Do you know if staking rewards count as a "yes" for the new question wording? I've been staking some ADA and getting small amounts every few days.

Yes, staking rewards absolutely count as a "yes" answer on the virtual currency question. The IRS treats staking rewards similar to interest income - you're receiving new cryptocurrency as a reward, which is considered taxable income when received. You'll need to track the fair market value of each staking reward at the time you received it and report the total as income. Most people report staking rewards either as "Other Income" on Schedule 1 or as business income on Schedule C if you're doing it as part of a business activity.

Those Coinbase Learn rewards are definitely NOT purchases! They count as income and you would need to mark "yes" on the virtual currency question. Basically anything where you RECEIVE crypto without directly buying it with USD (mining, staking, airdrops, rewards, etc.) is taxable income.

Whoa I had no idea about the 183 days thing! Is that calendar days or business days? And what counts as a "permanent place of abode"? Like if I'm renting a room would that count?

It's 184 calendar days (not just business days) - and partial days usually count as full days in NY. So if you cross into NY for lunch, that potentially counts as a full NY day. A "permanent place of abode" is usually any place you have regular access to that's suitable for year-round use - so yes, a rented room would typically count. It doesn't need to be owned by you or even paid for by you. If you have a key and regular access, it could qualify. NY is particularly aggressive about auditing people who claim to live elsewhere but work in NY. They've even been known to check your E-ZPass records, cell phone records, and credit card statements to verify your whereabouts! If you're close to that 183-day threshold, document everything.

Good point! This is why state-specific advice is so important. I'm in Illinois but work in Wisconsin, and they have a reciprocal agreement so I only pay IL taxes despite earning income in WI. Saves me from filing two state returns.

How exactly do you bring this up without causing family drama? My father-in-law gets defensive whenever I mention anything about the business structure or distributions.

The key is framing it as a business sustainability issue rather than a personal complaint. I approached it by saying: "For the business to thrive long-term, all owners need to be able to maintain their ownership without financial hardship." I also found it helpful to bring some documentation from our accountant explaining how other family businesses handle this common issue. When presented as a standard business practice rather than a criticism, it was received much better. Sometimes having a neutral third party (like an accountant) suggest these changes can remove the emotional element from the discussion.

This is good advice. When I was in a similar situation, I was able to deduct a portion of my home office, travel to business meetings, and some professional development costs. It didn't solve the whole problem, but it reduced the tax hit by about 30%.

I hadn't even thought about deductions! I work from home occasionally on stuff related to the orchard (mostly bookkeeping and some marketing). Would that count toward a home office deduction? And we drive about 80 miles round trip to visit the orchard like 6-7 times a year.

That's interesting about the S-Corp option. How difficult is it to change from partnership to S-Corp? Are there minimum salary requirements we would need to be aware of? Our LLC is still pretty small but we're planning for growth.

Converting from a partnership to an S-Corp isn't particularly difficult. You file Form 8832 to elect to be taxed as a corporation, then file Form 2553 to elect S-Corp status. It can be done any time, but if you want it effective for the current tax year, there are deadlines to be aware of. For salary requirements, the IRS expects S-Corp owners to take a "reasonable salary" based on market rates for the work you do. There's no specific minimum, but it needs to be defensible if questioned. Too low a salary raises red flags because it looks like you're trying to avoid payroll taxes. For a small business, even a modest salary that's in line with what you'd pay someone else for the same work should satisfy the requirement.

Good point about tax distributions! My partnership agreement actually requires minimum distributions equal to the highest tax bracket percentage of allocated income specifically for this reason. Helps prevent cash flow issues for partners at tax time.

Thanks for all the advice everyone! Quick question - if I put that extra amount on line 4(c), will that just reduce my paycheck by exactly that amount? Or does it calculate differently?

Exactly right - whatever dollar amount you put on line 4(c) will be withheld from each paycheck as an additional amount. So if you put $50, your paycheck will be $50 less each time, and that money goes straight toward your federal tax.

This is actually really smart. I never thought of doing a mid-year correction. Do you just submit a new W4 to your HR department?