I went through this exact same confusion last year! The key thing that helped me understand it was thinking about it from the IRS perspective - they want to see the full economic activity of your business, not just what hits your bank account after third parties take their cuts. So yes, report the gross amount customers pay as income, then deduct PayPal fees as a business expense. This is actually beneficial for you because it gives you a larger deduction and more accurately reflects your business activity. One practical tip: PayPal's monthly statements make this pretty easy to track. They show both your gross sales and total fees for each month, so you don't have to calculate transaction by transaction. I just download the monthly summaries and use those numbers for my tax prep. Also worth noting - if you're using PayPal Goods & Services, those fees are definitely deductible business expenses. But if you ever use Friends & Family for business (which you shouldn't), those transactions get murkier from a tax perspective since that's technically not a business payment method.

Great question! I had the same confusion when I started my business. You definitely want to report the FULL amount customers pay as income and deduct the PayPal fees separately as business expenses on Schedule C. Here's why this matters: If you only report the net amount, you're essentially letting PayPal reduce your income without getting the tax benefit of those fees as deductions. By reporting gross income and deducting fees, you get the full business expense deduction you're entitled to. Also, keep in mind that if you receive a 1099-K from PayPal (which reports the gross amounts to the IRS), your tax return needs to match what they've already told the IRS you received. If you only report the net amounts, there will be a discrepancy that could trigger questions. The fees typically go under "Commissions and fees" or "Payment processing fees" on your Schedule C. Make sure to keep good records - I save my PayPal monthly statements which clearly show both gross receipts and total fees charged. This makes tax prep much easier and gives you solid documentation if the IRS ever has questions. One last tip: set up a separate PayPal account just for business if you haven't already. Mixing personal and business transactions makes everything more complicated come tax time!

I had a friend who didn't report about $1200 in side income from these apps. The IRS sent him a letter 18 months later asking about it! Turns out the person who paid him filed it as a business expense, which created a mismatch. Not worth the stress IMO.

Thanks for asking this question - I was wondering the same thing! Based on all the responses here, it's clear that even small amounts like your $650 need to be reported. I appreciate everyone sharing their experiences with the various tools and services mentioned. One thing I'd add is to make sure you keep good records of what the payments were for. If it was truly income from work/services, you'll need to report it. But if any of those CashApp payments were reimbursements from friends (like splitting dinner bills) or gifts, those might not be taxable income. The key is being able to document the nature of each payment. It sounds like the safest approach is to report everything and let the IRS sort it out rather than risk getting a letter later asking questions you can't easily answer.

Has anyone tried the W-2 import feature in TurboTax for a situation like this? I'm curious if it would pull in both W-2s or just one, and if it would handle the differences automatically.

I just went through this exact situation last month! When you have two W-2s like this from the same employer, it's usually because of a mid-year change in tax jurisdictions (which matches your husband's office move). Here's what worked for me: Use the Federal/State W-2 as your primary form in TurboTax. This has all your complete federal wage and tax information. The City/Local W-2 is supplementary and should only be used for the local tax sections. For Box 12 specifically, the differences you're seeing make sense: - The lower Code C amount ($390 vs $1,350) on the City/Local form reflects the reduced life insurance benefit calculation after the move - The Code D difference ($10,900 vs $11,800) shows 401k contributions were slightly different between the two periods - Code AA only appears on the Federal/State form because that's where the complete annual Roth 401k contribution total is reported TurboTax's import feature will likely only grab the Federal/State W-2, so you'll need to manually enter the city tax amounts in the local tax section. Don't worry about "double reporting" - the software keeps federal and local separate. Just make sure you're using the right form for each section!

Bit of a tangent, but what gambling log app do people recommend? I've been using a paper notebook which is getting unwieldy. Is there a good mobile app that lets you log sessions and wins/losses on the go?

This is exactly why I always recommend keeping contemporaneous notes while gambling! The key thing to remember is that your gambling log should reflect the actual time you were gambling, not when the casino's "gaming day" officially ends. Here's what I do: I note the actual calendar date and time when I start and stop gambling, regardless of what the casino considers their "gaming day." If I'm playing at 2am on February 15th, that's what goes in my log as February 15th activity. When I get a W-2G that shows February 14th for that same jackpot, I make a note in my log like "W-2G dated 2/14 due to casino gaming day policy" next to the February 15th entry. This creates a clear audit trail. The IRS has been pretty consistent that they want to see gambling activity tracked by actual calendar days, not casino accounting periods. Your approach of wanting to stay organized by calendar days is correct - just make sure you have those reconciliation notes to explain any date discrepancies on your tax forms.

As someone who's been through this exact same situation, I can confirm what everyone else is saying - TurboTax handles everything automatically once the IRS releases your refund. The timing is really consistent too. I've used the refund deduction option for the past 3 years and it's always been 1-2 business days from when WMR shows "sent" to when the net amount (after TurboTax fees) appears in my account. Since your expected date is April 3rd and the kids' activities don't start until April 5th, you'll have a comfortable buffer. One thing I'd suggest is setting up account alerts with your bank so you get notified immediately when the deposit hits - that way you can finalize any last-minute planning for those spring activities without stress!

Just wanted to add another perspective as someone who's used TurboTax's refund deduction option multiple times! The process really is as straightforward as everyone's describing. One thing that might help with your peace of mind - you can actually log into your TurboTax account and see a detailed breakdown of exactly what fees will be deducted before they take them out. This helped me budget precisely when I was in a similar situation with tight timing for family expenses. Also, most banks process ACH deposits overnight, so if WMR shows your refund as "sent" on April 3rd (which is a Thursday), there's a good chance you'll see the money (minus TurboTax fees) in your account by Friday morning April 4th, giving you a full day buffer before the kids' activities start. The automatic nature of the whole process is actually a relief once you get used to it - no action needed on your part at all!