The photography business loss might raise some red flags since the expenses are much higher than the income. Make sure you can prove you're trying to make a profit. Take classes to improve skills, have a business plan showing projected path to profitability, advertise your services, maintain separate business accounts, etc. I've been running a photography business for years and had losses the first two years. As long as you treat it like a serious business and not a hobby, you should be fine claiming the losses.

Great question! Yes, you'll definitely need separate Schedule C forms for each business. The IRS considers these distinct activities - your jewelry business, delivery work, and photography are all different types of operations with different income streams and expense categories. For your photography business showing a loss, you can absolutely deduct those losses against your other income as long as you're operating it as a legitimate business (not a hobby). The key is demonstrating profit motive - keep records of your business plan, marketing efforts, time invested, and steps you're taking to improve profitability. One thing to watch out for: with $19k in equipment expenses against $6.8k income, make sure you're properly depreciating larger equipment purchases rather than deducting them all in one year. Camera gear, lighting equipment, etc. typically need to be depreciated over several years unless you elect Section 179 or bonus depreciation. Also consider whether some of those equipment purchases might qualify for the Section 179 deduction, which could let you deduct up to $1,160,000 in qualifying business equipment in the year you placed it in service (for 2024). This could be beneficial for your photography business if the equipment qualifies.

One piece of advice - make sure you keep track of all your interest throughout the year, even if it's small amounts. My HYSA started with really competitive rates last year (4.5%) but dropped to 3.75% by year end, and I earned just over $200 in interest. When tax time came, I had forgotten about one of my accounts that only earned like $8 in interest, and didn't receive a 1099-INT for it (since it was under $10). But when I did my taxes, I realized I should have included it anyway. Not that the IRS would come after you for a dollar or two in taxes, but technically you're supposed to report ALL interest.

I'm in a very similar situation! Just wanted to add that if you're doing gig work and getting paid in cash, you might want to consider whether any of that income needs to be reported as self-employment income on Schedule C. Even though it's cash and you might not get 1099s, if you're earning more than $400 from self-employment in a year, you're technically required to report it and pay self-employment taxes. This could actually work in your favor though - if you do need to file for the self-employment income, then reporting your interest income becomes part of the same return rather than a separate concern. Plus, you might be able to deduct some business expenses from your gig work that could offset both the self-employment tax and any tax on your interest. I'd recommend keeping good records of both your gig income and any related expenses (gas, supplies, etc.) alongside tracking your interest earnings. The combination might put you in a different filing situation than just having interest alone.

This is exactly the kind of complex tax situation where having professional guidance really pays off. Your 1099-R is actually correct - financial institutions are required to report the full distribution amount because they don't track your basis (after-tax contributions). The key is Form 8606, which calculates the taxable vs. non-taxable portions using the pro-rata rule that Noah mentioned. Based on your numbers, you should only owe taxes on about $7,600 of the $20,300 conversion. A few important reminders: 1. Make sure you have documentation of all your non-deductible contributions ($8,000 + $4,700) 2. TurboTax should ask about IRA basis when you enter the 1099-R - if it doesn't, search for "non-deductible IRA contributions" 3. Double-check that Form 8606 is generated and shows the correct basis amount 4. Don't forget about state tax implications If you're still having trouble getting TurboTax to recognize your basis, you might want to consider consulting a tax professional for this year, especially given the complexity of your situation with multiple types of contributions and the recharacterization.

Your question about documentation is spot-on - this is crucial for IRA basis tracking! Here's what you should definitely keep: **Essential Documentation:** - All tax returns with Form 8606 (these are your primary proof of basis) - Form 5498 from your IRA custodian showing contributions for each year - Any correspondence about recharacterizations or rollovers - Records of any distributions that reduced your basis **Good to Have:** - Bank statements showing IRA contributions (not strictly necessary but helpful) - Investment statements showing account values at year-end - Any worksheets you used to calculate basis The IRS generally accepts your filed Form 8606 as proof of basis unless they have reason to question it. Your old tax returns are usually sufficient documentation. Regarding audits on Roth conversions - they're relatively uncommon unless there are red flags like missing Forms 8606 or inconsistent reporting across years. If audited, the IRS typically wants to see: 1. Your basis calculation (Form 8606 history) 2. Proof of the non-deductible contributions (Form 5498s) 3. Documentation of the conversion transaction itself With your $3K non-deductible and $2K pre-tax situation, you'd only owe taxes on $1,200 of a full $5K conversion using the pro-rata rule. Make sure to file Form 8606 this year to establish your basis properly!

Has anyone used TurboSelf-Employed for an LLC situation like this? My business is similar and I'm trying to decide if I should use software or hire someone this year.

This is such a common area of confusion for new business owners! Just to add some clarity to what others have shared - the key distinction is timing and nature of the expenses. Since you made your first sales in November, that's when your business "began operations" in the IRS's view. Any expenses you incurred before November would potentially qualify as startup costs (up to the $5,000 first-year deduction limit), while expenses after November are regular business deductions. Your equipment purchases from July would likely fall under startup costs timeline-wise, but as others correctly noted, they're treated as capital expenditures regardless. The good news is Section 179 or bonus depreciation often gives you a better tax benefit than the startup cost treatment anyway! For your website and accounting setup costs - if these were actual out-of-pocket expenses (not just your time), they could qualify as startup costs. Things like domain registration, hosting fees, accounting software subscriptions, etc. would count. One tip: keep detailed records of when each expense occurred relative to when you started generating revenue. This timeline becomes crucial for proper tax treatment.

I'm in almost the exact same boat as the original poster - filed my 2021 taxes way late and got hit with penalties that I've since paid off. This thread has been absolutely invaluable for figuring out the Form 843 process! One thing I wanted to add that might help others: I discovered that if you're requesting penalty relief for both failure-to-file AND failure-to-pay penalties (which often happen together), you need to be specific about which penalties you're requesting relief for in Section 7 of Form 843. Don't just write "all penalties" - actually list the specific penalty types and amounts from your notices. Also, for anyone wondering about the mailing address confusion that the original poster mentioned - I found that the IRS has a specific Form 843 where-to-file tool on their website that asks for your state and the type of request you're making. It gives you the exact address based on your specific situation, which eliminates the guesswork. The certified mail + fax combination approach that several people mentioned sounds like the smartest strategy. I'm planning to do the same thing - fax first for speed, then certified mail as backup with a note referencing the fax date and confirmation number. Thanks everyone for sharing your experiences! It's so helpful to hear real success stories when you're dealing with this stressful situation.

As someone who just went through this exact process successfully, I wanted to share a few additional tips that really helped me get my penalty relief approved. First, regarding the penalty breakdown that NebulaNova asked about - your IRS notices should show codes like "FTF" (failure to file) and "FTP" (failure to pay) along with the amounts. If your notice just shows a lump sum, you can call the IRS transcript line at 1-800-908-9946 and request an account transcript, which will break down each penalty type clearly. Second, I found it really helpful to include a brief cover letter that literally says "I am requesting penalty relief under both First Time Penalty Abatement (if eligible) and Reasonable Cause as alternative grounds." This made it crystal clear to the processor what I was asking for. Third, when documenting your reasonable cause timeline, include not just when the hardship occurred, but also when you became aware you needed to file and what steps you took immediately after. The IRS wants to see that you acted promptly once you were able to. I submitted mine using the dual fax/certified mail approach mentioned throughout this thread and got approved in about 9 weeks. Got back $723 in penalties and related interest. The key really is being thorough, organized, and making the reviewer's job as easy as possible. The tools people mentioned (taxr.ai for form review and Claimyr for IRS contact) were also genuinely helpful for double-checking everything before submission.