I think everyone is overthinking this. I've been running my Etsy shop for 7 years and I just put all my material costs under "Supplies" and everything else under "Other expenses" with a note of what they are. Never been audited, never had a problem. The IRS has bigger fish to fry than whether you categorized your shipping costs separately from your Etsy fees.

I've been dealing with this exact same issue for my small business! Based on my experience and what I've learned from my CPA, proper categorization does matter more than some people think. While the IRS won't necessarily flag you for minor miscategorizations, having things in the right buckets helps if you ever get audited and also gives you better insights into your actual business expenses. For your jewelry business, I'd suggest: - Materials (beads, wire, findings) → "Cost of goods sold" if you track inventory, or "Supplies" if using cash method - Shipping costs → "Shipping and delivery" - Platform fees → "Commissions and fees" - Inventory software → "Office expenses" The key is consistency. Pick a reasonable categorization system and stick with it year over year. And definitely keep detailed records - receipts, transaction summaries from Etsy/eBay, etc. That documentation is way more important than perfect categorization. One tip: I create a simple document each year noting which expenses I put in which categories, so I can be consistent if I ever need to reference it later or if my accountant has questions.

Thanks everyone for all the helpful information! I'm dealing with a similar situation but with a twist - I paid an S-corp for marketing services, but they also reimbursed me for some advertising expenses I paid on their behalf. Do I need to issue them a 1099 for the net amount I paid them, or do I calculate it based on the gross service fees before the reimbursements? For example, if I paid them $12,000 for services but they reimbursed me $2,000 for ad spend, do I base the 1099 decision on the $12,000 or the $10,000 net? Since we've established S-corps generally don't need 1099s anyway, this might be a moot point, but I want to understand the principle for future reference with other contractors.

This is such a common confusion! I made the same mistake when I first started my business. The key thing to remember is that S-corporations are still corporations in the eyes of the IRS for 1099 reporting purposes, even though they have pass-through taxation like partnerships. One tip that helped me keep this straight: I created a simple spreadsheet tracking all my vendors with columns for their business type (from their W-9), total payments, and whether a 1099 is required. This way I don't have to re-research the rules every year. Also, don't stress too much about the deadline pressure - if you determine you don't need to send the 1099 to the S-corp, that's actually one less form you have to file! Just make sure you have that W-9 documentation like Emily mentioned, and you're all set.

Question - if a trust has zero income for the year, do you still need to file a 1041? Our family trust just holds some property but didn't generate any income last year.

Great question! I went through this exact situation last year. As others have mentioned, you don't need the grantors to file personal 1040s just for your trust filing purposes. However, I'd recommend getting a clear understanding of whether your trust is actually a "grantor trust" or not - this makes a huge difference. If it's a standard irrevocable trust (not a grantor trust), then the trust files its own 1041 and issues K-1s to beneficiaries for any distributions. The grantors' personal income levels are irrelevant to the trust's filing requirements. One thing to watch out for: even if the grantors don't normally need to file because of low income, if they receive distributions from the trust that push them above the filing threshold, they'll need to file to report the K-1 income. But that's their responsibility, not yours as trustee. Make sure you have the trust's EIN and keep good records of all trust income and distributions. The 1041 filing requirements are based on the trust having $600+ in gross income OR any taxable income, regardless of the grantors' situation.

Don't worry! I'm in a very similar situation - made $102k this year with 3 kids (ages 6, 9, and 11). I was freaking out about the same thing but just ran the numbers and I'm still getting back around $9k. The Child Tax Credit is huge - that's $6k right there for your 3 kids. Plus if you didn't adjust your withholding when your income went up, you probably had more taxes taken out than needed. The key thing is that tax credits reduce your tax liability dollar-for-dollar, so even if you're in a higher bracket, those credits still pack a punch. You'll probably be pleasantly surprised!

Just wanted to chime in as someone who went through this exact same worry last year! Made $99k with 3 kids and was convinced I'd owe money for the first time ever. Ended up getting back $8,900 - almost had a heart attack from relief lol. The Child Tax Credit really is a lifesaver at this income level. What helped me was looking at my paystubs throughout the year to see how much federal tax was actually withheld. If you didn't change your W-4 when you got the raise, you're probably golden. The worst part is just the anxiety of not knowing - once you actually run the numbers or file, you'll likely breathe a huge sigh of relief!

Has anyone here used Schwab's online system to just withdraw from an inherited IRA without the special form? Did it cause problems with your taxes? I'm in a similar situation but honestly the paperwork seems like a hassle if I can just do it online.

I've been managing inherited IRAs for clients for years, and I can confirm that Schwab absolutely requires their specific inherited IRA distribution form for proper tax reporting. The form number mentioned earlier (APP13049) is correct, and you can usually find it on their website under "Forms & Applications" or by calling their inherited accounts team. The key thing to understand is that inherited IRA distributions have special tax codes that need to be applied to your 1099-R. If you just do a regular withdrawal online, Schwab's system won't know to apply the correct distribution code, which could lead to tax complications later. For your situation with wanting to withdraw $6,500, you'll fill out the form indicating it's an RMD distribution, and Schwab will process it with the proper tax coding. The process usually takes 3-5 business days once they receive the completed form. You can often email or fax it to them rather than mailing it in. One more tip: Keep a copy of the completed form with your tax records - it serves as documentation that you properly requested an RMD distribution in case there are ever any questions from the IRS.