Oh that's really helpful to know about Etsy! So for my own website sales, do I need separate sales tax permits for each state once I hit their thresholds? And how exactly do I remit the taxes I collect?

Yes, you'll need to register for sales tax permits in each state once you meet their economic nexus thresholds. For your own website sales, you'll be responsible for calculating the correct rate (which can vary by city/county within states), collecting it from customers, and then filing returns and submitting payment to each state. Filing frequencies vary by state and sometimes depend on your sales volume - some might require monthly filing while others are quarterly or annual. Most states now have online filing systems, but each works differently. Some states also require prepayment or bonding for new registrants, so plan ahead before you hit thresholds.

Yikes, what triggered the audit? Was it just random or did something specific catch their attention? I'm wondering what red flags to avoid.

Thank you for the specific form recommendation! I didn't know about the 14157-A. Would you mind sharing how long the investigation into your preparer took? And did you end up having to pay back all the incorrect refunds you received in your situation?

The investigation took about 8 months before I received notification that action had been taken against the preparer. The IRS doesn't share specific details about penalties they impose, but I did receive a letter confirming my complaint was substantiated and that "appropriate action" had been taken. Regarding repayment, yes, I did have to pay back the incorrect refunds plus interest. However, the IRS did waive most of the accuracy-related penalties after reviewing my documentation showing I'd been misled. I was able to set up a payment plan with manageable monthly payments. The most important thing was separating myself from the fraudulent behavior by being completely transparent and proactive.

This is incorrect advice. They said they filed SEPARATELY, not jointly. Innocent spouse relief only applies to joint returns. Please be careful giving tax advice when you don't fully understand the situation.

I hadn't thought about that option. Is the OIC process more complicated than setting up an installment agreement? And do they accept a lot of these offers or is it really difficult to qualify?

An OIC is definitely more complex than a standard installment agreement. You'll need to complete Form 656 and Form 433-A (OIC) with much more detailed financial information. The process typically takes 6-12 months for a decision. As for acceptance rates, they've improved in recent years. The IRS accepts about 40-45% of OICs submitted these days, which is much better than the historical 10-15% acceptance rate from years ago. The key is being realistic about what you offer - they use a formula based on assets, income, and expenses to determine the minimum they'll accept.

This is good advice. I was placed in CNC status for 2 years when I had a medical issue that wiped out my savings. The IRS reviewed my case after about 24 months and by then I was able to set up a reasonable installment plan. Without that breathing room I would have been completely underwater.

TurboTax is way overpriced. Try FreeTaxUSA - it's like $15 for state filing and federal is free. Has all the same self-employment stuff without the crazy price tag.

Is there any way to offset capital gains? I'm going to sell some stocks this year that will give me a big gain and I'm dreading the tax hit.

Yes, you can offset capital gains with capital losses. If you have investments that have gone down in value, selling them in the same tax year will create capital losses that directly offset your gains. You can also contribute to tax-advantaged accounts like 401(k)s or traditional IRAs to lower your overall taxable income, which can help reduce the impact of the capital gains. For example, if contributing more to your 401(k) drops you into a lower tax bracket, your capital gains rate might also decrease.

I tried using TurboTax last year and it was a disaster for my ITIN application. The software let me complete the W-7 form but didn't provide good instructions about the supporting documentation needed. My application was rejected because I didn't include certified copies of my ID documents. Ended up having to reapply manually.

I actually had a good experience with H&R Block in-person (not the software). They have Certifying Acceptance Agents at many locations who can verify your documents on the spot so you don't have to mail originals. Cost me extra but was worth it for peace of mind.

Oh wow, that's good to know! I was hoping to have mine before the tax filing deadline. Maybe I should consider using one of the Certifying Acceptance Agents people mentioned to speed things up? Did you mail in original documents or copies?

I mailed in certified copies (got them authenticated at my country's consulate) and that worked fine, but using a Certifying Acceptance Agent would definitely be faster. My friend used one and got his ITIN in about 8 weeks total. If you're planning to file taxes this coming season, I'd definitely recommend going with an agent rather than mailing everything yourself. The peace of mind is worth it, plus you keep all your original documents with you. The IRS is still catching up on backlogs, so anything you can do to make your application more straightforward will help speed things up.