Quick question - are there different rules for different types of businesses? I run a small etsy shop and have maybe $600 in undocumented expenses for materials last year.

The good news is that you're planning to report all your income - that's the most important part and shows good faith to the IRS. The penalties for poor record-keeping are typically not as severe as people think, especially for honest taxpayers. Here's what you should do immediately: 1. **Reconstruct what you can**: Go through your bank statements, credit card records, and payment apps (Venmo/PayPal) to create a comprehensive list of all business income and expenses. 2. **Create a simple tracking system**: Use a spreadsheet or basic accounting software to categorize everything. Include dates, amounts, vendors, and business purposes. 3. **Save digital evidence**: Screenshot your payment app histories, save any client emails or text messages about work performed, and gather any photos of your work that might support your income claims. 4. **Start proper record-keeping now**: Going forward, keep all receipts and maintain organized records. Consider using a dedicated business bank account and credit card. For your $3.5k in component expenses, even without receipts, you can still claim legitimate business deductions if you can reasonably reconstruct them using bank statements or credit card records. The IRS understands that small businesses sometimes have imperfect records, especially in the first year. The key is demonstrating that you're making a good faith effort to comply and be accurate. You're much better off than someone trying to hide income entirely.

Don't forget that the IRS generally only resorts to levies after multiple notices over MANY months or even years. The collection process typically goes: notice of tax due → demand for payment → notice of intent to levy → actual levy. Each step usually has months between them with multiple letters. If you're at the "intent to levy" stage, you've likely received at least 3-4 notices already. They don't just suddenly decide to take your money. This is why ignoring those initial letters is so dangerous - by the time they're threatening levies, you've already missed several opportunities to resolve it more easily. This isn't meant to make anyone feel bad, just to emphasize that responding to the very first notice is ALWAYS the best approach.

I'm in a similar situation and just want to share what I learned from calling the IRS directly after getting my Notice of Intent to Levy. The 30-day deadline is real and starts from the date on the notice, not when you receive it. What surprised me was that the IRS agent actually walked me through several options I didn't know existed. Beyond the standard payment plan, they mentioned "partial payment installment agreements" for people who can't pay the full amount, and something called "Currently Not Collectible" status if you're facing genuine financial hardship. The key thing I learned is that ANY formal response within those 30 days - even just calling to discuss options - can pause the collection process while they review your situation. Don't wait until day 29 like I almost did. The earlier you respond, the more options you typically have available. Also, if you do set up a payment plan, make sure to ask for written confirmation that the levy process has been stopped. Get everything in writing!

I'd be really careful about deducting au pair payments as business expenses. The IRS has strict rules about what qualifies as a legitimate business deduction, and childcare generally doesn't meet those criteria even if it enables you to work. The key test is whether the expense is "ordinary and necessary" for your specific business operations. Paying someone to watch your kids while you work from home doesn't directly produce business income - it's a personal expense that happens to enable you to work. However, you're in a good position with the dependent care credit! With your combined freelance income, you should be able to claim up to $6,000 in qualifying expenses (assuming you have two or more kids) for a credit of $1,200-$2,100 depending on your AGI. Make sure you get the au pair's SSN/ITIN along with the agency's EIN for Form 2441. The math probably works out better with the credit anyway since it's a dollar-for-dollar reduction in taxes owed, versus a deduction that just reduces your taxable income.

This is a great question and I can see why you'd be confused! The key thing to understand is that the IRS treats childcare costs and business expenses very differently, even when the childcare enables you to work. Your weekly payments to the au pair are personal expenses that qualify for the dependent care credit, not business deductions. The test for business expenses is whether they're "ordinary and necessary" for your specific business operations. Paying someone to watch your kids so you can work doesn't meet this standard - it's a personal expense that happens to enable your work. Here's what you should focus on for maximum benefit: - Use the dependent care credit for both the agency fees and weekly payments - You can claim up to $6,000 in expenses if you have two or more qualifying children - The credit ranges from 20-35% of your expenses based on your AGI - Make sure you get the au pair's SSN/ITIN and have the agency's EIN for Form 2441 Given your income levels, the dependent care credit will likely provide better tax savings than trying to deduct these as business expenses (which could trigger audit issues). The credit directly reduces your tax liability dollar-for-dollar, while deductions only reduce taxable income. Keep detailed records of all payments and make sure your au pair files their 1040NR as you mentioned - that shows proper tax compliance on their end too.

Same thing happened to me last month! The 570 basically puts your refund on pause while they review something. Don't panic - it's usually just routine verification. I got my notice about 10 days later and it was just asking me to confirm some W-2 info. Once I responded, they released my refund within 2 weeks. Hang in there!

These codes are super common this time of year! 570 means they've temporarily held your refund for additional review, and 971 means they're sending you a notice explaining why. It's usually something simple like verifying income or checking for duplicate filings. The good news is that most of these resolve pretty quickly once you get the letter and respond if needed. Try not to stress too much - you should hear from them within 2-3 weeks with next steps!

Does anyone know what the actual tax RATES were like in 1775 compared to now? I'm curious if we're paying more or less of our income to taxes than colonists did.

This is such a fascinating topic! What really strikes me is how the colonial tax system was so much more transparent and straightforward. When a tax assessor came to your property, you could literally see what you were being taxed on - your land, your house, your livestock. There was no mystery about deductions, credits, or hidden calculations. Compare that to today where most people have no idea how their tax liability is actually calculated, even with software doing it for them. We have this incredibly complex system that requires professional expertise to navigate, while colonists could probably understand their entire tax obligation in a single conversation with the assessor. I wonder if there's something to be said for that simplicity, even if it meant fewer services from government. At least people knew exactly what they were paying for and why. The irony is that the Boston Tea Party was partly about "taxation without representation," but nowadays many people feel like they have representation but still don't understand their taxation!