I'm a little confused by some of the responses here. The $5,000 threshold is just about whether you get a 1099-K form, not whether you need to report the income. ALL income is taxable regardless of amount or whether you got a tax form. The only exception would be if you're selling personal items at a loss (like used clothes for less than you paid for them). That's not taxable because there's no profit. But if you're making and selling crafts on Etsy, that's income even if it's just $50. The honest answer to the question is "yes" you received payments through a third party network.

Is nobody going to mention the hobby loss rule? If this is truly a hobby (not a profit-seeking activity), you can report the income but you CANNOT deduct any expenses against it anymore. The Tax Cuts and Jobs Act eliminated hobby expense deductions. If you're regularly trying to make money from your Etsy store, it might be better to treat it as a business so you can deduct your expenses. Otherwise you're paying tax on the full $875 with no deductions for your supplies.

Another simple trick - look at your 2020 tax return PDF file size. If it's bigger than usual, you probably itemized because Schedule A adds pages. My standard deduction returns are always like 10-15 pages but my itemized years are 20+ pages with all the extra forms. Just a quick way to check before digging into the actual numbers.

UGH im looking at my 2020 return right now and line 12 shows $24,800 but there's also something on line 8 that says "Schedule A" with a checkmark? Super confused!!! Why would it have schedule A but also the standard deduction amount??

One thing that might help is understanding that the IRS penalty calculation system is largely automated and doesn't always account for nuances in how payments are processed through EFTPS. I've seen cases where the system flags deposits as late even when they were technically submitted on time. A few specific things to double-check: 1. When you schedule your EFTPS payment, make sure the "effective date" (when the money actually leaves your account) falls on or before the deposit deadline - not just when you initiate the transaction. 2. Be very careful about the "Tax Period" dropdown in EFTPS. For semi-weekly deposits, you need to select the specific quarter AND make sure you're not accidentally selecting "Annual" or "Monthly" instead of the quarterly option. 3. Bank holidays can throw off the timing. If your due date falls on a banking holiday, the deposit is due the next business day, but the EFTPS system doesn't always make this clear. I'd also suggest calling the Practitioner Priority Service line at 866-860-4259 if you or your tax preparer has a PTIN. It's a separate line with much shorter wait times than the general taxpayer line. Even if you're not a practitioner yourself, many enrolled agents will make this call on behalf of clients for a small fee. The good news is that first-time penalty abatement is usually granted automatically if you have a clean compliance history, so don't stress too much about the immediate financial impact while you figure this out.

I've been following this thread with great interest because I'm dealing with a very similar situation! Got bumped to semi-weekly deposits about 6 months ago and it's been a nightmare trying to get the timing right. One thing that really helped me was finding out that the IRS has a specific deposit schedule lookup tool on their website (Publication 15, Circular E) that shows exactly which days deposits are due based on your payday. But even more helpful was learning that you can call EFTPS customer service directly at 1-800-555-4477 - they can actually walk you through the correct way to enter your deposits and explain the tax period selections. The EFTPS rep I spoke with told me that a lot of the confusion comes from people thinking "semi-weekly" means twice a week, when it actually just means there are two possible due dates each week depending on when you pay wages. She also mentioned that if you're ever unsure about a deposit deadline, you can always make the deposit earlier - there's no penalty for depositing early, only for depositing late. Also wanted to echo what others said about keeping detailed records. I started taking screenshots of my EFTPS confirmations and noting exactly which tax period I selected for each deposit. When I did get a penalty notice, having those records made it much easier to prove the deposits were made correctly and get the penalties reversed. Hope this helps - you're definitely not alone in finding this system confusing!

I totally get that pre-opening anxiety! I've been there multiple times and that sick feeling when you see the IRS envelope in Informed Delivery is just awful. One thing that's helped me is remembering that March is peak processing season - they're churning through millions of returns and sending out tons of routine correspondence. Could literally be something as simple as "we received your return" or "your refund is processing." I actually started keeping a little log of IRS letters I've received over the years, and honestly about 85% turned out to be completely routine stuff that required zero action from me. The ones that did need responses were usually just requests for additional documentation that took maybe 15 minutes to handle. Try to get a good night's sleep tonight - tomorrow you'll have actual information instead of just anxiety-fueled speculation!

I feel you on this anxiety! That Informed Delivery preview is both a blessing and a curse - you get advance warning but then have to sit with the worry all day. I've gotten probably a dozen IRS letters over the years and only one was actually problematic (turned out to be a simple math error they caught). The rest were things like payment confirmations, return acknowledgments, or updates to my taxpayer info. Since you mentioned being extra careful this year after learning from the crypto situation, you're probably in really good shape. One thing that helps me is remembering that truly urgent IRS matters usually come certified mail or require signature - regular mail is typically routine stuff. Whatever it is, you'll handle it. The unknown is always scarier than the reality!

Has anyone used the "regular method" vs "simplified method" for calculating the home deduction for childcare? I'm watching 2 kids in my apartment and trying to figure out which one would give me a better deduction.

One thing to keep in mind is that you'll want to separate business and personal expenses very clearly. Since your wife is providing childcare in your family home, the IRS can be particular about what constitutes a legitimate business expense versus personal family expenses. For meals and snacks, you can only deduct the portions provided to the childcare child - not what your own kids eat during the same time. I recommend keeping a simple log of what you buy specifically for the childcare child versus family groceries. Also, don't forget that if your wife earns over $400 in self-employment income, she'll need to make quarterly estimated tax payments starting next year to avoid penalties. Since this is her first year, she won't owe penalties for 2024, but she should start planning for quarterly payments in 2025 if she continues providing childcare. The good news is that even though she has to pay self-employment tax (about 15.3% on the net profit), she's also earning Social Security and Medicare credits that will benefit her later in retirement. Many people don't realize that stay-at-home parents can build up their own Social Security benefits this way.