Has anyone mentioned the business income limitation for Section 179? You can't deduct more than your business income for the year. So if you only have $4k in business income, that's your maximum Section 179 deduction regardless of the vehicle cost.

This is exactly the kind of question I love seeing here! As someone who's helped several small business owners navigate vehicle deductions, I want to add a few practical considerations to the excellent advice already given. First, @Kingston Bellamy nailed the technical aspects, but let me add this: with only $3,500-4,500 in expected revenue, you might want to seriously consider the standard mileage rate that @Raul Neal mentioned. Here's why - even if you qualify for the full Section 179 deduction, you're limited by your business income. So you'd only be able to deduct $4,500 maximum in year one, with the rest carried forward. However, if you're confident your woodworking business will grow significantly in years 2-3, then taking the Section 179 approach makes sense because you can use those carryforwards. One thing I always tell clients: make sure you have a separate business bank account and keep immaculate records from day one. The IRS scrutinizes vehicle deductions heavily, especially for newer businesses. Document every business trip with date, destination, business purpose, and odometer readings. Also, since you mentioned this is currently a hobby, make sure you're operating with profit motive and treating it as a real business. The IRS has specific rules about hobby vs. business classification that could affect all your deductions. The F-150 Lightning is an awesome choice - just make sure the business case supports the tax strategy!

I went through something very similar when I switched jobs mid-year and my new employer somehow set up my withholding incorrectly. The good news is that with 2 kids under 10, you have some solid tax credits working in your favor. The Child Tax Credit alone could give you up to $4,000 ($2,000 per child), and depending on your income level, a significant portion of that can be refundable even if you paid zero in withholding. The Earned Income Tax Credit could also apply if your income falls within certain ranges - with 2 qualifying children, this can be worth thousands more. Your health issues might also qualify you to file as Head of Household, which has better tax brackets and a higher standard deduction. I'd definitely recommend running your numbers through some tax software to get a realistic picture, but don't panic - families with dependents often come out better than they expect, even with withholding issues.

The EITC income limits for 2023 (filing in 2024) with 2 qualifying children are pretty generous - you can earn up to about $50,594 if filing single or $56,844 if married filing jointly and still get some credit. The maximum EITC with 2 kids is $6,164, which phases out as your income increases. Combined with the Child Tax Credit, you could potentially see a substantial refund even with zero withholding. Just make sure your kids meet the qualifying child requirements (age, relationship, residency tests) and that they have valid Social Security Numbers. Also, definitely fix your W-4 going forward to avoid potential underpayment penalties next year. Your situation with health issues and being the primary caregiver for 2 young kids sounds like it would qualify you for Head of Household status, which would give you even better tax treatment.

Has the nonprofit actually filed these late 1099s with the IRS yet? If not, maybe you could talk to them about only filing for the most recent 3 years since that's typically how far back the IRS looks anyway. The nonprofit might be willing to work with you if they understand the financial hardship this could cause.

This is such a stressful situation for your volunteer, and I really feel for them. I went through something similar a few years ago when I discovered I hadn't been reporting some freelance income properly. One thing that might help is to have the volunteer gather any documentation they can find about expenses related to their volunteer work - even partial records can be helpful. Things like: - Cell phone records showing calls/texts related to volunteer activities - Calendar entries or emails that could help reconstruct mileage - Any photos they might have taken during volunteer events that are timestamped - Bank or credit card statements showing purchases that could be volunteer-related Also, depending on the volunteer's income level, they might qualify for free tax preparation help through the VITA (Volunteer Income Tax Assistance) program. These volunteers are trained to handle situations exactly like this, and since your volunteer is on a limited income, they would likely qualify for the service. The most important thing is that they don't ignore this situation. The IRS is generally more willing to work with people who are proactive about fixing tax issues rather than those who try to avoid them. With the right approach and documentation, this might not be the financial disaster it seems like at first glance.

The $600 threshold is definitely real now - I learned this the hard way when I got a 1099-K for my pet sitting side business last year. Even though you might not get the form, you're still required to report all income. One thing that really helped me was setting up a separate savings account and putting aside about 25-30% of each payment for taxes (covers both income tax and self-employment tax). That way when tax time comes, you're not scrambling to find money to pay what you owe. Also, don't stress too much about perfect record keeping for what's already happened - the IRS accepts reasonable documentation. Your Apple Cash screenshots showing dates, amounts, and who paid you should be sufficient. Just start keeping better records going forward with a simple spreadsheet tracking income and any business expenses. You're being smart by thinking about this now rather than ignoring it. Most people in your situation who run into trouble are the ones who never report anything at all, not the ones trying to do things right.

The key thing to remember is that you're already ahead of most people by thinking about this proactively! I run a small freelance writing business and went through this same panic when I first started making money through payment apps. A few practical tips from my experience: 1. Yes, you need to report this income on Schedule C regardless of whether you get a 1099-K form. The $600 threshold just determines if payment processors send you and the IRS a form, but your obligation to report income hasn't changed. 2. For documentation, your Apple Cash screenshots are actually fine - just make sure they show the date, amount, and ideally what the payment was for. Create a simple spreadsheet now with columns for date, amount, client/description, and keep it updated going forward. 3. Don't forget about business deductions! Things like repair supplies, any software you use for tutoring, a portion of your phone bill, even some textbooks if you reference them for tutoring could potentially be deductible. 4. Consider opening a separate checking account for your business income. Makes tracking so much easier and looks more professional if you ever do get audited. You don't necessarily need a business license for this scale, but check your college's policies too - some schools have rules about students running businesses on campus or in dorms. The IRS isn't going to come knocking down your door over $4,800, especially if you report it properly. Just get organized now and you'll be fine!

Are you and your fiancée filing taxes together? Because if so, I think there might be a different issue - you can't claim someone as a dependent if you're filing a joint return with them.

Just to add another perspective - I work as a tax preparer and see this confusion all the time! You're absolutely right that it's the net profit from Schedule C that counts toward the qualifying relative income test, not gross receipts. One thing to also keep in mind is that if you had any estimated tax payments or self-employment tax throughout the year, those don't reduce your "gross income" for dependency purposes - it's still the $2,700 net profit that counts. The self-employment tax is calculated separately and doesn't affect whether you meet the income test. Also, since you mentioned you're getting married next year, just be aware that once you're married, you'll need to decide whether to file jointly (which would be more beneficial in most cases) or separately if one of you wants to continue being claimed as a dependent by someone else. But that's a problem for next year's taxes!