21 Just curious - what industry are you contracting in? The best app might depend on your specific situation. For example, if you're in construction, an app that handles inventory and job materials might be different than what a freelance designer would use.

Great thread! As someone who's been contracting for a few years now, I'll add that whatever app you choose, make sure to back up your data regularly. I learned this the hard way when my phone died and I nearly lost months of receipt data. Also, don't forget about bank and credit card statements as backup documentation. Even with a great receipt app, your financial institution records can serve as additional proof of business expenses if you ever get audited. One more tip - start tracking everything from day one, even small expenses like parking meters or coffee during client meetings. Those small amounts really add up over the year, and it's much easier to develop the habit now than to try to recreate months of expenses later!

Don't forget that even if you qualify for First Time Abatement, it only applies to certain penalties! It works for failure-to-file, failure-to-pay, and failure-to-deposit penalties. It won't help with accuracy-related penalties, fraud penalties, or estimated tax penalties. Also, it's a one-time deal for each type of penalty. So if you get the FTA for a failure-to-file penalty this year, you can't get another one for failure-to-file in the future. But you might still qualify for an FTA on a different type of penalty later.

Douglas, you're definitely in a good position for First Time Abatement with 8 years of clean filing history! I successfully got my penalties waived last year using this exact process. Here's what worked for me: I called the IRS directly using the number on my penalty notice and specifically asked for "First Time Abatement relief." The rep was able to pull up my compliance history right there and approved the request on the spot. My $620 in penalties were removed immediately from my account. The key is being very clear about what you're requesting - don't just say you want penalty relief, specifically mention "First Time Abatement" or "FTA." The IRS reps are familiar with this program and can process it quickly if you qualify. Since you mentioned the payment deadline is next month, I'd recommend calling rather than mailing Form 843, as the written process can take 8-12 weeks. With your clean history, you should have no problem getting approved. Just be prepared for potentially long hold times when calling - early morning (8 AM EST) tends to be the best time to get through. Good luck! With your track record, this should be pretty straightforward.

Make sure you're calculating your SEP contribution correctly! It's not 20% of your gross business income, but rather about 20% of your net self-employment income AFTER deducting half of your self-employment tax. This tripped me up my first year. If your side hustle brings in $27k revenue but you have $7k in legitimate business expenses, your net profit is $20k. Then you have to account for self-employment tax in the calculation. There are calculators online that can help with the exact math.

This is a great question that I see come up a lot! The short answer is yes - you can absolutely contribute to a SEP IRA even with a maxed out employer 401k, since they're treated as completely separate retirement plans. One thing to keep in mind is that you'll need to make sure you're tracking your self-employment income and expenses carefully throughout the year. The SEP contribution is based on your net self-employment income, so good record-keeping will help you maximize your contribution when tax time comes. Also consider opening the SEP IRA sooner rather than later, even if you don't contribute right away. Some brokerages have account minimums or waiting periods, and you want to have it ready when you're ready to make your contribution for the tax year. The tax benefits are definitely worth it - you're essentially getting a deduction that reduces both your regular income tax and your self-employment tax burden from the business income.

Just to add another perspective - don't forget about Qualified Business Income deduction (Section 199A) in your calculations. If your business becomes profitable in future years, you might be eligible for up to a 20% deduction on your qualified business income. If you push too many deductions into future profitable years through depreciation, you might inadvertently reduce your QBI deduction. Sometimes it's better to take the hit now when you're showing a loss, especially if your W-2 income puts you in a decent tax bracket already.

As someone who's been through this exact scenario with my freelance graphic design business, I'd recommend being really strategic about this decision. You're in a unique position where you can use the business loss to offset your W-2 income, which could save you significant money this year. One thing I learned the hard way is to keep meticulous records showing your profit motive - the IRS hobby loss rules are real and they do scrutinize new businesses showing losses. Document your business plan, marketing efforts, client outreach, etc. This becomes especially important if you show losses for multiple years. For the equipment strategy, I'd suggest looking at which items are likely to become obsolete quickly (software, some electronics) versus durable goods (quality microphones, mixing boards). Consider fully expensing the items that depreciate rapidly in real-world value while using regular depreciation for equipment that will serve you for many years. Also, make sure you're capturing all possible business deductions - home office space, business use of your car for client meetings, professional development, etc. These can add up and help justify the business nature of your activities to the IRS. The royalty income on Schedule C makes perfect sense given that it's the same type of work as your current business. This actually strengthens your case that this is a legitimate business continuation rather than a new hobby.

5 Side question related to this: I filed 83(b) election for restricted stock (not options) last year. My stock is on a 4-year vesting schedule, but I'm thinking of leaving the company after only 2 years. What happens to the taxes I already paid on unvested shares if I forfeit them when I leave?

Great question! Yes, you're correct that your company should send you Form 3921 for the stock option exercise. Since you properly filed your 83(b) election within the 30-day window in June 2023, you've already handled the most important part. For your 2023 tax return, you'll need to report the ordinary income from the spread between your exercise price and the fair market value at the time of exercise (this should be reflected on the Form 3921). The good news is that by filing the 83(b) election, you've locked in the tax treatment - any future appreciation in the stock value won't be taxed as ordinary income when it vests. Make sure to keep copies of your 83(b) election filing and the certified mail receipt with your permanent tax records. You'll need this documentation if you're ever audited, especially when you eventually sell the shares. The 83(b) election affects your future cost basis calculation, so proper documentation is crucial. No additional forms are required specifically for the 83(b) election itself on your annual return - you just report the income from the option exercise using the information from Form 3921.