This happened to me too! Check if you completed Form 8606 for non-deductible IRA contributions. It's super important to file this form every year you make non-deductible contributions, otherwise you might end up paying taxes twice on that money.

This is a really common confusion! At your income level with workplace retirement plan coverage, you're likely hitting the Traditional IRA deductibility phase-out limits that others mentioned. One quick way to verify this: look at Line 20 on your Form 1040 (Traditional IRA deduction). If it shows $0 or less than $6,500, then your contribution wasn't fully deductible due to income limits. Since you made a non-deductible Traditional IRA contribution, you absolutely need to file Form 8606 to track your basis in the account. This is crucial for avoiding double taxation when you eventually withdraw. Given your income level, you might want to consider doing a backdoor Roth IRA conversion instead. You'd contribute to Traditional IRA (non-deductible), then immediately convert to Roth. This way you get the tax-free growth benefit of a Roth IRA despite being over the income limits for direct Roth contributions. Your $930 tax reduction ($1,200 - $270) makes perfect sense if only the $3,000 capital loss was deductible. At roughly 24% marginal rate, that's about $720 in tax savings, which aligns with what you're seeing.

Yes, unfortunately that's exactly right - this is one of the most frustrating aspects of gambling taxation. Even if you're a net loser for the year, you still have to report all your winnings as income on your tax return. In your example, you'd report the $2,000 in winnings as "Other Income" on Schedule 1. Your $3,000 in losses can only be deducted if you itemize deductions on Schedule A, and even then only up to the amount of your winnings (so $2,000 max). If your total itemized deductions don't exceed the standard deduction ($13,850 for single filers in 2023), you're better off taking the standard deduction and can't claim the gambling losses at all. This means you could end up paying taxes on $2,000 of "income" even though you actually lost $1,000 overall. It's a terrible system for recreational gamblers, but that's how the tax code is written. This is why it's so important to keep detailed records and understand the tax implications before you start gambling regularly.

Setting up an LLC for gambling activities generally won't help you avoid these tax issues and could actually make things more complicated. The IRS treats gambling as a personal activity, not a business, for most recreational bettors. Even with an LLC, your gambling winnings would likely still be treated as personal income subject to the same rules. To qualify as a gambling "business" that could use normal business accounting (where net losses could offset other income), you'd need to meet very strict criteria: gambling must be your primary occupation, you'd need to show profit motive, maintain detailed business records, and demonstrate expertise in the field. The IRS is extremely skeptical of these claims and most recreational bettors wouldn't qualify. The reality is that the tax code is deliberately unfavorable to gambling because Congress wants to discourage it. Your best bet as a recreational gambler is to either: 1. Keep your gambling small enough that you can absorb the tax hit on gross winnings 2. Make sure you have enough other itemizable deductions to exceed the standard deduction 3. Track everything meticulously so you can at least minimize the tax impact through proper reporting The tax complexity is definitely a legitimate reason to think twice about getting heavily involved in sports betting.

When this happened to me, I found out the company used the wrong SSN. They had transposed two digits from someone else's number! I still reported the income on my Schedule C, but I also attached a statement explaining the SSN discrepancy. No problems from the IRS, but I did have to call the company multiple times to get them to issue a corrected form.

Whatever you do, don't ignore this! I made that mistake once thinking "they don't have my SSN so it won't matter" and ended up with a CP2000 notice from the IRS and penalties. Even if the 1099 has incorrect info, the IRS will eventually connect the dots.

One thing nobody mentioned - if you're donating inventory items regularly, make sure you're getting proper donation receipts. The IRS is super picky about documentation for non-cash donations. For anything over $250, you need a contemporaneous written acknowledgment, and if over $500, you also need to fill out Form 8283. I learned this the hard way when I had a bunch of eBay items I donated and couldn't take the deduction because I didn't have proper paperwork. Now I keep a donation log with original cost, FMV, date of donation, etc.

Just an FYI - cash accounting for small sellers is great but watch out for the inventory exception limits. If your business has average annual gross receipts over $26 million for the prior 3 years, or if you're in certain industries like mining or manufacturing, you can't use this exception. Also, if you maintain inventory in your accounting system for non-tax purposes (like for business tracking), make sure your tax preparer knows you're using the small business exception on your actual tax filing so they don't mistakenly treat you as accrual basis.

31% isn't actually that bad for California tbh. When I was making around 60k in LA, my withholding was closer to 35%! California's state income tax is no joke. One thing to consider is that there's actually a difference between your withholding rate and your effective tax rate. The withholding is what comes out of each paycheck, but your effective rate is what you actually pay after deductions, credits, etc. For example, my withholding was 35%, but after filing my taxes, my effective rate was only about 25% because I got a big refund. Still sucked seeing those small paychecks all year though.

Welcome to the high-tax club! I'm also a recent grad in California and went through the exact same shock. A few things that helped me understand what was happening: First, that 31% includes both your portion AND what feels like every tax California can think of. You've got federal income tax (probably around 12% at your salary), California state income tax (6-9% depending on your exact income), Social Security (6.2%), Medicare (1.45%), and that SDI (State Disability Insurance) at about 1.1%. The good news is you'll likely get some of this back when you file taxes, especially if you have student loan interest, contributed to a 401k, or qualify for other deductions. I got back about $2,800 my first year. Also check if your employer offers pre-tax benefits like health insurance, HSA, or 401k contributions - these reduce your taxable income and can lower your withholding. Even contributing just 3% to a 401k would save you money on taxes while building retirement savings. It sucks seeing such small paychecks, but you're not alone! California is expensive but the career opportunities often make up for it in the long run.