Has anyone actually had the IRS contact them about this kind of duplicate 1099 situation? I'm wondering how likely it is that this would trigger an audit or something.

This is such a frustrating situation that happens way too often with online gambling platforms! I went through the same thing last year with DraftKings and Venmo. The key thing to remember is that you absolutely need to report both 1099s on your return, but you only pay taxes on the actual income once. When you're in TurboTax, enter both forms exactly as they appear, then look for the "duplicate income" or "adjustment" section where you can subtract out the duplicated amount. Make sure you keep detailed records showing the money flow - screenshot your PrizePicks withdrawal, your PayPal deposit, and any confirmation emails. If the IRS ever questions it, you want to be able to show a clear paper trail that it's the same funds. Also pro tip: if the amounts are slightly different due to processing fees, report the higher amount (usually from the gambling platform) as your income, and you might be able to deduct those transfer fees if you itemize. The most important thing is being consistent and having good documentation to back up your filing.

Quick tip on the PayPal/1099-K situation - PayPal is required to issue 1099-Ks for annual payments over a certain threshold, but that doesn't mean you have to pay taxes twice! When I enter my tax info, I always: 1) Enter the 1099-NEC first 2) When TurboTax asks about 1099-K, I say yes, I received one 3) When it asks if this income was already reported elsewhere, I say YES 4) It'll then ask you to identify which income it duplicates This way everything is properly documented but not double-counted. Hope that helps!

Based on your situation, here's what I'd recommend: **For the teaching income ($1,875.50):** You're absolutely right to only report this once. Use the 1099-NEC from the makerspace and ignore the PayPal 1099-K for the same payments. **For the $31.75 reimbursement:** This shouldn't be included as income since it was reimbursement for out-of-pocket expenses you incurred for the classes. You can subtract this from your total income, but then you also can't claim those material costs as expenses. **For the $25 hobby sale:** Unfortunately, yes, you need to report this as "Other Income" even though you lost money overall. The elimination of hobby expense deductions really stings in situations like yours. **Consider the business angle:** Given that you teach classes regularly at the makerspace, keep records, and have expertise in woodturning, you might actually qualify to treat this as a business rather than a hobby. This would let you use Schedule C and deduct your teaching-related expenses against your income. The key is showing profit motive - even if you're not profitable yet, if you're operating in a businesslike manner, it could qualify. I'd suggest talking to a tax professional about whether your teaching activities meet the business criteria. It could save you money and better reflect the reality of what you're doing.

One thing nobody mentioned - if you have foreign bank accounts over $10,000 combined at any point during the year, you might need to file an FBAR form (FinCEN Form 114), even if you don't need to file a tax return. This is separate from the tax filing and has different rules.

Just want to add another perspective here - I moved from Ireland on an H1B in November 2023 (so similar dual status situation) and had zero US income during my brief resident period. I didn't file anything for 2023 and never heard from the IRS. However, what I wish I'd known then is that establishing good recordkeeping from day one is really important. Even though you don't need to file, I'd recommend keeping documentation of your arrival date, visa type, and evidence that you had no income during the resident portion. This becomes useful context when you file your first full-year return in 2025. Also worth noting - if you're planning to apply for citizenship eventually, having a clean compliance record from the start (even if it's just documentation showing you correctly determined no filing was required) can be helpful during the naturalization process. The USCIS sometimes asks about tax compliance history.

The fundamental difference is corporate governance and tax structure. Public company CEOs who take $1 salaries have their compensation packages approved by independent boards of directors and compensation committees, which provides legitimacy in the eyes of regulators. Their stock options and RSUs are still subject to ordinary income tax rates when exercised/vested, plus the company pays payroll taxes on the fair market value. Small business owners face different scrutiny because S-Corp distributions avoid self-employment taxes (15.3% savings), while CEO stock compensation doesn't provide the same tax avoidance opportunity. The IRS specifically targets owner-operators who might abuse this structure. The "reasonable compensation" test for small businesses considers: your role and responsibilities, hours worked, business profits attributable to your personal services vs. capital, and what you'd pay a non-owner to do your job. There's no magic percentage - it's truly case-by-case based on these factors. Bottom line: Big company CEOs aren't actually avoiding taxes with their structure, they're just deferring timing. Small business owners using minimal salaries are potentially avoiding payroll taxes entirely, which is why the IRS watches it more closely.

This is a great question that highlights a common misconception about CEO compensation structures. The key difference isn't that CEOs get special tax treatment - it's that their compensation is still fully taxable, just structured differently for legitimate business reasons. When a CEO takes $1 salary plus stock options, those options are taxed as ordinary income when exercised (often at rates up to 37%), plus the company pays payroll taxes on that compensation. The board of directors approves this structure based on performance incentives and shareholder alignment, not tax avoidance. For small business S-Corp owners, the IRS is specifically watching for abuse of the salary vs. distribution split because distributions avoid the 15.3% self-employment tax. That's real tax savings that CEO stock compensation doesn't provide. The "reasonable compensation" standard considers your actual role, industry benchmarks, hours worked, and how much profit comes from your personal efforts vs. business assets. A marketing agency owner generating most revenue through personal services will need higher salary allocation than someone whose profits come primarily from equipment or passive investments. My advice: document your compensation decision with industry data and keep records showing your reasoning. The IRS respects good faith efforts to comply, even if your exact number might be debatable.

ugh the waiting game is the WORST. feels like watching paint dry 🤡

I feel your pain! Same thing happened to me last year - blank transcript for weeks even though it showed up as available. Turns out the IRS creates the transcript "shell" before they actually populate it with data. For cycle 05 filers, this is super common since we're in that early processing batch. Mine finally updated after about 3 weeks with all the transaction codes and cycle info. Just keep checking Friday mornings since that's when cycle 05 typically updates. The waiting is brutal but totally normal! 🤞