This has been such an informative discussion! As someone who's been putting off starting affiliate marketing because of tax confusion, you've all really helped clarify things. I'm definitely going to get an EIN - the privacy protection alone makes it worth it. One thing I'm curious about that hasn't been mentioned yet - if I get an EIN now but don't actually start making any affiliate income until next year, does that cause any issues? Like, do I need to file anything special just for having the EIN, or does it only matter once I actually start earning money? Also, for those tracking expenses, do you separate out expenses that are partially personal use? For example, if I upgrade my internet plan partly for affiliate work but also just because I wanted faster speeds for streaming, how do you handle that on the business side? Thanks again everyone - this community has been incredibly helpful for a newcomer like me!

This thread has been incredibly helpful! I just wanted to add my experience as someone who recently went through this process. I got my EIN about 6 months ago specifically for affiliate marketing, and it's been one of the best decisions I made. One thing I learned that might help others - when you're filling out W-9 forms for affiliate programs, make sure you select the correct tax classification. As a sole proprietor with an EIN, you'll typically check "Individual/sole proprietor" and then write your EIN in the tax ID field instead of your SSN. Some people get confused and think they need to check "LLC" or something else, but if you haven't formed a separate business entity, you're still an individual/sole proprietor even with an EIN. Also, I'd recommend keeping a simple log of which affiliate programs you've provided your EIN to and when. This has helped me anticipate which 1099s to expect at the end of the year and follow up if any seem to be missing. The organization aspect really does make tax season much less stressful! For anyone still hesitant - the whole process took me maybe 15 minutes on the IRS website, and the peace of mind has been worth so much more than that small time investment.

The IRS is such a joke fr taking 6 months to verify basic info 🤡

Wow, 6 months is insane but at least you got it sorted! Looking at all those codes and adjustments, it seems like the IRS was doing a deep dive review of your return. The fact that they reduced your prior tax assessment by over $6k in September suggests they found something significant in your favor. Quick question - did you have any major life changes or income sources that might have triggered the initial freeze? Trying to figure out if there's a pattern to these long delays 🤔

You might also qualify for the Qualified Business Income (QBI) deduction, which lets self-employed people deduct up to 20% of their business income. Though with your income level and the self-employment tax situation, it probably won't zero out your taxes completely.

One thing that might help reduce your self-employment tax burden is to make sure you're deducting the home office expenses if you work from home. As a graphic designer, if you have a dedicated space in your home that you use exclusively for your design work, you can deduct a portion of your rent/mortgage, utilities, and other home expenses. You can either use the simplified method (up to 300 sq ft at $5 per sq ft, max $1,500) or calculate the actual expenses based on the percentage of your home used for business. This directly reduces your net self-employment income, which means less self-employment tax. Also don't forget about equipment depreciation - your computer, monitor, drawing tablet, software licenses, etc. can all be deducted either as current expenses or depreciated over time depending on their cost. Every dollar you can legitimately deduct as a business expense saves you about 15 cents in self-employment tax.

Nina, I completely understand the overwhelming stress you're experiencing with that debt burden. Before you make any decisions about your 401k, I want to share a few additional options that might help you avoid touching your retirement savings entirely. First, have you looked into balance transfer credit cards with 0% introductory APR periods? If you still have decent credit, you might qualify for cards offering 12-21 months at 0% interest, which could give you breathing room to pay down the principal without the crushing interest charges. Second, consider reaching out to local community organizations, churches, or credit unions that sometimes offer emergency financial assistance or low-interest consolidation loans. Many credit unions have "payday alternative loans" or emergency loans at much lower rates than credit cards. Third, if you have any assets like a car that's paid off, you might explore a secured loan against it at a much lower interest rate than your credit cards - just be very careful about your ability to repay. The key thing everyone here is emphasizing is that your 401k should truly be the last resort. Between taxes, penalties, and lost compound growth, you could end up sacrificing $100k+ of retirement wealth to solve a $25k problem today. Your future self will thank you for exhausting every other option first. Have you tried calling 2-1-1 (dial 211)? It's a nationwide service that connects people with local financial assistance programs that many people don't know exist.

Nina, I can really feel your desperation in this situation, and I want to help you avoid what could be a very costly mistake. As others have mentioned, misrepresenting your hardship reason isn't just risky - it could lead to fraud charges that would make your current financial problems look minor in comparison. Before you consider touching your 401k, I'd strongly encourage you to explore these steps in order: 1) Contact your credit card companies immediately to ask about hardship programs - many will reduce interest rates or payments if you're proactive, 2) Look into nonprofit credit counseling through NFCC.org - they can often negotiate rates down to 6-8%, 3) Check if your 401k allows loans instead of withdrawals - you'd pay interest to yourself with no taxes or penalties. I also want to emphasize something that might not be obvious: that $25k in your 401k today could easily be worth $150k-200k by retirement with compound growth. You'd essentially be trading your future financial security for a temporary fix to today's problem. One more resource to consider: many employers have Employee Assistance Programs (EAPs) that offer financial counseling and sometimes even emergency loans or grants. It's worth checking with HR to see what might be available. Your situation feels impossible right now, but there are usually more options than we initially see when we're stressed and overwhelmed.

Am I completely misunderstanding something? I thought Roth contributions were always made with after-tax dollars, so why would lowering your MAGI matter for contribution eligibility? Isn't the whole point that you pay taxes now so you don't pay them later in retirement?

Based on everyone's helpful responses here, it sounds like your $4,000 charitable donation alone won't help you get under the Roth IRA income limits unless you have other significant itemized deductions totaling over $14,600. Instead, I'd recommend focusing on "above-the-line" deductions that directly reduce your MAGI regardless of whether you itemize: 1. Max out your 401(k) contributions if your employer offers one ($23,500 limit for 2025) 2. Contribute to an HSA if you're eligible ($4,150 for individual coverage in 2025) 3. Consider a traditional IRA contribution if you're not covered by a workplace plan With your $142k income, you'd only need to reduce your MAGI by about $2,000-3,000 to get comfortably under the phase-out threshold. An HSA contribution alone could get you there while also giving you triple tax benefits (deductible contribution, tax-free growth, tax-free withdrawals for medical expenses). You could still make those charitable donations for the good causes you support, but don't count on them to help with your Roth eligibility unless you're already planning to itemize for other reasons.