Wait, is the $400 threshold for ALL income or just self-employment? I made about $350 last year doing some freelance work and didn't report it. Should I be worried???

The $400 threshold applies specifically to self-employment income, which is when you need to file Schedule SE and pay self-employment tax. But that's completely different from the requirement to report all income on your tax return. All income is technically required to be reported regardless of amount. The $400 threshold only determines whether you need to pay self-employment tax, not whether you need to report the income. For your freelance work, you should still report it on Schedule C even if it's under $400, but you wouldn't need to file Schedule SE or pay self-employment tax.

How did they even find such a small amount? Was it just because of the 1099? Now I'm worried about some small payments I've received...

Do you think it would be better to just take the whole cost as a business expense? Like can't I just say it's 100% for the dog sitting since that's what ruined it? The living room is where all the dogs hang out during the day.

I wouldn't recommend claiming 100% business use if you actually use it for personal purposes too. The IRS specifically looks for people trying to deduct personal expenses as business ones. If you're honestly using it almost entirely for the business, you might be able to justify a higher percentage like 90%, but you should be truthful about any personal use. Better to take a slightly smaller legitimate deduction than risk problems with an audit by overreaching.

That approach doesn't actually change the tax treatment. Whether you use a business account or personal funds later reimbursed, the deductibility still depends on the business use percentage. The IRS cares about the actual use of the item, not which account you used to buy it.

Oh man, another form I need to worry about? Is Form 5471 something I can handle myself or is this definitely something I should have my accountant prepare? And are there any specific schedules within Form 5471 that relate to Subpart F income reporting?

I strongly recommend having your accountant prepare Form 5471. It's one of the most complex IRS forms with multiple schedules and detailed reporting requirements. Schedule I specifically reports Subpart F income and is where you'll need to break down those passive investment earnings. Schedule J tracks your E&P balances which affect future distributions. And don't forget Schedule P for tracking previously taxed earnings. Even experienced accountants sometimes struggle with this form, so it's definitely not something I'd suggest handling yourself, especially with the significant penalties for errors or omissions.

Does making a 962 election make sense if most of the foreign income is already NOT Subpart F (like the consulting income mentioned)? Seems like it might create more complications than benefits in that case.

9 Did you need a lawyer to set up your LLC? I've heard it can be expensive and complicated with annual fees. Is it really worth it for a smaller content creator account?

17 I didn't use a lawyer - I just went through my state's business filing website and did it myself. The filing fee was around $100 in my state, and yes, there are annual fees to maintain it (varies by state). Whether it's worth it depends on your situation. If you're making significant income or have privacy concerns, it can be valuable. For me, having business transactions under my LLC name rather than my personal name was important. Plus, it makes tax deductions cleaner since business expenses are clearly separated from personal ones. If you're just starting out with minimal earnings, maybe wait until your revenue justifies it.

2 Did you need to file any additional forms when you made the switch? I've heard some people say you need to do a "final" filing under your SSN before switching to the EIN, but that doesn't make sense to me since it's all just me either way.

Thanks for this tip! I wasn't aware of the 540NR form. Do you remember what documentation California required to prove your residency change? I have my Texas apartment lease and utility bills starting in December 2023, but I'm not sure if I need anything else.

For proving your change of residency, California typically wants to see a combination of documents. Your lease and utility bills are good starts. Also gather: your Texas driver's license (if you've gotten one), voter registration, vehicle registration if you transferred it, and bank statements showing your address change. The more documentation you have showing you've established a permanent home in Texas, the better. California can be particularly aggressive about maintaining tax residency claims, especially for higher-income individuals. Make sure all your documentation has consistent dates that align with when you claim to have moved. And keep copies of everything you submit - California's Franchise Tax Board has been known to "lose" documentation and ask for it multiple times.

Same here! Filed in January, submitted 3911 in April, and still nothing. When I finally got through to someone on the phone (took 3 attempts and about 2 hours total wait time), they just said "it's in process" and couldn't give me any timeline. The whole system feels broken.