The audit risk stuff is important but don't overlook making sure you handle the business closure properly! When I closed my little consulting business last year, I had to: 1. File final employment tax returns (if you had employees) 2. Issue final W2s/1099s 3. Cancel EIN 4. Close business tax accounts with state 5. Report sale/disposal of business assets 6. Maintain records for at least 7 years Did TurboTax walk you through all these steps?

I completely understand your anxiety about this situation! I went through something very similar with my small photography business that had losses for 3 years before I closed it. Here's what helped put my mind at ease: the IRS audit statistics show that Schedule C businesses with gross receipts under $100k have an audit rate of less than 1%. With your highest year being $47k, you're well below that threshold. The key thing about the hobby loss rule is that it's not just about the 3-out-of-5-year test - the IRS looks at nine factors including whether you operated in a businesslike manner, kept good records, and made changes to improve profitability. Since you mentioned you were legitimately trying to run a business and made the rational decision to close when it wasn't working, that actually supports your case. Keep all your documentation organized (receipts, bank statements, inventory records, any business correspondence) just in case, but honestly, your situation sounds very low-risk. The IRS is generally more concerned with larger operations or obvious red flags like claiming massive losses on minimal income.

Based on my experience with CA state refunds, 5 business days for a paper check isn't unusual yet. I received mine about 8 business days after the "issued" status last year. The FTB typically batches their check mailings, so there can be a delay between when they mark it as issued and when it actually gets to the post office. Since you're using this for investment planning, you might want to factor in up to 10 business days total from the issued date. If it doesn't arrive by next week, that's when I'd consider calling them directly.

I can share some recent data points that might help with your tracking. I filed my CA return in February and received my refund check exactly 9 business days after the "issued" status appeared on the FTB website. What I learned from calling the FTB is that there's often a 2-3 day gap between when they mark it as "issued" and when it actually gets sent to their mailing contractor. So your 5 days might actually be more like 2-3 days in transit. Given that you're planning investments around this, I'd suggest waiting until day 10-12 before getting concerned. The good news is that CA refunds are generally very reliable once they hit "issued" status - just slower than we'd like!

Don't beat yourself up about this - medical issues can definitely make it hard to stay on top of everything! The good news is that while you'll owe some penalty, it's really not that bad in your case. For a $127 excess contribution, you're looking at about $7.62 per year in excise tax (6% of $127). So for 2020-2023, that's roughly $30 total - definitely manageable. Here's what I'd recommend: First, call your HSA administrator and request removal of the excess contribution from 2020. They should be able to calculate any earnings on that $127 and remove both the excess and earnings. You'll get a 1099-SA for 2024 showing the withdrawal. Then file Form 5329 for each year 2020-2023 to pay the 6% excise tax. You don't need to amend your full returns - just file the 5329 forms separately with payment. The earnings portion will be taxable income on your 2024 return, but since it's been sitting there for years, it might actually be a decent amount that's been growing tax-free. One tip: when you call your HSA administrator, be very specific that you want to "remove excess contributions for tax year 2020" - use those exact words. Some customer service reps get confused if you just say you want to withdraw money.

I went through something very similar last year! Had an excess HSA contribution from 2019 that I didn't catch until 2023. The key thing to remember is that you're not in any serious trouble - this happens more often than you'd think, especially during job transitions. Here's what worked for me: I called my HSA provider (mine was with HSA Bank) and specifically asked for "removal of excess contribution for tax year 2020." They knew exactly what I was talking about and handled it within about a week. They removed both the $127 excess and any earnings attributed to it. The 6% excise tax isn't too painful on such a small amount - you're looking at about $7.62 per year, so maybe $30-35 total for all the years it's been sitting there. I filed Form 5329 for each affected year separately (didn't need to amend full returns) and just sent payment with each form. The earnings that get removed will show up as income on your 2024 return, but honestly after sitting in the HSA for 4+ years, there might be a nice little growth there that partially offsets the penalties. Don't stress too much about this - you're being proactive now and that's what matters. The IRS deals with HSA issues all the time and as long as you're making the effort to fix it, they're pretty reasonable about these situations.

Quick question for anyone who's dealt with this before - does the Kiddie Tax apply differently to different types of unearned income? The LLC sale in the original post is a capital gain, but would it be treated differently if it was dividend or interest income instead?

I've been through a similar situation with my nephew after his parents died in a car accident. The process can feel overwhelming, but you're on the right track asking these questions. One thing I learned that might help - make sure you have all the proper legal guardianship documentation ready when you file. The IRS may ask for proof of your guardianship status, especially with such a substantial amount of unearned income involved. Also, with $67K in capital gains, you might want to consider whether any estimated tax payments should have been made throughout the year. The Kiddie Tax can create a significant tax liability that might trigger underpayment penalties if not addressed properly. Have you consulted with a tax professional who specializes in guardianship situations? Given the complexity and the dollar amounts involved, it might be worth the investment to ensure everything is handled correctly. The cost of professional help could save you from potential issues down the road.

Don't forget that the American Opportunity Credit has an income phase-out! If your modified adjusted gross income is between $80,000-$90,000 (single) or $160,000-$180,000 (married filing jointly), the credit starts to phase out. After $90k/$180k you can't claim it at all. Lifetime Learning also has phase-outs but at different thresholds. Worth checking if you're near those income levels since it might affect your strategy.

This is a great discussion! One thing I'd add is to also consider timing your tuition payments strategically. Since education credits are based on when you actually pay the expenses (not when they're due), you might want to pay some spring semester costs in December vs January to optimize which tax year gets the benefit. Also, don't overlook textbooks and required course materials - these qualify for the American Opportunity Credit but NOT for the Lifetime Learning Credit. So when you switch to AOC in later years, make sure you're tracking those expenses too since they can add up to several hundred dollars per semester. And regarding the 529/credit coordination that others mentioned - one strategy is to use 529 funds for room and board (which don't qualify for education credits anyway) and pay tuition/fees out of pocket so you can claim the credits. Just make sure the 529 withdrawal amount doesn't exceed total qualified education expenses for the year or you'll owe taxes and penalties on the excess.