This is really helpful advice, thanks! I've been tracking sales but not as formally as you described. Do you have any recommendations for good software or templates to use for this kind of tracking? And do you know if there's a revenue threshold where requirements become stricter?

For your level of business, a well-organized spreadsheet is actually sufficient - that's what I still use. I created columns for purchase date, purchase price, sale date, sale price, platform fees, and profit calculation. I also keep a separate tab for business expenses like software subscriptions. The requirements get significantly stricter once you exceed €22,000 in annual turnover, as you'll lose the Kleinunternehmer status and need to deal with VAT (Umsatzsteuer). Once you hit €60,000 annual profit, you'll need to use double-entry bookkeeping (doppelte Buchführung) instead of simple income-surplus calculation (EÜR). At your current scale, though, the detailed spreadsheet approach should be sufficient for the Finanzamt.

This is such an important point that people miss. My friend got hit with a huge health insurance adjustment bill because he didn't realize his side business income would affect his calculation. The Krankenkasse recalculated two years of premiums retroactively!

I tried that first thing, but it seems my employer set up their ADP account differently. When I log in, I can only see paystubs up until I left, but no tax documents. The ADP rep specifically told me the employer has to grant access to those. I even have my last paystub, but I'm not confident in calculating all the tax amounts correctly from that alone.

That's frustrating! In that case, I'd definitely go with getting the wage transcript from the IRS like others suggested. One more thing - if you have your last paystub of the year, it often has your year-to-date totals which are usually pretty close to what appears on your W2. You could use that as a starting point while waiting for the official transcript. Just make sure to attach a note explaining the situation when you send documents to your state. Most tax agencies deal with this kind of employer non-compliance regularly and have procedures for it.

This is exactly what I did when my former employer wouldn't give me my W2. Filed complaints with both the state labor department and the IRS. Got my W2 mysteriously emailed to me about a week later. Amazing how they suddenly "found" it after ignoring me for months!

Oh man I completely forgot about state taxes! I'm in Minnesota - do you know if they have any special treatment for capital gains or do they just add it to regular income?

Minnesota treats capital gains as regular income and taxes them at your normal state income tax rate. With your income level, you're probably looking at around 7.05% state tax on your gains. So if you're in the 15% federal long-term capital gains bracket, your effective rate is actually more like 22% when you factor in state taxes. It's definitely worth planning for this ahead of time so you don't get surprised by a big tax bill. You might want to consider making estimated tax payments if you're selling a large amount to avoid underpayment penalties.

I've used TurboTax for the past few years with capital gains from stocks and ETFs and it's been fine. Their crypto handling was kinda clunky last year though. If you have a lot of crypto transactions, you might want something more specialized. TT also charges extra for the premier version you need for investments.

Thanks for sharing what worked for you. Did you find that alternating years was financially fair for both of you? And did you need to show this notarized agreement to the IRS, or was it just an agreement between you two?

Alternating years worked out fairly well financially for us. Some years one of us might "lose out" a bit if we had more expenses, but it evens out over time and eliminates the yearly fight. The peace of mind is worth any small financial difference. We've never needed to show the agreement to the IRS because we've stuck to it consistently. It's primarily a document between us to prevent disputes. However, if there ever was an IRS question, having a signed and notarized agreement would help show we had a legitimate arrangement. What matters to the IRS is that only one of us claims the child each year.

I've used Form 8332 for the past 4 years with my ex. It only transfers the Child Tax Credit and the dependency exemption. The custodial parent still gets to claim head of household filing status and the earned income credit if they qualify. The IRS is very specific about this - those benefits stay with whoever the child lives with more, regardless of who claims them as a dependent.

Thanks for clarifying that! That makes more sense now. I was worried I'd be giving up too many benefits, but if I can still claim head of household as the custodial parent, that makes a big difference. I'll look into working out an arrangement with my ex.

That's really helpful information! I just checked his business card and he does have a CPA license number listed. Do you remember how long the complaint process took before you got a response? I'm worried about the timing with the deadline so close.

The complaint process took about 10 days before I heard anything, but things moved quickly after that. He contacted me within 24 hours of the board reaching out to him. Since you're so close to the deadline, I'd recommend proceeding with the extension filing and document retrieval processes others suggested while simultaneously filing the complaint. It's worth mentioning that just the threat of a complaint sometimes works - send an email stating you'll be filing a complaint with the state board in 48 hours if he doesn't respond, and copy the email address of your state's CPA board. That alone worked for a friend of mine in a similar situation.

This is honestly great advice. Sometimes there's a simple explanation. My "ghosting" preparer last year had actually died suddenly, and the firm was in chaos trying to handle everything. They were grateful when I showed up because they were trying to figure out how to contact everyone.