Great question! I went through this exact same situation when I was starting my freelance graphic design business. You absolutely CAN file a Schedule C even without income yet, but there are some important things to keep in mind. The key distinction is between "startup costs" and "business expenses." True startup costs (before your business is actually operational) can only be deducted once your business begins - up to $5,000 in the first year, with the remainder amortized over 15 years. However, if you're already actively conducting business activities (even without revenue), those can be current year deductions. Since you mentioned spending on equipment, software, and courses, document WHY each expense was necessary for your business and WHEN you plan to launch. The IRS looks for genuine intent to make a profit, not just tax benefits. Keep a business journal showing your planning activities, market research, and steps toward launch. One tip: consider whether waiting until you actually start generating income might be simpler for your first year. You could still claim those startup costs retroactively once you begin operations. But if you're confident in your business plan and timeline, filing now is totally legitimate - just be prepared to show you're serious about this as a business, not a hobby.

This is such a common question and I'm glad you asked! I was in almost the exact same boat two years ago when I was preparing to launch my online marketing consultancy. The short answer is yes, you can file a Schedule C with expenses but no income, BUT you need to be very strategic about it. Here's what I learned the hard way: First, make sure you can demonstrate "active business conduct" - not just planning. This means things like: registering your business name, getting an EIN, opening a business bank account, creating marketing materials, actively networking or seeking clients, etc. The IRS wants to see you're genuinely trying to start a business, not just buying stuff and hoping to write it off. Second, keep METICULOUS records. I created a simple spreadsheet tracking every expense with: date, amount, vendor, business purpose, and category. Take photos of receipts and store them digitally. If you get audited, this documentation will save you. Third, consider your long-term strategy. Filing losses in year one isn't a red flag, but multiple consecutive years of losses can trigger hobby loss rules. Make sure you have a realistic plan to generate income soon. The $2,800 you've spent sounds totally reasonable for legitimate startup costs. Equipment and software are classic business expenses, and education/training that directly relates to your planned business is generally deductible too. My advice? File the Schedule C if you're confident you'll launch within the next few months and can show active business preparation. The tax savings are worth it, and it establishes your business start date officially.

I'm going through this exact scenario in Guam! My CPA here says not to worry - if the IRS ever questions why you haven't filed US returns, they'd send a notice first asking for an explanation before jumping to audit. At that point, you'd just respond with copies of your territorial tax returns and proof of bona fide residency. The $75k threshold is there because the IRS doesn't want to process thousands of forms from people they're not too concerned about. The only people I know who've had issues are those who claimed to be bona fide residents but weren't actually living in the territory full-time or were trying to claim benefits from both systems.

This is really helpful information from everyone! I'm in a similar situation in American Samoa and have been wondering about the same things. One thing I'd add based on my research - even though we're under the $75k threshold, it's worth understanding the "closer connection" test that the IRS uses to determine bona fide residency. They look at factors like where your permanent home is, where your family lives, your business/employment location, driver's license, voter registration, etc. I keep a folder with all this documentation updated annually - copies of my territorial tax returns, lease agreements, utility bills, bank statements showing local address, employment contracts, and even photos of my residence. It might seem like overkill, but if questions ever arise, having a comprehensive record of your life in the territory makes proving bona fide residency much easier. The key insight from Owen Jenkins about the statute of limitations not starting until they have notice is concerning though. Makes me think about whether I should proactively send that letter he mentioned, even years after establishing residency here.

The key thing to remember is that you're already ahead of most people by thinking about this proactively! I run a small freelance writing business and went through this same panic when I first started making money through payment apps. A few practical tips from my experience: 1. Yes, you need to report this income on Schedule C regardless of whether you get a 1099-K form. The $600 threshold just determines if payment processors send you and the IRS a form, but your obligation to report income hasn't changed. 2. For documentation, your Apple Cash screenshots are actually fine - just make sure they show the date, amount, and ideally what the payment was for. Create a simple spreadsheet now with columns for date, amount, client/description, and keep it updated going forward. 3. Don't forget about business deductions! Things like repair supplies, any software you use for tutoring, a portion of your phone bill, even some textbooks if you reference them for tutoring could potentially be deductible. 4. Consider opening a separate checking account for your business income. Makes tracking so much easier and looks more professional if you ever do get audited. You don't necessarily need a business license for this scale, but check your college's policies too - some schools have rules about students running businesses on campus or in dorms. The IRS isn't going to come knocking down your door over $4,800, especially if you report it properly. Just get organized now and you'll be fine!

I went through this exact same situation last year with my campus tutoring business! Made about $6,200 through various payment apps and was completely stressed about taxes. Here's what I learned: First, definitely report the income on Schedule C - even if you don't get a 1099-K, you're still required to report all earnings. The good news is that your Apple Cash screenshots are totally acceptable documentation. I used mine and had no issues. Second, start tracking business expenses NOW. You'd be surprised what you can deduct - I was able to claim portions of my internet bill, supplies for tech repairs, even some educational materials I bought specifically for tutoring. It reduced my taxable income by almost $1,500. For self-employment tax, yes it's about 15.3% on your net profit (after business deductions), but remember you can deduct half of it on your main tax return, which helps offset some of the sting. The IRS isn't going to target small operations like yours, especially if you're making an honest effort to comply. I was terrified they'd audit me, but my tax preparer said audits for small side businesses under $10K are extremely rare unless there are obvious red flags. Start keeping better records going forward - simple spreadsheet with date, amount, client, and what service you provided. Open a separate bank account if you can (doesn't need to be a business account, just one you use only for this income). And consider setting aside 25-30% of each payment for taxes so you're not scrambling next April. You're already ahead of most people by thinking about this proactively. Just get organized and report everything properly - you'll be fine!

Has anyone else noticed that withholding seems super messed up lately? I claimed 0 dependents like OP but I'm still getting way less taken out than last year. I'm worried I'll owe a ton when I file.

Connor, you're definitely not overthinking this! Your approach is actually really smart - claiming 0 dependents on your W-4 will indeed maximize your withholding throughout the year, which often leads to a larger refund when you file. The key thing to remember is that your W-4 withholding and your actual tax return are two completely separate processes. Your W-4 is just telling your employer how much to withhold from each paycheck as an estimate, while your tax return reflects your actual tax situation for the year. Since you have the legal right to claim your son as a dependent for the 2025 tax year (based on your custody agreement), you can absolutely claim him when you file your return, regardless of what you put on your W-4. This might actually work out perfectly for you - you'll have extra tax withheld all year, then get credit for your dependent when you file, potentially resulting in a nice refund. Just make sure you keep good records of your custody arrangement and that you and your ex are crystal clear about who claims your son each year. Having it documented in your divorce decree is ideal. Good luck with the new job!

Just a warning - I had this same issue last year, ignored it thinking it was just a system glitch, and ended up with a massive headache. Turned out there was a typo in my SSN on my return (my fault) that caused the WMR error. The return was "accepted" because that just means the file format was valid, not that all the information was correct. I'd suggest getting a transcript if possible - if you can access that, your info is correct. If not, there might actually be an issue. I lost 6 weeks thinking it was just a system problem before I finally called and sorted it out. Just sharing so you don't make my mistake!

I'm going through this exact same situation right now! Filed on February 25th, got acceptance confirmation the next day, but WMR has been giving me the "information incorrect" error for over two weeks. I was starting to panic thinking something was wrong with my return. Reading all these responses is actually really reassuring - it sounds like this is way more common than I thought. I've been triple-checking my SSN, filing status, and refund amount ($2,891) but keep getting the same error. I think I'll try accessing my tax transcript like several people suggested instead of obsessing over WMR. It's good to know that the acceptance confirmation is what really matters and that these systems don't always sync up properly. Thanks everyone for sharing your experiences - definitely helps ease the anxiety!