Something important nobody's mentioned yet - if you're getting income through these apps that will now be reported on 1099-Ks, you probably need to be making quarterly estimated tax payments throughout the year, not just paying at tax time. I got hit with an underpayment penalty last year because I wasn't doing this with my side gig income. The IRS expects you to pay taxes as you earn income, not all at the end of the year. If you're going to owe more than $1,000 at tax time, you should be making quarterly payments. This whole $600 reporting change means a lot more people will need to be thinking about this!

This is such a helpful thread! I'm in a similar boat with my freelance graphic design work - been using Venmo and PayPal for client payments and had no idea about this $600 threshold change. One thing I wanted to add that might help others: if you're scrambling to get your records organized like I was, your bank statements can be a lifesaver for tracking business expenses. I went through mine and found tons of deductible purchases I'd forgotten about - Adobe subscription, stock photo purchases, even mileage to client meetings. Also, for anyone doing this kind of side work, consider opening a separate business checking account if you haven't already. Makes tracking so much easier and looks more professional to clients. Some banks even offer free business accounts for small operations. It's one of those things I wish I'd done from the start instead of mixing everything with my personal account. Thanks everyone for sharing your experiences - this whole thread has been incredibly informative!

Pro tip: Watch for code 846 on your transcript every morning around 3am-6am EST. That's when they usually update. Also check your WMR tool - sometimes it updates before transcripts do.

Looking at your transcript, you're actually in a pretty good spot! The fact that you have codes 150, 806, and 768 already showing means your return has been accepted and is moving through the system. The $5 amount next to code 150 is totally normal - that's just how the IRS displays the tax liability line when you have a refund coming. Your cycle code 20250505 puts you in the 5th week processing cycle for 2025, which typically means updates happen on Fridays. Since your processing date shows 02-17-2025, you should keep checking your transcript for updates - especially watch for any 570/971 codes (which would indicate additional review) or hopefully the golden 846 code with your refund date! The April 15th dates on your 806 and 768 codes are just system placeholders, not actual processing dates. With your withholding ($1,795) and EIC ($6,930) totaling $8,725, you should see that full amount when the 846 code posts. Keep checking Friday mornings around 6am EST for transcript updates! 🤞

Something nobody's mentioned - in Michigan specifically, you still need to file annual statements with the state for LLCs even if they had no activity. It's only $25 per LLC, but if you miss it, Michigan can technically dissolve your LLC and there are penalties for late filing. So while your federal tax situation might be fine as others have said, make sure you're current with Michigan's Department of Licensing and Regulatory Affairs (LARA) requirements too!

Your accountant is likely being overly cautious or may not be familiar with LLC tax requirements. Based on what the IRS told you directly, you're probably in the clear. Here's why: For single-member LLCs that are "disregarded entities" (the default), they're reported on your personal tax return via Schedule C. If there was no activity, you'd report zero income and zero expenses. The penalties your accountant mentioned ($295/month per LLC) sound like they're referencing partnership return penalties (Form 1065), but those only apply if you elected to be taxed as a partnership. Since you never received penalty notices and the IRS confirmed you don't owe anything for the LLC without an EIN, I'd trust their word over your personal tax preparer who admittedly only does individual returns. My recommendation: If you're not planning to use these LLCs, properly dissolve them with Michigan and file final "zero activity" returns to close them out with the IRS. This prevents any future confusion. Don't pay $7,080 in penalties without getting a second opinion from someone who specializes in business taxes - that amount seems completely disproportionate for dormant entities that never operated.

I use a "purchase record form" for exactly this situation. I created a simple template that has spaces for date, item description, amount paid, business purpose, seller info, and how I paid. I also attach a photo of the item in use for my business. Been doing this for 3 years with no issues.

I'd be happy to share! I keep it really simple - just a basic Word document with fields for: • Date of purchase • Item description (desk, chair, filing cabinet, etc.) • Amount paid ($650 in your case) • Payment method (cash, check, etc.) • Seller information (name/contact if available) • Business purpose (home office setup for consulting business) • Supporting evidence (screenshots of messages, photos, bank withdrawal records) I print it out, fill it by hand, and scan it back in to keep with my digital records. The key is doing it as close to the purchase date as possible so it's "contemporaneous." For your Facebook Marketplace purchase, this would work perfectly since you have those messages and photos already. You can find similar templates by searching "business expense documentation form" or "receipt substitute form" online. The IRS doesn't require any specific format - they just want to see that you made a good faith effort to document legitimate business expenses.

Just fyi there's a huge difference between community property states and non-community property states when it comes to step-up basis for surviving spouses!!! My mom got a full step-up on ALL assets when my dad died because they lived in California (community property state), but my aunt who lives in new york only got step-up on my uncle's half of their joint assets. Cost her like $30k more in taxes when she sold their vacation home!!!

Just want to emphasize what others have said - you're absolutely fine and caught this at the perfect time! I went through almost the exact same situation when I inherited my grandfather's portfolio last year. One additional tip: make sure you get proper documentation of the December death date value. If these were publicly traded stocks, you can usually pull historical price data from sites like Yahoo Finance or your brokerage. For the exact date of death value, you'll typically use either the closing price on that date, or if you want to be more precise, you can use the average of the high and low prices for that day. Also keep in mind that if your grandmother died on a weekend or holiday when markets were closed, you'd use the closing price from the next trading day. The IRS is pretty reasonable about this stuff as long as you have documentation and use a consistent method. You're going to save yourself a lot of money by reporting this correctly - that $66,000 difference in taxable gains is huge! Props for doing your research before filing.