Thanks for mentioning Form 4852 - I didn't know that was an option! Does it work the same for 1099-MISC as it does for W-2s? And did you still need to attach an explanation letter or did the form itself cover everything?

Form 4852 works for both W-2s and 1099s, though it's more commonly used for W-2s. The form itself includes sections where you explain the discrepancy and how you calculated the correct amount. I still attached a short explanation letter with mine just to be extra clear, along with copies of my invoices and bank statements showing the actual payments received. Better to provide too much documentation than not enough when you're contradicting what's been reported to the IRS.

I work in government accounting and can confirm this happens ALL THE TIME. Our fiscal year is different from the calendar year and our ancient software regularly messes up 1099s because of December/January payment processing. Always worth asking if this is what happened.

That's a really good point about self-discipline. Did you work while getting your degree? I'm considering working part-time in a tax preparation office while studying to get some practical experience alongside the theory.

I worked full-time at a regional accounting firm while getting my degree, and it was definitely challenging to balance both. The upside was that I could immediately apply what I was learning to real client situations, which reinforced the concepts. Working part-time at a tax prep office while studying is an excellent idea. Tax season will be intense, but you'll gain invaluable practical experience that will make the academic concepts click. Plus, having that experience on your resume alongside your Masters will make you much more marketable when you graduate.

Most programs I've seen don't focus on specific software but rather on tax concepts and research skills. They might use CCH or RIA for research databases, but the actual tax preparation software varies. My program had optional workshops for UltraTax and ProSeries, but it wasn't part of the core curriculum.

But what about influencers who actually DO use luxury items as part of their business model? Like if your entire content is about luxury cars, wouldn't a Lambo be considered necessary?

That's a good question. For established influencers with substantial income from content specifically about luxury vehicles, there might be a legitimate case. However, the burden of proof would be extremely high. You'd need to show the direct connection between the specific vehicle and revenue generation, demonstrate that the entire vehicle (not just a portion) is used for business, and prove that the expense is reasonable relative to your business income. Most importantly, you'd need to show a history of profitability or a reasonable path to profitability. Starting from zero with a huge expense like a Lamborghini would be extremely difficult to justify to the IRS.

Yeah but how did they prove he wasn't really trying to start a business? Seems pretty subjective to me.

Thanks for this suggestion! I've heard about backdoor Roth conversions but wasn't sure if they applied to my situation. If I'm understanding correctly, since I can't deduct the traditional IRA contribution due to my income, converting it to a Roth would mean I'm not being taxed twice? Do you know if doing this backdoor conversion would fix the TurboTax error I'm getting, or would it potentially create new complications for filing?

You've got it exactly right - since you can't deduct the traditional IRA contribution, you've already paid tax on that money. If you convert to a Roth soon after contributing (before there's significant earnings), you'll pay very little or no additional tax on the conversion. Then all future growth will be tax-free when you withdraw in retirement. Regarding your TurboTax issue, doing a backdoor Roth actually might simplify things. First, fix your current issue by properly coding the inherited IRA distribution and marking your traditional IRA contribution as non-deductible. Once that's working, you can add the Roth conversion as a separate transaction. TurboTax has a specific section for Roth conversions that's generally quite straightforward. The software will generate Form 8606 to track your non-deductible basis and properly report the conversion.

I switched from TurboTax to FreeTaxUSA last year and found it much easier for handling my inherited IRA from my dad. Their interface for entering distribution codes is more straightforward, and they have really clear explanations about inherited IRA rules. Plus it's way cheaper!

Did you need all those licenses even if you were just doing loans to friends and family? Or were you advertising to the general public?

I'm going through this right now! The surety bond was like $1,500 for me - totally didn't budget for that expense when switching my business. And the application process took almost 3 months.

That approach might work for some businesses, but private lending is much more heavily regulated than either graphic design or dropshipping. Banking/lending activities often require specific licenses and registrations regardless of your LLC structure. While the LLC itself might be flexible in its business purpose, certain industries have regulatory requirements that exist separately from business entity rules. Not complying with lending regulations can result in significant penalties, as another commenter mentioned about their $5,000 fine. It's always better to do things properly from the start rather than risk regulatory issues down the road, especially in financial services.