Just be aware that if you don't report this income and somehow get audited, you'll face penalties and interest on top of the taxes you should have paid. The fact that PayPal doesn't report "friends and family" transfers doesn't protect you - it's still your legal obligation to report ALL income. I learned this the hard way with my Discord server donations. Started small but grew to about $400/month. Never reported it because "PayPal doesn't report it" - ended up with a nasty surprise when I got flagged for an audit for unrelated reasons and they found the unreported income.

This is really helpful information everyone! I'm in a similar situation with my Rust server where I collect donations through various platforms. One thing I want to add that might be useful - even if you decide to treat this as hobby income rather than business income, you still need to keep detailed records of all your expenses. I learned from my accountant that the IRS can be pretty strict about what counts as legitimate expenses, especially for gaming-related activities. Make sure you're tracking things like server hosting costs, domain registration, any software licenses, and potentially even a portion of your internet bill if you can demonstrate it's used substantially for the server. The key is being able to show that these expenses are directly related to generating the income, not just general gaming expenses. Keep receipts and document everything - it'll save you headaches later whether you file as hobby or business income.

FYI - don't forget that margin interest on money borrowed to buy tax-exempt investments (like municipal bonds) isn't deductible at all. That tripped me up last year and I had to amend my return.

I went through this exact same situation last year with about $15K in margin interest. One thing that really helped me was keeping detailed records of exactly what I used the margin for - the IRS can ask for documentation showing the borrowed funds were actually used for investment purposes. Also, make sure you're capturing ALL your investment income on line 4a of Form 4952, not just the gains from the specific stocks you bought on margin. This includes interest, dividends, and short-term gains from ALL your investments, even those not purchased with borrowed money. This can significantly increase the amount of margin interest you can deduct. The form is designed to limit your deduction to your total investment income, so maximizing that line 4a figure is important. Many people miss rental income, taxable bond interest, or other investment income that should be included.

Don't forget to track your Cash App fees as deductions too! I do pet portrait commissions through Cash App, and when I switched from accepting "friends and family" to proper business payments, I started paying those 2.75% transaction fees. Those are fully deductible business expenses. Also, if you're using your phone to process payments or communicate with clients, you can deduct a portion of your phone bill. Same goes for mileage if you drive to meet clients, and any supplies specific to your business.

Yes, you can absolutely amend your prior year return to claim those Cash App fees! You'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return) to add those business expenses to your Schedule C. Just make sure you have documentation of the fees - Cash App transaction history showing the fees charged should be sufficient. You generally have 3 years from the original filing deadline to amend a return, so if you filed your 2023 return on time, you have until April 15, 2027 to amend it. The $300 in fees could result in a decent refund depending on your tax bracket. If you're in the 22% bracket, for example, that's about $66 back plus whatever self-employment tax savings you'd get (roughly another $46). Definitely worth the effort to file the amendment!

A word of caution from personal experience - when you file that amended return, make sure you pay any additional tax ASAP. Interest keeps accumulating from the original due date of the return, not from when you discover the problem. I reported my preparer last year and ended up owing about $3,800 in additional taxes, plus almost $450 in interest because I waited a few months to actually pay after filing the 1040-X.

I'm going through something very similar right now and wanted to share what I've learned from my tax attorney. The most important thing is to act quickly but methodically. First, gather ALL documentation related to your tax preparation - emails, worksheets, receipts, anything the preparer gave you or asked for. This will be crucial evidence. When you file Form 14157 and 14157-A, be as specific as possible about what the preparer did wrong. Don't just say "they added deductions I didn't authorize" - list each specific deduction, the amount, and explain what documentation (if any) you actually provided. The more detailed you are, the stronger your case. One thing that really helped me was keeping a timeline of all my interactions with the preparer. Write down dates, what was discussed, what documents you provided, etc. This shows the IRS that you were engaged in the process appropriately and didn't just blindly sign whatever was put in front of you. Also, consider getting a consultation with a tax professional before filing your amended return. Yes, it costs money upfront, but having someone review your situation can help ensure you don't miss anything or make additional errors. The last thing you want is to file an amended return that still has problems.

This is a really tough situation, but you're absolutely right to be concerned. Your boss is essentially asking you to be complicit in tax evasion, and his behavior - especially discouraging you from seeking professional tax advice - is a huge red flag. Here's what you need to know: You are legally required to report ALL income to the IRS, regardless of how it's paid to you. The fact that your employer pays you partially in cash doesn't make that portion non-taxable. Keep detailed records of every payment you receive (dates, amounts, cash vs. check) - this will be crucial for your tax filing. I'd strongly recommend getting a second job lined up before taking any action. While there are legal protections for whistleblowers, small businesses can sometimes find ways to retaliate, and you don't want to be left without income while dealing with this mess. When you file your taxes, report your complete income even if your W-2 doesn't reflect the cash payments. You can use Form 4852 if needed to report the correct amounts. The IRS cares most about individuals paying their proper taxes - if you're honest and thorough in your reporting, you'll be protecting yourself even if your employer isn't handling things properly. Stay strong and trust your instincts - this situation definitely feels sketchy because it IS sketchy.

I'm a tax preparer and I see situations like this more often than you'd think. Your instincts are absolutely correct - what your boss is doing is tax evasion, and his attempts to prevent you from seeking professional advice are major warning signs. Here's the bottom line: ALL income must be reported to the IRS, period. Cash payments don't have some magical exemption just because they're harder to track. Your boss claiming the cash "isn't reported to the IRS" while also saying it's "handled through business deductions" makes no sense - he's clearly making things up as he goes. The good news is you can absolutely protect yourself. Keep meticulous records of every single payment (I recommend a simple spreadsheet with date, amount, and payment type). When tax time comes, report your TOTAL income regardless of what appears on your W-2. If your W-2 is incorrect, use Form 4852 to report the actual amounts. Yes, you'll owe more taxes since no withholding was taken from the cash portion, but that's infinitely better than facing penalties for underreporting income. The IRS has payment plan options if you can't pay the full amount immediately. I'd also strongly suggest starting your job search now. Employers who operate this way rarely change, and you deserve to work somewhere that handles payroll legally and transparently. You're young and clearly have good judgment - don't let this situation derail your financial future.