Based on my experience as a tax professional, I'd strongly recommend faxing your response. The IRS has been dealing with massive paper processing backlogs since the pandemic, and mailed documents can sit in warehouses for months before being scanned into their system. A few additional tips for your fax submission: - Include a cover sheet with your name, SSN, tax year (2018), and the notice number - Write your SSN and the notice number on every page you send - Fax during business hours (9am-4pm) to ensure it goes through properly - Keep the transmission confirmation sheet as proof of delivery Since you're dealing with education credits and an amended return, make sure you're sending everything they need in one go. The IRS often requests additional documentation if something is missing, which can delay your $4K refund by several more months. Given that you'd pass the post offices anyway on your way to fax, the extra drive time is definitely worth the faster processing you'll get. Good luck with your refund!

Great advice from everyone here! I've been dealing with IRS correspondence for years and can confirm that faxing is definitely the way to go right now. The mail processing delays are still really bad - I had a client who mailed documents in March 2022 and they weren't processed until October. One additional tip: when you fax your response, send it to the specific fax number listed on your notice, not the general IRS fax lines. Each notice type has its own processing center, and using the wrong fax number can cause delays even with electronic submission. Also, since you mentioned this is about education credits, make sure you understand exactly what the IRS is questioning. Sometimes they need more than just the 1098-T - they might want proof of enrollment, transcripts, or receipts for qualified expenses. The notice should specify exactly what they're looking for, but if you're unsure, it's worth getting clarification before you send anything. With a $4K refund on the line and a firm deadline, the extra drive to your office is a small price to pay for the peace of mind and faster processing you'll get with faxing!

Have any other Patreon artists here had issues with how to categorize different tier rewards for tax purposes? I offer digital downloads at my base tier, physical prints at the middle tier, and custom commissions at the highest tier. Not sure if I should be treating all of this as the same business or if I need to split it up somehow on my taxes. Also - what tax software are people using that handles Patreon income well? I tried using FreeFileFillableForms last year and it was a nightmare.

Welcome to the creative entrepreneur tax world! You're absolutely right to check "Individual/sole proprietor or single-member LLC" on your W-9 - that's exactly what you are as an independent artist. One thing I'd add to the great advice already given: since you're consistently making $850/month ($10,200 annually), you'll definitely want to start thinking about quarterly estimated tax payments. The general rule is if you'll owe $1,000 or more in taxes on your self-employment income, you should be making quarterly payments to avoid underpayment penalties. Also, start keeping meticulous records NOW if you haven't already. Track every business expense - art supplies, software subscriptions, equipment, even a portion of your internet bill. As a digital artist, you might be surprised how many legitimate business deductions you have. Consider opening a separate checking account just for your art business to make tracking easier. Congratulations on building a successful Patreon! It's exciting to see artists making it work in the digital space.

Consider utilizing the NJ Taxation Regional Information Centers for in-person assistance. These offices can provide real-time status updates beyond what's available online. Bring your filing confirmation, ID, and any correspondence received. The Trenton and Newark offices typically have shorter wait times than Camden or Northfield. Some taxpayers report success requesting expedited processing when facing documented financial hardship.

I'm experiencing the exact same issue! Filed my NJ return on February 12th and it's still showing "processing" status. Federal refund came through weeks ago, but NJ is dragging their feet. What's particularly frustrating is that I called the NJ Division of Taxation hotline three times over the past two weeks and each time I either got disconnected after an hour-long hold or reached someone who could only tell me "your return is being processed" without any timeline. My return is pretty straightforward - just W-2 income and standard deductions, no property tax credits or business income. Based on what others are saying here, it sounds like even simple returns are taking 8+ weeks this year. Has anyone had success with visiting the regional offices in person? I'm considering driving to the Trenton office if it means getting some actual answers about when I can expect my refund.

As someone who's been in real estate development for 15 years, I'd strongly recommend consulting with a CPA who specializes in real estate. The dealer vs investor status isn't always clear-cut, and I've had projects where we were able to make strong arguments for investor treatment even though we were developing properties.

I've been through this exact situation with my development projects. One key factor that hasn't been mentioned yet is the frequency and scale of your development activities. The IRS looks at whether real estate development is your primary business or just occasional transactions. If you're doing multiple developments per year with the intent to sell, you're almost certainly going to be classified as a dealer. For dealer status, you'll need to report expenses as they occur on Schedule C - this includes your holding costs, permits, materials, labor, etc. The profit gets treated as ordinary income subject to self-employment tax, which can be quite significant. However, there's one strategy worth exploring: if you occasionally hold a property for rental purposes before selling (even just 1-2 years), you might be able to argue for dual-purpose treatment on some properties. This requires very careful documentation of your intent from the beginning of each project. I'd definitely echo the advice about getting a real estate-focused CPA. The nuances here can save or cost you thousands in taxes, and the rules have gotten more complex with recent tax law changes.

Great thread with lots of solid advice! I went through this exact decision last year when selling my small IT consulting LLC. One thing I'd add - definitely consider the timing of when you need the cash vs when you want to pay taxes. With the membership interest sale, if the buyer is willing to structure it with some seller financing (like 70% at closing, 30% over 2 years), you might qualify for installment sale treatment under Section 453. This lets you spread the tax hit over multiple years instead of taking it all in one year. I ended up doing this and it kept me out of the higher tax brackets. My CPA estimated it saved me about $18k in federal taxes compared to recognizing all the gain in year one. The buyer was actually happy with this approach since it reduced their upfront cash needs. Also, @Jake - since you mentioned the deal is worth $320k, definitely look into Section 1202 qualified small business stock exclusion if your LLC was originally structured as a C-corp or if you can convert it. Could potentially exclude up to $10M or 10x basis from federal taxes if you meet the requirements.

One consideration that hasn't been fully explored here is the depreciation recapture piece, especially since you mentioned running the LLC for 7 years. If you've been depreciating computers, office equipment, or software over the years, an asset sale will force you to "recapture" that depreciation as ordinary income (taxed at your regular income tax rates, not the lower capital gains rates). This can be a significant hit depending on how much equipment you've written off. For example, if you've claimed $40k in depreciation over 7 years, that entire amount gets taxed as ordinary income in an asset sale - potentially at 32-37% rates depending on your bracket. With a membership interest sale, you avoid this recapture entirely since you're not selling the assets themselves - the LLC still owns them. This alone might explain why your buyer prefers the membership route and could save you substantial taxes. Before making your final decision, I'd recommend getting a detailed breakdown of your depreciation schedules from your bookkeeper or CPA. Sometimes the depreciation recapture difference alone is enough to override other considerations in the tax analysis.