Friendly reminder that Square fees aren't your only potential deduction! When I got my first 1099-K, I only deducted the processing fees and ended up paying WAY too much in taxes. Don't forget about: - Supplies for your services - Any equipment purchases - Mileage if you travel to clients - Portion of phone bill if used for business - Software subscriptions related to your work - Continuing education or training costs - Marketing/advertising expenses TurboTax walks through all these categories, so don't skip them! Your tax bill could be significantly lower.

I went through this exact same situation last year with my dog walking side business! The good news is TurboTax makes it pretty straightforward once you know the steps. When you get to the business income section, you'll enter your 1099-K information using your SSN as the tax ID. TurboTax will automatically generate Schedule C for your self-employment income. The key thing is to make sure you enter the gross amount from Box 1a of your 1099-K - that's what Square reported to the IRS. One thing that really helped me was keeping a simple spreadsheet throughout the year tracking all my business expenses. Beyond the Square processing fees, don't forget about: - Hair styling tools and equipment - Products you use on clients - Any licensing or certification costs - Transportation to client locations - Even a portion of your home wifi if you use it to manage bookings Also be prepared for the self-employment tax hit - that caught me off guard my first year. You'll owe both regular income tax plus the additional 15.3% for Social Security and Medicare on your net profit. Setting aside about 25-30% of your side business income throughout the year helps avoid a big surprise at tax time. The most important thing is just being honest and thorough with your reporting. The IRS isn't trying to trick you - they just want to make sure the income matches what was reported by Square.

Has anyone considered whether a spousal HSA contribution might work in this scenario? If you're married and your spouse has earned income, they might be able to contribute to your HSA even if you personally don't have earned income.

This is such a common misconception! I see a lot of people thinking that having any kind of taxable income qualifies them for HSA contributions, but the IRS is very specific about requiring "earned income" or "compensation." The bright line rule is that investment income, inherited IRA distributions, dividends, interest, rental income, and other passive income sources don't count as compensation for HSA purposes - even though you'll pay taxes on them. If you're determined to contribute to your HSA during your career break, the freelance work strategy mentioned by others is really your best bet. Even a small amount of consulting or gig work can qualify you. Just make sure your earned income equals or exceeds your planned HSA contribution amount. One thing to keep in mind: if you do decide to generate some earned income through freelancing, you'll want to factor in the self-employment taxes (15.3%) when calculating whether it's worth it. But given the triple tax advantage of HSAs (deductible contributions, tax-free growth, tax-free qualified withdrawals), it often still makes financial sense, especially if you're in a higher tax bracket on your other income.

Think of your tax refund like a flight reservation. Sometimes the airline needs to cancel your original flight (your first DDD), but they immediately rebook you on a new flight (your new DDD). They're not cancelling your trip entirely - they're just making an adjustment to when it happens. Have you checked whether there are any other new codes on your transcript besides the cancellation and new DDD?

I've been through this exact scenario twice in the past three years, and it's always nerve-wracking when you see that cancellation! In my experience, the most common reason for this pattern is when the IRS needs to verify information before releasing your refund. Since you mentioned this is different from your home country's tax system, I should mention that the US IRS has become much more cautious about refund fraud in recent years, so they often do additional verification steps that can trigger these cancellation/reissue cycles. The good news is that having a new DDD of 3/7 means they've completed whatever review they needed to do. I'd recommend checking your transcript again in a few days to see if any additional transaction codes appear that might give you more insight into what specifically triggered the review.

I went through this exact same confusion with Hurricane Ian losses for my property in Bonita Springs. The IRS guidance online is definitely outdated - they still reference Hurricane Maria in most publications because they don't update every document immediately after each disaster. Hurricane Ian is absolutely a qualified disaster under FEMA declaration DR-4673-FL from September 29, 2022. I successfully claimed my losses using Form 4684 and received my refund without any issues from the IRS. The key documentation you'll need: detailed photos of damage, all insurance correspondence and claim settlements, contractor estimates for repairs, receipts for any out-of-pocket expenses, and proof you were in an affected county. For your $42,000 loss, make sure you're clear about what portion was covered by insurance versus your actual out-of-pocket loss. One thing I wish I'd known earlier - you can choose to claim the loss on either your 2021 or 2022 tax return, whichever gives you better tax savings. With a loss that size, it's worth running the calculations both ways. In my case, claiming it on 2021 saved me about $4,200 more because my income was higher that year and the deduction was worth more. Don't let outdated IRS publications confuse you - Hurricane Ian definitely qualifies and you should claim that deduction if you have proper documentation.

I can definitely help clarify this confusion about Hurricane Ian! You're absolutely right that the IRS guidance online is frustratingly outdated - they still reference Hurricane Maria in most of their publications because they don't update every single document after each new disaster. Hurricane Ian is 100% a qualified disaster under FEMA declaration DR-4673-FL (declared September 29, 2022). I work in tax preparation and have successfully processed dozens of Hurricane Ian claims using Form 4684 without any issues from the IRS. For your $42,000 loss, here's what you need to know: 1) Use Form 4684 (Casualties and Thefts) and specifically reference FEMA DR-4673-FL 2) Document everything: photos of damage, insurance claim details, contractor estimates, repair receipts 3) Calculate your loss as the lesser of: decrease in fair market value OR your adjusted basis, minus any insurance reimbursements One crucial tip that could save you thousands: you can elect to claim this loss on either your 2021 OR 2022 tax return - whichever gives you better tax savings. With a $42K loss, this decision could easily be worth $3,000+ in additional refund depending on your income in each year. Don't let your tax preparer's uncertainty cost you money. The guidance is crystal clear once you know the FEMA declaration number. Hurricane Ian absolutely qualifies and you should claim every penny you're entitled to.

Did the court specifically classify the additional amount as "punitive damages" or as "statutory damages"? This can make a difference for tax purposes sometimes. Statutory damages might be treated differently than punitive damages in certain cases.

One thing to also keep in mind is timing for next year's filing - since you won the case in 2025, you'll need to report the taxable portion (that extra $1,600) on your 2025 tax return that you'll file in early 2026. Don't try to amend your 2024 return or anything like that. Also, if this was a significant amount relative to your usual income, you might want to consider making an estimated tax payment for Q1 2026 to avoid any underpayment penalties. The IRS generally expects you to pay taxes on income as you receive it, not just when you file your return. Keep all your court documents, the original lease showing the deposit amount, and any correspondence with the landlord. These will be important if the IRS ever has questions about how you determined what portion was taxable vs. just a return of your own funds.