Has anyone tried FreeTaxUSA? I've used it for the past 2 years and it's been really good. Federal filing is completely free regardless of income or complexity (I have investments, HSA, and 1099 income), and state is only like $15. The interface isn't as fancy as TurboTax but it gets the job done without upselling you constantly.

This is such a comprehensive breakdown - thank you for putting this together! I've been dreading tax season but this makes it seem much more manageable. Quick question about the AGI threshold for IRS Free File - is that $79,000 based on your 2024 income or your 2023 income from last year's return? I'm right around that number and want to make sure I'm looking at the right year's income to determine eligibility. Also, for anyone who's used multiple free options, how do they compare in terms of user-friendliness? I'm not super tech-savvy and get overwhelmed by complicated interfaces. Would love to hear which ones are most straightforward to navigate!

Just to add to what others have said - as a sole proprietor LLC, your business doesn't file its own tax return. Instead, you report the income and expenses on Schedule C of your personal tax return (Form 1040). And yes, the threshold is $400 net profit, not $5,000.

One thing nobody mentioned - even if you're under the $400 threshold, you might still want to file taxes for your business. Filing can establish your business history (helpful for loans later) and let you claim startup losses to offset future profits. My accountant had me file even when I only made $275 my first year.

5 Does anyone know if you can deduct the PayPal fees if you're not filing a Schedule C? I sometimes do small gigs and get paid through PayPal but I just report it as "Other Income" since it's not really a business.

I've been dealing with this exact issue for years as a freelancer! The advice here about reporting gross income and deducting fees separately is spot on. One thing I'd add - make sure you're keeping good records throughout the year, not just at tax time. I set up a simple spreadsheet where I track each PayPal payment with columns for: date, client name, gross amount invoiced, PayPal fee, and net received. This makes tax prep so much easier because you have everything organized already. Also, don't forget that if you use PayPal's "Goods & Services" option (which you should for business transactions), those fees are typically higher than "Friends & Family" but they're fully deductible business expenses. The protection is worth it for business use, and every penny of those fees reduces your taxable income. For anyone using multiple payment processors, the same principle applies across all of them - Stripe, Square, Venmo Business, etc. Track gross income and fees separately for each platform.

I'm new to this community but went through almost exactly what you're describing last year. I had a $28,000 critical illness payout from my employer plan where I paid premiums through pre-tax payroll deduction, and initially got the same incorrect advice from a different tax preparation service. After reading through all the responses here, I want to add one more resource that really helped me get clarity. I ended up calling the insurance company directly and asking them about the tax treatment. While they can't give tax advice, they were able to confirm that my premiums were indeed paid with pre-tax dollars and that they typically don't issue 1099 forms for critical illness benefits because the taxability depends on the premium payment method. The customer service rep also mentioned that this is one of the most common questions they get during tax season, which suggests a lot of people are getting conflicting advice from tax preparers who don't understand these specialized insurance products. What really convinced me to report it as taxable income was thinking about it from the IRS perspective: if they let everyone claim tax-free benefits on insurance paid with pre-tax dollars, it would essentially be a massive tax loophole. The government isn't going to give you both a tax break on the premiums AND tax-free benefits. I ended up owing about $7,000 in additional taxes, but the peace of mind knowing I reported everything correctly was worth it. Don't let H&R Block pressure you into filing incorrectly - get that second opinion and protect yourself from potential audit issues down the road.

Based on everything I've read in this thread, you're absolutely right to be concerned about H&R Block's advice. As someone who works in employee benefits (though not as a tax professional), I see this exact confusion all the time. The fundamental principle is straightforward: if you received a tax advantage when paying the premiums (through pre-tax payroll deductions), then the IRS expects to collect taxes when you receive the benefits. You can't get the tax benefit twice - once when paying premiums and again when receiving the payout. What's particularly concerning is that H&R Block apparently didn't even ask HOW your premiums were paid, which is literally the most important factor in determining taxability. This suggests they're applying a blanket "insurance benefits are tax-free" rule without understanding the nuances of employer-sponsored policies. I'd strongly recommend following the advice from the tax attorney and experienced preparers in this thread: 1. Get written documentation from H&R Block explaining their position with specific tax code citations 2. Obtain written confirmation from your HR department about the pre-tax treatment of your premiums 3. Get a second opinion from a CPA who specializes in employee benefits taxation With $47,000 at stake, the potential consequences of underreporting are severe. Even if there's a chance H&R Block is right (which seems unlikely based on the legal analysis provided here), the risk of penalties and interest on that amount of unreported income isn't worth taking. Document everything and protect yourself. The IRS holds YOU responsible for accurate reporting, regardless of what advice you received from a tax preparer.

Don't forget to check if the previous owners made any improvements too! Those also add to your basis. When I bought my house, the seller gave me a list of major improvements they'd made, but I never thought to ask about the bathroom they said was remodeled "years ago" - turns out it was a $24k remodel just before they bought the place! I found this out by chatting with neighbors who remembered the work being done.

This is such a helpful thread! I'm dealing with a similar situation but with improvements from even earlier - my house has additions from the 1960s that my grandparents made. Reading through all these suggestions, I think I'll start with checking the county assessor's office for old building permits, then try researching historical construction costs through the library archives. One question though - when you're estimating these old improvement costs, do you need to be super precise or is a reasonable range acceptable? Like if a bathroom remodel in 1984 could have cost anywhere from $8,000 to $15,000, should I go with the middle estimate or be more conservative? I want to maximize my basis adjustment but also don't want to be unreasonable if the IRS questions it. Also wondering if anyone has experience with whether things like landscaping improvements (like a deck or patio) from decades ago count toward basis adjustments?