3 Just to add my two cents - if you use accounting software like QuickBooks Self-Employed, they have specific features for handling PayPal transactions correctly. It automatically imports your PayPal activity and separates the fees from your income, but still accounts for everything properly on your tax forms.

As someone who's been dealing with self-employment taxes for several years, I can confirm the advice about reporting gross income and deducting fees separately is absolutely correct. One additional tip I'd suggest - make sure to save your PayPal monthly statements as PDFs throughout the year. These statements clearly show the breakdown of gross payments vs. fees, which can be invaluable if you ever need to provide documentation to the IRS. Also, don't forget that other PayPal-related expenses might be deductible too, like currency conversion fees if you receive international payments, or chargeback fees if you unfortunately deal with those. The key is keeping everything well-documented and categorized consistently. Good luck with your first year of self-employment taxes - it gets easier once you establish a good system!

I was scared to take the home office deduction for years because I heard it was an "audit flag" but my accountant finally convinced me it was leaving money on the table. As long as you have a legit office that's exclusively used for business, you should absolutely take it. And document everything - take pics of your office, keep receipts for all office equipment, etc.

Based on your situation, you definitely should be able to take the home office deduction for both businesses. With $130k profit from your LLC and $8k from your online store, plus a dedicated 25% office space, you have a solid case. One thing to consider - since you have two separate businesses using the same space, you might want to allocate the deduction between them based on actual usage. For example, if you spend 80% of your office time on the LLC and 20% on the online store, you could split the deduction accordingly. This can actually be beneficial for tax planning since they're different business structures. Also, don't forget about other home office expenses beyond rent/utilities - office supplies, equipment depreciation, repairs to the office area, etc. With your income levels, these deductions will really add up. Just make sure you have good documentation for everything since the IRS does pay attention to home office deductions on higher-income returns. Your plan to get a good CPA is smart - they can help you optimize the deduction and make sure you're doing everything by the book.

Has anyone actually gotten audited for claiming unreimbursed work expenses? I've been deducting my work laptop for years and never had an issue. The IRS doesn't check every return, right?

I feel your frustration with the laptop situation! I was in a similar spot last year when my company kept delaying equipment purchases. Unfortunately, as others have mentioned, the Tax Cuts and Jobs Act really changed the game for employees. You can't deduct unreimbursed work expenses on your personal taxes anymore, even if your employer should be providing the equipment. Here's what I'd suggest trying before you spend your own money: 1. Document everything - emails about the laptop shortage, dates you've requested equipment, any impact on your work 2. Ask your manager to put in writing that you need to purchase your own equipment for work duties 3. See if they'll at least agree to reimburse you later when the budget gets approved 4. Check if your company has any policy about "bring your own device" allowances If you absolutely have to buy it yourself, keep all receipts and documentation. While you can't deduct it as a W-2 employee, if you ever do any freelance or consulting work on the side, you might be able to claim a portion of it on Schedule C based on business use percentage. The bigger issue here is that your employer is basically forcing you to subsidize their business operations, which isn't fair. Might be worth having a conversation with HR about the policy implications of requiring employees to purchase their own work equipment.

My tax software gave me an error when I tried to do something similar with my cousin. Said I couldn't claim HOH if I wasn't claiming any dependents. Which tax software are you using?

Based on what you've described, you should be able to claim Head of Household status even though your brother will claim your mother as a dependent through Form 2120. The IRS specifically allows this when someone would qualify as your dependent except for the multiple support agreement. Since your mother lived with you for 8 months (more than half the year), you paid more than half the costs of maintaining the household, and she would otherwise qualify as your dependent, you meet the HOH requirements. The fact that you're allowing your brother to claim her through Form 2120 doesn't disqualify you from HOH status. Just make sure to keep detailed records of the household expenses you paid and the support calculation showing neither of you provided more than 50% of her total support. You'll want this documentation in case the IRS has questions later.

Former tax preparer here. The confusion might be because you mentioned "claiming your wife" which isn't actually how it works anymore. You file either as "married filing jointly" (MFJ) or "married filing separately" (MFS). If you file jointly, which most couples do because it's usually more beneficial, then the refund belongs equally to both spouses under tax law, regardless of who earned what. It's a joint return with joint liability and joint benefits.

This is actually more complicated than just tax law. While the IRS treats the refund as belonging to both of you when filing jointly, state laws about marital property can also come into play. In community property states, most assets acquired during marriage are generally considered owned equally by both spouses. But in equitable distribution states, it could be treated differently in certain contexts.