The audit risk stuff is important but don't overlook making sure you handle the business closure properly! When I closed my little consulting business last year, I had to: 1. File final employment tax returns (if you had employees) 2. Issue final W2s/1099s 3. Cancel EIN 4. Close business tax accounts with state 5. Report sale/disposal of business assets 6. Maintain records for at least 7 years Did TurboTax walk you through all these steps?

I completely understand your anxiety about this situation! I went through something very similar with my small photography business that had losses for 3 years before I closed it. Here's what helped put my mind at ease: the IRS audit statistics show that Schedule C businesses with gross receipts under $100k have an audit rate of less than 1%. With your highest year being $47k, you're well below that threshold. The key thing about the hobby loss rule is that it's not just about the 3-out-of-5-year test - the IRS looks at nine factors including whether you operated in a businesslike manner, kept good records, and made changes to improve profitability. Since you mentioned you were legitimately trying to run a business and made the rational decision to close when it wasn't working, that actually supports your case. Keep all your documentation organized (receipts, bank statements, inventory records, any business correspondence) just in case, but honestly, your situation sounds very low-risk. The IRS is generally more concerned with larger operations or obvious red flags like claiming massive losses on minimal income.

Based on my experience with CA state refunds, 5 business days for a paper check isn't unusual yet. I received mine about 8 business days after the "issued" status last year. The FTB typically batches their check mailings, so there can be a delay between when they mark it as issued and when it actually gets to the post office. Since you're using this for investment planning, you might want to factor in up to 10 business days total from the issued date. If it doesn't arrive by next week, that's when I'd consider calling them directly.

I can share some recent data points that might help with your tracking. I filed my CA return in February and received my refund check exactly 9 business days after the "issued" status appeared on the FTB website. What I learned from calling the FTB is that there's often a 2-3 day gap between when they mark it as "issued" and when it actually gets sent to their mailing contractor. So your 5 days might actually be more like 2-3 days in transit. Given that you're planning investments around this, I'd suggest waiting until day 10-12 before getting concerned. The good news is that CA refunds are generally very reliable once they hit "issued" status - just slower than we'd like!

Just to add another perspective - I went through something similar when my parents helped me with living expenses during graduate school. One thing that really helped me was keeping simple records of these transfers, even though you don't need to report them as the recipient. I created a basic spreadsheet showing the dates, amounts, and noted they were "family support/gifts" in case I ever needed to explain them later. It's probably overkill, but having that documentation gave me peace of mind, especially since some of the amounts were substantial. The IRS rarely questions legitimate family gifts, but if they ever did, having a clear record showing these were regular support payments from your dad (not income from work or anything else) would be helpful. Plus it makes it easy to track that you're staying under the annual gift limits each year. Don't stress too much about it though - based on everything you've described, these are clearly gifts and you're handling everything correctly by not reporting them as income!

One thing I haven't seen mentioned yet is to make sure your dad understands the gift tax rules too, especially if he's helping multiple family members. The $18,000 annual exclusion is per recipient, so he can give $18,000 to you AND $18,000 to a sibling or other family member in the same year without any reporting requirements. Also, if your parents are married, they can each give you $18,000 annually (so $36,000 total per year) even if the money is coming from a joint account or just one parent's account. This is called "gift splitting" and just requires them to agree to it - no special paperwork needed unless they exceed the individual limits. Just wanted to add this in case it helps with future planning! Sounds like you're handling everything correctly though. Family support during school is one of the most common and straightforward gift situations.

Quick question for anyone who's dealt with this before - does the Kiddie Tax apply differently to different types of unearned income? The LLC sale in the original post is a capital gain, but would it be treated differently if it was dividend or interest income instead?

I've been through a similar situation with my nephew after his parents died in a car accident. The process can feel overwhelming, but you're on the right track asking these questions. One thing I learned that might help - make sure you have all the proper legal guardianship documentation ready when you file. The IRS may ask for proof of your guardianship status, especially with such a substantial amount of unearned income involved. Also, with $67K in capital gains, you might want to consider whether any estimated tax payments should have been made throughout the year. The Kiddie Tax can create a significant tax liability that might trigger underpayment penalties if not addressed properly. Have you consulted with a tax professional who specializes in guardianship situations? Given the complexity and the dollar amounts involved, it might be worth the investment to ensure everything is handled correctly. The cost of professional help could save you from potential issues down the road.

Don't forget that the American Opportunity Credit has an income phase-out! If your modified adjusted gross income is between $80,000-$90,000 (single) or $160,000-$180,000 (married filing jointly), the credit starts to phase out. After $90k/$180k you can't claim it at all. Lifetime Learning also has phase-outs but at different thresholds. Worth checking if you're near those income levels since it might affect your strategy.

This is a great discussion! One thing I'd add is to also consider timing your tuition payments strategically. Since education credits are based on when you actually pay the expenses (not when they're due), you might want to pay some spring semester costs in December vs January to optimize which tax year gets the benefit. Also, don't overlook textbooks and required course materials - these qualify for the American Opportunity Credit but NOT for the Lifetime Learning Credit. So when you switch to AOC in later years, make sure you're tracking those expenses too since they can add up to several hundred dollars per semester. And regarding the 529/credit coordination that others mentioned - one strategy is to use 529 funds for room and board (which don't qualify for education credits anyway) and pay tuition/fees out of pocket so you can claim the credits. Just make sure the 529 withdrawal amount doesn't exceed total qualified education expenses for the year or you'll owe taxes and penalties on the excess.