Based on your situation, you shouldn't be overly concerned about hobby classification. Having a profitable year followed by losses due to losing your main distribution channel actually tells a clear business story that the IRS would likely understand. A few key points that work in your favor: 1. **Substantial inventory ($135k)** - This is strong evidence of business intent. Hobbies don't typically involve six-figure inventory investments. 2. **Previous profitability** - Your $53k profit in 2022 demonstrates you can operate profitably, which is a major factor the IRS considers. 3. **External business disruption** - Losing your marketplace isn't a pattern of poor business management; it's an external factor that legitimate businesses sometimes face. To strengthen your position, document your efforts to rebuild: - Save all communications with potential new distributors - Keep records of marketing efforts and business development activities - Maintain separate business banking and proper bookkeeping - Consider keeping a business journal of your recovery efforts The IRS typically looks for patterns over multiple years, not isolated setbacks. Your situation shows business intent, professional operation, and legitimate profit motive. Focus on rebuilding your sales channels rather than worrying about classification issues that are unlikely to arise given your circumstances.

Your situation actually sounds very solid from a business classification perspective. The combination of substantial inventory, previous profitability, and a clear external disruption creates a strong narrative that this is a legitimate business facing temporary challenges rather than a hobby. A few additional thoughts that might help: **Documentation beyond the basics:** - Keep records of any professional development or industry education you pursue - Document market research efforts (even informal ones like checking competitor pricing) - Save any business insurance policies or professional licenses - Maintain records of business-related travel or meetings **The "businesslike manner" factor:** The IRS looks at whether you operate like other businesses in your industry. This includes things like having a business plan (even if informal), setting regular work hours, maintaining professional relationships with suppliers/customers, and adapting your strategy based on market conditions. **Your inventory situation actually helps:** That $135k inventory isn't just evidence of business intent - it also shows you're making rational business decisions by not liquidating at a massive loss. A hobby enthusiast might panic-sell, but a business owner strategically holds inventory while rebuilding distribution channels. The fact that you're actively concerned about tax implications and seeking advice also demonstrates business intent. Hobby participants typically don't worry about IRS classification rules. Focus your energy on rebuilding rather than worrying about classification issues that are very unlikely to materialize given your strong business indicators.

Before you make any decisions, calculate the actual difference between your options. Sometimes W2 benefits (especially health insurance, 401k matching, and other perks) are worth more than the tax deductions you'd get as a 1099. Run the numbers with: 1. Current situation - W2 with no deductions but all benefits 2. 1099 scenario - self-employment tax (15.3% for Medicare/SS) but business deductions 3. Hybrid model - keeping W2 job but with a legitimate side business Don't forget self-employment tax eats up a big chunk of 1099 income, plus you'd lose unemployment eligibility. For your truck, even with Section 179, you'd need to prove it's used primarily (>50%) for business.

Another option worth exploring is the home office deduction if you regularly use part of your home exclusively for work. Even as a W2 employee, if your employer requires you to work from home or if you maintain a home office for the convenience of your employer, you might qualify. For the travel between offices - if neither location is your "regular workplace" and you're traveling for business purposes, there could be some scenarios where this qualifies for reimbursement or deduction. But if one office is considered your regular workplace and you're just commuting to the other, that's typically not deductible. The key is documentation. Keep detailed records of all your expenses, mileage, and business purposes. Even if you can't deduct them now as a W2 employee, having this documentation will be crucial if you do transition to 1099 or set up a side business later. Also consider negotiating with your employer - since these marketing activities are bringing in more revenue for the company, they might be willing to reimburse some expenses or increase your compensation to offset these costs.

The hobby loss rule can be stressful, but you're actually in a stronger position than you might think. Having legitimate wholesale accounts with Southern Hobby and GTS Distribution, maintaining detailed QuickBooks records, and keeping all receipts shows you're operating like a real business - not a hobby. The 3-out-of-5 year profitability test is just one factor the IRS considers. They also look at whether you're making business-like changes to improve profitability, which it sounds like you are doing. The fact that you're actively evaluating whether to continue or dissolve shows business judgment. If you do decide to dissolve, you'll need to handle the inventory carefully. Any inventory you sell during wind-down is income, while inventory you keep for personal use would be treated as a distribution at fair market value. You can still deduct legitimate business expenses through the final dissolution. One suggestion: before dissolving, consider documenting any specific changes you've made or plan to make to improve profitability. This creates a paper trail showing business intent that could be valuable if the IRS ever questions your losses. The card market has been volatile, so external factors beyond your control might also support your case.

I've been through a similar situation with my consulting business that ran losses for the first few years. The hobby loss rule is definitely something to take seriously, but you're actually doing a lot of things right that work in your favor. The IRS uses a nine-factor test to determine business vs. hobby intent, and you're hitting several key factors: maintaining complete records, having legitimate wholesale supplier relationships, operating from a dedicated space, and most importantly - you're actively evaluating and making business decisions (like considering dissolution). One thing that really helped me was creating a written business plan that documented my strategy for achieving profitability. This doesn't have to be fancy - just outline what you've learned about which products have better margins, how you plan to reduce inventory costs, or any market trends you're adapting to. The trading card market volatility since 2021 actually works in your favor as an external factor affecting profitability. If you do dissolve, timing matters for tax purposes. You'll want to coordinate the final sale/distribution of inventory with your tax professional to optimize the treatment of remaining losses and any income from liquidation. But honestly, with your solid documentation and business practices, continuing might be worth considering if you can identify a clear path to better margins.

Has anyone tried applying for an advance from multiple tax prep companies? I got denied by H&R Block but wondering if I should try Jackson Hewitt or Liberty before just giving up on getting an advance this year.

Just want to point out that tax refund advances are basically payday loans with slightly better marketing. Even when you do get approved, there are usually fees hidden in the tax preparation costs. You're much better off just filing early and waiting the 2-3 weeks for the IRS to process your return. The advances made more sense years ago when refunds took 6-8 weeks, but now it's just not worth it.

Yes, OASDI is exactly the same as Social Security! OASDI stands for "Old-Age, Survivors, and Disability Insurance," which is the official name for what we commonly call Social Security. For 2025, the maximum annual OASDI contribution is $11,780 (6.2% of the $190,000 wage base limit). Based on your YTD amount of $9,342.18, you're getting close to hitting that cap - you have about $2,438 left to contribute. Once you reach that maximum, the OASDI deduction will stop appearing on your paychecks for the remainder of the year, which means you'll see a nice increase in your take-home pay (that extra 6.2%!). Most employers don't give advance notice - you'll just notice when your paycheck is suddenly larger. Given your current contribution level, you'll probably hit the cap within the next few months. It's actually a nice perk of higher earnings - those last paychecks of the year feel like bonuses when the OASDI withholding stops!

Yes, OASDI is exactly the same as Social Security! OASDI stands for "Old-Age, Survivors, and Disability Insurance," which is the official name for what we commonly call Social Security. For 2025, the maximum annual OASDI contribution is $11,780 (6.2% of the $190,000 wage base limit). Looking at your YTD amount of $9,342.18, you're getting close to hitting that cap - you have about $2,438 left before you reach the maximum. Once you hit that cap, the OASDI deduction will completely stop for the rest of the year, which means you'll see a nice 6.2% increase in your take-home pay for those remaining paychecks. It's like getting a temporary raise! Most employers don't notify you in advance - you'll just notice when your paycheck suddenly gets bigger. Based on your current contribution rate of $783.25 per paycheck, you'll probably hit the cap in about 3 more pay periods. So if you're paid biweekly, that's roughly 6 weeks away. Mark your calendar - those holiday season paychecks are going to look great!