Make sure you track EVERYTHING for your Schedule C! As someone who's been freelancing for years, here's what you can typically deduct: - Software (like Adobe - you can allocate a % for business use) - Hardware (laptop, etc. - with depreciation) - Internet (% used for business) - Phone (% used for business) - Office supplies - Professional development (courses related to your design work) - Business insurance if you have it - Portion of rent/mortgage for home office (if you have a dedicated space) - Utilities for that same % of your home Just make sure everything you deduct is ORDINARY and NECESSARY for your business. That's the IRS standard. And keep receipts for EVERYTHING!

Great breakdown from everyone! One thing I'd add for Sara - since you're just getting started with freelance work, consider opening a separate business checking account even if you're not incorporated. It makes tracking income and expenses SO much easier, and banks often offer free business accounts for sole proprietors. Also, don't stress too much about getting everything perfect in your first year. The IRS understands that people learning the ropes might make minor errors. Just do your best to track expenses and set aside money for taxes. You can always hire a tax pro next year once you see how much your freelance income grows. One last tip - if your freelance income does grow significantly, look into making yourself an LLC. It doesn't change your taxes much as a single-member LLC, but it gives you some liability protection and makes you look more professional to potential clients. Plus it opens up more business banking and credit options down the road.

I've been through almost the exact same situation! The IRS took about $1,200 from my expected refund last year with similar codes, and I was completely panicked at first. Here's what I learned: those transcript codes are actually pretty straightforward once you understand them. The 826 code means they applied your 2023 refund to pay a debt from 2021, and the numbers at the end (202112) refer to the tax period - so December 2021 processing cycle. The most common reasons this happens are: 1. Unreported income from 2021 (1099s, W2s, or side gig income) 2. Math errors on your original 2021 return 3. Forgotten retirement account withdrawals or distributions 4. Claimed credits you weren't eligible for Since you mentioned having a side gig, my guess is either you underreported some 1099 income from 2021, or you didn't pay enough estimated taxes that year and penalties/interest accumulated. Don't panic though - you have options! You can request a payment trace to see exactly what the debt was for, and if there was an error on the IRS's part, you can dispute it. Sometimes they make mistakes too. The key is getting your full account transcript for 2021 to see what triggered the balance. You can download it instantly from the IRS website if you can verify your identity online.

I've been helping people navigate IRS transcript codes for years, and your situation is actually more common than you might think. The 826 and 706 codes you're seeing are standard offset procedures - basically the IRS found a discrepancy in your 2021 return and applied your 2023 refund to cover it. Given that you mentioned having a side gig and cashing out a 401k in 2021, here's what likely happened: The IRS received documentation (like a 1099-R for your retirement withdrawal or a corrected 1099-MISC from a client) that didn't match what you reported. They then made an adjustment to your 2021 account, creating a balance due with penalties and interest. The good news is this isn't necessarily permanent. Here's what I'd recommend: 1. Get your complete 2021 account transcript online - look for transaction codes 290, 300, or any 30X series that show adjustments 2. Compare that against your original 2021 return to identify the discrepancy 3. If you find the IRS made an error, file Form 843 to claim a refund 4. If the adjustment is correct but you qualify for penalty relief (first-time penalty abatement, reasonable cause, etc.), you can still recover some money Don't give up - I've seen people successfully challenge these offsets when they had valid reasons or when the IRS made computational errors.

Has anyone tried Credit Karma Tax? I switched to them last year and they're completely free for federal and state. No hidden fees, no refund transfer delays. The IRS direct deposited to my account in 8 days. The interface isn't as nice as TurboTax, but for the price difference, I can deal with it.

This is exactly why I always tell people to avoid the refund transfer option if possible! I've been preparing taxes for family members for years and learned this lesson the hard way. The marketing makes it sound convenient, but what they don't emphasize is that you're essentially adding an extra middleman (the bank) between you and your refund. Michael, I'm sorry you had to deal with this runaround. For future reference, if you can't pay the prep fees upfront, some tax software companies like FreeTaxUSA actually let you file your federal return for free and only charge for state returns. That way you can still get your federal refund directly from the IRS without any third-party delays. Also, for anyone reading this - always check the "Where's My Refund" tool on the IRS website. It will show you exactly when the IRS processed and sent your refund, which gives you ammunition when dealing with these processing banks if there are unexplained delays.

Don't forget about depreciation! When you rent out a property, you have to take depreciation on the building portion of your property (not the land). This is a significant deduction that offsets your rental income. If you don't take it voluntarily, the IRS will assume you took it anyway when you eventually sell the property, so there's no reason not to claim it. The general rule is 27.5 years for residential rental property. So you'd divide your building value (minus land value) by 27.5 to get your annual depreciation deduction.

Just to add something others haven't mentioned - since your property was intended to be your primary residence initially, be careful about the qualified residence interest rules if you later move into it. The rules get complicated if you convert back from rental to primary residence regarding how much of your future sale would be eligible for the principal residence exclusion ($250k/$500k). Keep VERY good records about when you converted it to rental use, what improvements you make during the rental period, and depreciation taken. You'll thank yourself later if/when you sell.

Having TT fees taken from your refund is like taking the scenic route instead of the highway - it might be convenient, but it definitely adds time to the journey. The refund has to stop at TurboTax's bank partner first, they take their cut, then send the rest to you. It's never going to be faster than direct deposit without the middleman. For cycle code 0605, think of Thursday as your "update day" - that's when you'll see movement on your transcript, but the actual money usually follows about a week later.

I'm in the exact same boat with cycle code 0605 and TurboTax fee deduction! From what I've researched and experienced in previous years, the fee deduction method typically doesn't speed things up - it actually can add a day or two because of the extra processing step through SBTPG. Your 0605 cycle means your transcript should update Thursday mornings around 3-6am EST. Once you see that 846 code with your DDD (Direct Deposit Date), you can expect the money 5-7 days later, but subtract one day if your bank does early deposits. The key is watching for that 846 code on your transcript rather than relying on WMR, which tends to be less accurate with timing. Good luck!