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 went through this exact situation two years ago with a $38,000 critical illness payout from my employer's plan. Like you, I paid premiums with pre-tax dollars, and my initial tax preparer (also at H&R Block, coincidentally) told me the entire payout was tax-free. Something didn't sit right with me, so I did my own research and discovered what everyone here is confirming - when you pay premiums with pre-tax dollars, the benefits are typically taxable income. I ended up switching to a CPA who specialized in employee benefits taxation, and she confirmed that I owed taxes on the full amount. The frustrating part was that H&R Block never asked me HOW the premiums were paid - they just assumed it was tax-free because it was "insurance." That's a dangerous assumption that could have cost me thousands in penalties and interest if the IRS had caught it later. My advice: get everything in writing from H&R Block explaining their reasoning, then take that to a second tax professional for review. Don't let them file your return until you're 100% confident in the tax treatment. The IRS doesn't care what H&R Block told you - you're ultimately responsible for accurate reporting on your return. For what it's worth, even after paying taxes on my payout, I was still grateful to have had the critical illness coverage. But I definitely learned to be more skeptical of chain tax services when dealing with complex situations like employer-sponsored insurance benefits.

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.

I think I might have some insight here... When I amended my 2023 return in February, I received two separate payments about 3 weeks apart. The first payment was for the basic tax adjustment, and the second was specifically for the Child Tax Credit portion. The letter should indicate which specific credits or adjustments the second payment covers. It's probably not a typo, but rather the IRS processing different parts of your amendment separately.

This is definitely a split payment situation - totally normal for amended returns! I went through the same thing with my 2023 amendment. The IRS processed my basic refund first, then sent a separate payment for the Earned Income Tax Credit about two weeks later. The letter you received likely breaks down exactly what the second payment covers. If you add $4,092 + $3,809 = $7,901, which is pretty close to your expected $8,000 (the small difference might be interest or a minor calculation adjustment). I'd suggest checking your online IRS account transcript to confirm both payments are showing up there - that'll give you the complete picture of how they processed your amendment.

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?

For my small business (S-Corp), here's how the tax situation works with employees: 1. My business earns revenue 2. I deduct ALL legitimate business expenses including: - Employee wages and benefits - Contractor payments - Rent, utilities, equipment - My own reasonable salary 3. The remaining profit flows to my personal tax return 4. I pay income tax on that profit, but not self-employment tax The big advantage is employee costs are fully deductible. But remember you're still responsible for employment taxes on their wages (social security, medicare, etc). This is separate from your income tax on profits.

I've been a small business owner for 6 years and the tax situation REALLY depends on your business structure: Sole Prop / LLC (default): Revenue minus expenses (including employee wages) = your profit. You pay BOTH income tax AND self-employment tax (15.3%) on all profits. S-Corp: You pay yourself a reasonable salary (subject to payroll taxes) PLUS you can take distributions from remaining profits (NOT subject to self-employment tax). C-Corp: The business itself pays corporate tax on profits after all expenses. Then you pay personal income tax on whatever salary the business pays you. Double taxation but some advantages for reinvestment. Your tax advisor can run the numbers based on your specific situation, but generally S-Corps become advantageous once you're making $80K+ in profit.