One more thing to consider - tax software is getting better every year at handling small business situations. I've been using FreeTaxUSA for my Etsy shop for years and it's way cheaper than TurboTax but does everything I need.

I'm in a very similar boat - just started my consulting business in late 2024 and made about $2,100. I was also stressing about whether to hire a CPA, but after reading everyone's advice here, I think I'm going to try the DIY route this year too. One thing I learned from talking to other small business owners is that you can always amend your return later if you miss something significant. For our revenue levels, the potential mistakes aren't going to be catastrophic. Plus, going through the process yourself this first year will help you understand your business finances better, which is valuable knowledge as you grow. I'd say save the CPA money for now and put it toward marketing or inventory for your shop instead. That investment is more likely to generate returns at this stage than paying hundreds for tax prep on such a straightforward situation.

Has anyone actually tried just calling H&R Block's customer service? I've used them for years and they've always been pretty straightforward about cancellations.

Just wanted to add another perspective here - if you do decide to cancel with H&R Block, make sure you get confirmation in writing (email) that you've cancelled and won't be charged. I've heard stories of people thinking they cancelled but still getting billed later. Also, since you mentioned owing $13k, definitely look into setting up an IRS payment plan if you need it. The IRS actually has pretty reasonable payment plan options, and the fees are way lower than what you'd pay in credit card interest. You can set it up online at IRS.gov and it's much easier than people think. Just make sure to file your return on time even if you can't pay the full amount - the failure-to-file penalty is much worse than the failure-to-pay penalty.

I'm in a very similar situation with my ex-husband and our 8-year-old daughter. We alternate claiming her every year, and I've learned a few things that might help you out. First, definitely align your W-4 with your actual tax filing plans each year. I used to just leave my W-4 alone and deal with whatever happened at tax time, but that led to some unpleasant surprises - especially a $1,400 tax bill one year when I had withheld as if I was claiming her but then it was his turn to claim her on taxes. Since you now have full physical custody, you might want to consider updating your informal agreement or at least getting it documented somehow. Even a simple text exchange confirming "2025 is Ana's year to claim, 2026 is mom's year" can be helpful if questions ever come up. One practical tip: I set a recurring calendar reminder every December to review and update my W-4 for the following year. Takes 5 minutes but saves me from major headaches. Also, don't stress too much about penalties - the IRS really doesn't care how many times you update your W-4 during the year as long as you're trying to match your actual tax situation. Your co-parenting situation sounds really healthy, which makes all of this so much easier to navigate!

This is such a relatable situation! I went through something very similar when my custody arrangement changed a few years ago. One thing that really helped me was thinking of the W-4 as a "withholding estimate" rather than a commitment. The key is making your best guess at the beginning of each year about what your tax situation will look like, then adjusting if things change. Since you now have full physical custody, you're technically the custodial parent, which gives you the default right to claim your son. If you want to continue the alternating arrangement with his mom, just make sure you both understand that you'll need to sign Form 8332 in the years when she claims him. For the W-4 strategy, I'd recommend updating it each January based on your plan for that tax year. If 2025 is your year to claim him, put down 2 allowances (you + your son). If 2026 is his mom's year, go back to just claiming yourself. Yes, it means updating your W-4 every year, but it's way better than getting hit with a surprise tax bill. The IRS won't penalize you for having the "wrong" W-4 during the year as long as you're making a good faith effort to estimate your taxes correctly. The penalties only come into play if you significantly underpay your actual tax liability. Hope this helps, and kudos on maintaining such a positive co-parenting relationship!

Has anyone actually successfully achieved "trader tax status" with the IRS? I keep hearing mixed things about whether day trading qualifies as a "business" or just as investment activity.

Great discussion here! I'm dealing with a similar situation and want to add a few considerations that might help others: One thing to really think about is the timing of setting up your business structure. If you're planning to elect Mark-to-Market status (Section 475), you need to make that election by April 15th of the year it takes effect, and it's generally easier to do this when you first establish your trading business rather than switching later. Also, don't forget about state taxes in your decision. Some states have different rules for S-Corps vs LLCs, and if you're doing well with trading, state tax implications could be significant depending on where you live. From my research, the "reasonable salary" requirement for S-Corps is probably the trickiest part. The IRS doesn't publish specific guidelines for traders, so you really need documentation showing what comparable professionals earn. I've seen suggestions ranging from 40-60% of net trading income as salary, but definitely get professional advice on this. One last thing - make sure whatever structure you choose, you're keeping meticulous records. Trading businesses get audited more frequently than other types of businesses, so having everything properly documented from day one is crucial.

One thing that helped me when I was confused about my transcript was focusing on just the key sections first instead of trying to understand everything at once. For a mortgage application, lenders typically care most about: 1. Your filing status and AGI from line 150 (this shows your tax return was filed) 2. Any balance owed or refund amount 3. Whether there are any current holds or unresolved issues The cycle dates and transaction codes can be overwhelming, but for mortgage purposes, they're usually not scrutinizing every detail unless there's a red flag. Start with those basics and then dig deeper into the codes if you need to understand something specific. Also, if you see any codes starting with 84X, 97X, or 420-424, those typically relate to Earned Income Credit or Child Tax Credit issues which are common but usually not concerning for mortgage applications.

Great question! I was in the exact same position when I first got my transcript - it really does look like hieroglyphics at first glance. Here's what helped me break it down: Your transcript is essentially a chronological record of everything that's happened with your tax account. The most important sections to focus on are: **Account Summary at the top** - Shows your filing status, number of exemptions, and adjusted gross income (AGI). This is probably what your mortgage lender cares about most. **Transaction Section** - Each line shows a different action. The dates are in YYYYMMDD format, so 20231204 would be December 4, 2023. The dollar amounts show debits (what you owed) and credits (payments, withholding, refunds). **Transaction Codes (TC)** - These 3-digit numbers tell you what happened: - TC 150: Your original return was processed - TC 806: Withholding or estimated tax payments - TC 846: Refund issued to you - TC 570: Account hold (usually temporary) For your mortgage application, they're mainly verifying that your reported income matches what the IRS has on file and that you've been filing your returns. Don't stress about understanding every single code - focus on the big picture first! If you see anything that looks concerning or confusing, feel free to share (with personal info removed) and we can help decode it!