I've been following this discussion with great interest since I'm in a very similar situation - just started boarding a friend's horse last month for $400/month. One thing I'd like to add based on my research: even if you treat this as hobby income initially, you can potentially change to business treatment in future years if your situation evolves. The IRS doesn't lock you into one classification forever. What's been most eye-opening from this thread is realizing how many expenses I wasn't considering. Things like vehicle mileage for feed runs, a portion of my property insurance, even depreciation on equipment used for the boarded horse. These can really add up and significantly reduce your taxable profit. @Benjamin Kim - have you considered whether your friend would be willing to pay some expenses directly (like vet bills or farrier services for their horse)? That could reduce both your income and your deductible expenses, simplifying the whole situation. Plus, it might demonstrate to the IRS that this is a legitimate boarding arrangement rather than just helping out a friend. Thanks to everyone who shared their experiences - this has been incredibly valuable for someone just starting out!

This has been such an informative discussion! As a tax professional, I want to emphasize a few key points that have come up: 1. **Documentation is everything** - Whether you go hobby or business route, keep meticulous records from day one. I've seen too many clients scramble at tax time trying to reconstruct expenses. 2. **The "profit motive" test isn't just about making money** - it's about conducting yourself like someone who INTENDS to make money. This includes things like: researching market rates, maintaining professional records, seeking ways to improve profitability, and treating it as a separate activity from your personal horse enjoyment. 3. **Consider the long-term picture** - Even if you're only boarding one horse now, if there's any possibility of expansion, starting with proper business practices makes sense. It's much harder to switch from hobby to business treatment later. 4. **State taxes matter too** - Don't forget that your state may have different rules for business income, sales tax on services, or even licensing requirements for boarding operations. The insurance point that @Sofia Morales raised is crucial and often overlooked. Many people don't realize their homeowner's policy might not cover commercial activities until it's too late. Given your conservative approach to taxes, @Benjamin Kim, I'd lean toward the Schedule C business treatment if you can demonstrate genuine profit motive. The self-employment tax hurts, but the ability to deduct legitimate business expenses usually more than makes up for it.

One more tip that might help you decide - TurboTax Free Edition will actually let you start your return and go pretty far into the process before hitting any paywalls. So you could begin with the free version, enter your basic info (W-2s, dependents, etc.), and see if it prompts you to upgrade at any point. The advantage of this approach is that you'll know for certain whether the free version meets your needs before committing to pay for Deluxe. In your situation with standard deduction, you should be able to complete everything in the free version, but this way you can verify it yourself. Just be prepared for the aggressive upselling throughout the process - TurboTax will try to convince you that you "might be missing deductions" with scary language, but stick to your guns if you know the standard deduction is better for you. The free version should handle your W-2 income, child tax credits, and standard deduction perfectly fine.

Just want to add another perspective here - I made the mistake of buying Deluxe for years when I absolutely didn't need it. Your situation sounds almost identical to mine (married, W-2s, mortgage, kids, standard deduction), and I finally switched to the free version last year after doing the math. Here's what really opened my eyes: I calculated that I would need over $25,900 in itemized deductions to beat the standard deduction. Between mortgage interest, property taxes, state taxes, and charitable donations, I was only hitting about $18,000. So I was literally paying TurboTax $60+ to use a worse deduction! The free version handled everything I needed - W-2 import, child tax credit, earned income credit if applicable, and the standard deduction. The only "features" I was missing in Deluxe were ones that didn't even apply to my situation. One thing to watch out for: TurboTax will show you a "comparison" screen that makes it look like Deluxe might find you more money, but this is usually misleading if you're taking the standard deduction. They're basically selling you peace of mind for situations that don't apply to you. Start with IRS Free File if you qualify income-wise, otherwise the regular TurboTax Free Edition should work perfectly for your situation.

As someone new to this community but with experience in agricultural tax situations, I wanted to add another perspective that might help clarify things. The distinction between gift and income in family farm operations often comes down to what tax professionals call the "arm's length" test - would this same transaction have occurred between unrelated parties under similar circumstances? In your case, since you mentioned this was a one-time "thank you" payment with no formal employment relationship, no ownership stake, and no ongoing expectation of future work-for-payment arrangements, it really does sound like a gift situation. The fact that your CPA was asking about basis and ownership suggests they were initially thinking this might be treated as if you had some ownership interest in the cattle, which clearly isn't the case. One thing I'd add to the great advice already given: make sure you and your parents are consistent in your record-keeping. Even though gifts under the annual exclusion don't require formal reporting, it's still good practice to document the nature and intent of the transaction. A simple written note from your parents stating this was a gift in appreciation for past help (rather than payment for services) could be valuable if questions ever arise. The key takeaway is that the IRS looks at the economic substance of transactions, not just family relationships, so having clarity on intent and consistency in reporting between you and your parents is crucial.

Welcome to the community! Your situation is actually quite common in family farming operations, and the confusion about classification is totally understandable. Based on what you've described, this sounds like it should be treated as a gift rather than taxable income. Here's why: you have no ownership stake in the farm or cattle, no formal employment relationship, and your parents characterized this as a "thank you" for past help rather than payment for specific services. The key factors that support gift treatment are: - No documented ownership interest in the cattle - No formal business relationship or employment agreement - One-time payment described as appreciation rather than ongoing compensation - Amount ($4,300) is well under the 2025 annual gift exclusion of $19,000 per person Your CPA was asking about "basis" because they were trying to determine if you had an ownership stake that would require capital gains treatment. Since you didn't own the cattle, basis doesn't apply to your situation. I'd recommend clarifying with your parents how they're handling this payment on their Schedule F farm return. If they're not deducting it as a labor expense (which they shouldn't if it's truly a gift), then you definitely shouldn't report it as income. The IRS expects consistency between related parties. You might want to amend your return to remove this from miscellaneous income if you've already filed, or at minimum have a clear conversation with your CPA about reclassifying it based on the gift nature of the transaction.

Don't overthink this! I run a single-member LLC and tried fancy software but it was overkill. I just use a Google Sheet with tabs for income, expenses, mileage, etc. For receipts I take pics with my phone and save them to a Google Drive folder. As long as u have a separate business account like others mentioned, and keep good records of everything, you're fine. The IRS mostly wants to see that you're tracking things consistently and have documentation to back up yr deductions. When you make more money or get more clients, then upgrade to QuickBooks or whatever. Starting simple helped me actually stick with it!

As someone who's been through several IRS audits with my LLC, I have to respectfully disagree with the spreadsheet approach. While it might seem simple, the IRS expects professional bookkeeping practices for business entities, even single-member LLCs. I learned this the hard way during my first audit - they questioned my "informal" record-keeping system and it created unnecessary complications. Now I use FreshBooks (similar to QuickBooks but more user-friendly) and it's been worth every penny for the peace of mind. The key things the IRS really focuses on during LLC audits are: 1) Clear separation of business/personal expenses, 2) Proper categorization of deductions, 3) Complete documentation trail, and 4) Consistent accounting methods. Professional accounting software automatically creates this audit trail, while manual spreadsheets leave gaps that auditors love to exploit. For someone specifically worried about IRS issues like OP, investing in proper software from day one is crucial. Better to spend $15-30/month on software than thousands later on audit defense!

Random question: did anyone here get their 1095-A corrected? Mine had wrong values but I'm getting nowhere with the marketplace phone line. Been trying for weeks and I'm about to just file with the wrong form and deal with the mess later.

I feel your pain - this exact situation happened to me two years ago and it was such a shock! The $1,350 repayment does sound about right given your income and the advance credits you received. One thing that might help explain it: when you were unemployed and applied for marketplace coverage, you likely estimated a lower income for the year. But your final AGI of $47,435 (including that unemployment income) put you in a higher income bracket than expected, which reduced how much premium tax credit you were actually eligible for. The silver lining is that you did have health coverage when you needed it most - during unemployment. And switching to employer coverage in September was absolutely the right move. For next year, if you ever need marketplace coverage again, try to be conservative with your income estimates. It's better to get a smaller subsidy upfront and get money back at tax time than to owe a large repayment. Also, make sure to report income changes to the marketplace as soon as they happen. The system is frustrating but you didn't do anything wrong - this is just how the ACA reconciliation process works unfortunately.