Just wanted to add my experience - I was in this EXACT situation last year. What solved it for me was getting my own bank account that my parents don't have access to and filing my own taxes this year. I used TurboTax and it was pretty easy even for a first-timer. My mom was mad at first but eventually got over it. The key is becoming financially independent step by step. Even if they claim you as a dependent, you can still file your own return and direct where your refund goes!

My parents pulled this same garbage with me. Here's what I learned: If you're under 24 and a full-time student, they CAN legally claim you as a dependent, BUT that doesn't mean they own your refund!! The refund is based on YOUR income and YOUR withheld taxes. Next year, file your own taxes ASAP before your parents can. You can still mark that "someone can claim you as a dependent" but YOU control where the refund goes. For this year, unfortunately, it might be a matter of family negotiation rather than legal action. The IRS won't get involved in family disputes even if you're technically right.

10 Just to add another perspective - I've been selling handmade jewelry on both platforms for about 4 years now. The tax stuff seems scary at first but it gets easier! Here's my simple approach: 1) I put 30% of every sale into a separate savings account for taxes (overkill, but prevents surprises) 2) I use the free version of Wave accounting to track everything 3) I take photos of every receipt with my phone immediately Don't worry about forming an LLC or anything fancy until you're making substantial profit. As a sole proprietor, you just need to file Schedule C with your regular taxes. The $600 reporting threshold is confusing because it's just about what Etsy/Ebay reports to the IRS, not what you need to report. Technically, you're supposed to report ALL income even if it's under $600!

15 My wife sells handcrafted items online and was in your exact position last year. What really helped was scheduling a FREE consultation with a VITA (Volunteer Income Tax Assistance) volunteer. They offer free tax help to people who make under $60,000. They walked her through everything - what receipts to keep, how to categorize expenses, and even showed her how to track everything in a basic spreadsheet. Totally changed her perspective on the tax side of her business. Google "VITA tax help" plus your city name to find locations. They typically operate January through April, but some offer year-round guidance.

Something important that hasn't been mentioned - if you had employees in that old business, and there are unpaid payroll taxes (941 taxes), that's a whole different level of seriousness. The IRS is extremely aggressive about collecting those, and they can and will come after you personally regardless of business structure. The Trust Fund Recovery Penalty allows them to assess the unpaid employment taxes personally against anyone who was responsible for collecting/paying those taxes. If any portion of that $54k is payroll taxes, I would strongly advise getting professional help immediately.

Have you looked into an Offer in Compromise? If you can prove you don't have the ability to pay the full amount, the IRS might accept a smaller settlement. I settled about $65k of business tax debt for around $12k when my last business failed. It's a lot of paperwork and they look at everything - assets, income, expenses - but if you genuinely can't pay, it might be an option. They'd rather get something than nothing.

As someone who just went through this last tax season, make sure you're also looking at whether you qualify for head of household filing status, which is much better than married filing separately! If you had the kids living with you for more than half the year (sounds like you did) and paid more than half the costs of keeping up the home, you might qualify even though you're not technically divorced yet. This made a HUGE difference for me - saved almost $3,800 compared to married filing separately. My divorce wasn't final until this year, but I was still able to file as HOH for last year.

One thing nobody's mentioned - make sure you're also tracking all the utilities, repairs, insurance, etc. that you've paid since separation. If you itemize deductions, those costs help establish that you paid "more than half the cost of keeping up the home" which matters for HOH status. My accountant had me create a simple spreadsheet with every home-related expense after my ex moved out. This documentation really helped support my tax position and prevented any disputes. Just a quick tip from someone who's been there!

To answer your original question - yes, FreeTaxUSA will handle your situation just fine. I've used it for the past 3 tax seasons with similar income sources (W-2, 1099, and investment accounts). The step-by-step process is pretty thorough, and they cover all the major tax forms and schedules. One tip: before you start, gather all your documents and organize them. FreeTaxUSA doesn't have all the fancy import features that TurboTax advertises, but honestly I find manually entering the data makes me more aware of what's actually happening with my taxes.

Just be aware that FreeTaxUSA doesn't support certain complex situations very well. If you have multi-state filings or foreign income, you might want to look elsewhere. But for your situation with a W-2, some freelance income, and retirement contributions, it'll work perfectly fine.