Has anyone used FreeTaxUSA for reporting Twitch income? TurboTax keeps trying to charge me for the self-employment version even though I just need to file a Schedule E for royalties.

This is exactly the kind of confusion I had when I first started getting 1099s from my side income! The distinction between royalties and self-employment income is really important and can save you money. Just to add to what others have said - since you're operating at a net loss, make sure you keep detailed records of all your streaming-related expenses (equipment, software subscriptions, games, internet upgrades, etc.). Even though you're reporting on Schedule E for the royalty income, you can still deduct ordinary and necessary expenses against that income. Also, don't let TurboTax upsell you into the self-employment package if you don't need it! The basic version should handle Schedule E just fine. If your tax software is pushing you toward Schedule C, it's probably because it's seeing "1099" and assuming it's all self-employment income, but as others have explained, the 1099-MISC Box 2 royalties are different. One last tip - keep good documentation about the hobby vs. business question. The IRS looks at factors like whether you're trying to make a profit, how much time you spend on it, and whether you have the expertise to make it profitable. Since you mentioned you're still in the "costs money" phase, documenting your efforts to grow the channel and become profitable could be helpful if this ever comes up.

One additional strategy to consider is the potential for a partial exclusion even if you don't meet the full 2-year requirement. If you have to sell before completing 24 months due to unforeseen circumstances (job change, health issues, etc.), you may still qualify for a partial Section 121 exclusion based on the time you did live there as your primary residence. Also, don't forget about the tax implications of your current primary residence. If you've lived there for more than 2 years and it has appreciated significantly, you might want to consider which property has more potential gain that could benefit from the exclusion. Sometimes the math works better to keep the rental as rental and sell the current primary residence first, then do the conversion strategy later. Given your overtime income situation, another factor is timing the sale to occur in a year when your regular income might be lower (maybe a year with less overtime), which could help you stay under the NIIT threshold and potentially in a lower capital gains tax bracket. Tax planning for real estate sales really benefits from looking at the bigger picture across multiple tax years.

As someone who's been through multiple property sales and conversions, I'd strongly recommend getting a tax professional to run the actual numbers before making your decision. While the advice here about the Section 121 exclusion and your friend's suggestion is generally sound, your specific situation has several moving parts that could significantly impact which strategy is actually best. Consider that you'll need to factor in: 1) the actual appreciation amounts on each property, 2) how much depreciation you've claimed/should have claimed on the rental, 3) your income projections for the next few years, and 4) the carrying costs of holding properties longer. The "obvious" choice isn't always the most profitable when you run real numbers. Also think about your personal situation - living in a rental property for 2+ years to save on taxes sounds great in theory, but make sure it's practical for your lifestyle. If the rental is smaller, in a less desirable location, or would significantly impact your quality of life, the tax savings might not be worth it. Sometimes the best financial decision includes factors beyond just minimizing taxes. That said, with current property values, the potential tax savings from the primary residence exclusion could easily be $40,000-80,000+, which is definitely worth the effort to analyze properly.

I'm a bit confused. What exactly is Box 14 used for on a W-2? Is that even taxable income?

I actually work in payroll and see this situation fairly often! When box 14 has a tiny amount but box 1 is blank, it's usually something like a final expense reimbursement, a small bonus adjustment, or even a rounding error from benefits calculations that got processed after your last regular paycheck. The key thing is to look at what's written next to that 6 cents in box 14 - there should be a description or code. If it just says "Other" with no explanation, you can definitely enter $0 in box 1 for TurboTax. Sometimes you need to go into the advanced W-2 entry mode rather than the simplified version. If TurboTax keeps rejecting it, try FreeTaxUSA or Credit Karma Tax - they tend to be more flexible with unusual W-2 situations. You shouldn't have to paper file for something this minor!

Wait im confused. I've been selling on Etsy for years and never worried about this. I just report whatever is on my 1099k. Are you guys saying im doing it wrong??? Now im stressing that I've been doing my taxes incorrectly this whole time!

As someone who's been dealing with this exact issue across multiple platforms (eBay, Etsy, Amazon), I can confirm this timing difference is incredibly frustrating. What helped me was creating a simple reconciliation spreadsheet that tracks three columns: 1) Sale date, 2) Payment received date, and 3) Platform payout date. This way I can easily see which sales fall into different tax years based on when funds were actually available. I decided to stick with cash basis accounting to match my 1099-Ks, even though it means some December sales don't show up as income until the following year when the platforms release the funds. The key thing I learned is that consistency matters more than which method you choose. Pick either cash or accrual and stick with it year after year. I keep detailed notes in my records explaining any timing differences, which gives me peace of mind if I ever need to explain the numbers to the IRS. For what it's worth, my CPA told me that most small online sellers use cash basis specifically because it eliminates this headache. The platforms are essentially acting as your payment processor, so treating income as received when they release it makes perfect sense from an accounting standpoint.

Just wanna add that if you're not making a profit for several years, the IRS might classify your farm as a hobby rather than a business. Generally, they expect you to show a profit in 3 out of 5 consecutive years (though the rule is 2 out of 7 years for horse operations). If you get classified as a hobby, you lose all those business deductions. So document EVERYTHING that shows you're trying to make a profit - your business plan, marketing efforts, education/training, improvements aimed at efficiency, etc.

Something that hasn't been mentioned yet is the importance of keeping a detailed activity log from day one. I learned this the hard way when the IRS audited my small farm operation three years in. They wanted to see proof that I was spending substantial time on legitimate business activities, not just weekend hobby farming. I'd recommend tracking your hours weekly - time spent researching markets, maintaining equipment, caring for animals, preparing land, etc. Also document any educational activities like attending farming workshops, reading agricultural publications, or consulting with extension agents. This creates a paper trail showing business intent even before you have revenue. One more tip: consider getting your farm business properly registered and obtaining any necessary licenses or permits for your area, even if you're not selling yet. Having official recognition as an agricultural operation strengthens your position if questions arise about business legitimacy.