This is such a common situation for creative freelancers! You're definitely not alone in being confused about the tax obligations. The good news is that you're addressing it now rather than letting it pile up for more years. One thing I'd add to the excellent advice already given - make sure you're keeping detailed records of not just your income, but also your business expenses. Things like Adobe Creative Suite subscriptions, Wacom tablet styluses, online course fees for improving your art skills, and even a portion of your internet bill can potentially be deducted as business expenses. Since you mentioned you're getting paid through Venmo, I'd strongly recommend switching to a more business-friendly payment method like PayPal Business or Stripe for future commissions. These platforms make it much easier to track your income and provide better documentation for tax purposes. Plus, they look more professional to clients. For the income you've already earned in previous years, you might want to consider filing amended returns if the amounts were significant. The IRS is generally more lenient if you voluntarily correct past mistakes rather than waiting for them to find discrepancies.

As a digital artist who went through this exact same panic a few years ago, I can tell you that you're handling this the right way by addressing it now! The IRS actually appreciates when people come forward voluntarily rather than trying to hide income. One thing I haven't seen mentioned yet - consider setting aside 25-30% of your commission income going forward for taxes. Since you're already employed full-time, your art income will likely be taxed at your marginal rate plus self-employment tax, so it adds up quickly. I learned this lesson the hard way during my first year! Also, keep in mind that the IRS has a "hobby vs. business" test. Since you're consistently earning income and treating this seriously, you should be fine. But document your business activities - save client communications, keep a log of time spent on projects, and maintain professional practices. This helps establish that you're running a legitimate business, not just pursuing a hobby. For record-keeping, I use a simple spreadsheet with columns for date, client, project description, amount earned, and payment method. Takes 2 minutes per transaction but saves hours during tax season. You can also photograph receipts for business expenses with your phone - just make sure they're clear and organized by category. The learning curve is steep at first, but once you get systems in place, it becomes routine. You've got this!

Has anyone actually successfully gotten an audit where the IRS questioned fiverr expenses? Im in the same boat but ive been just putting everything under "contracted services" on my taxes for my webcomic. ive been doing this for 3 years and no issues...

I've been running my digital marketing LLC for about two years and have used Fiverr extensively for graphic design and copywriting services. The key thing I learned (the hard way during a tax review) is that documentation is everything. Yes, your Fiverr payments are absolutely deductible business expenses for your comic book LLC. Since Fiverr acts as the payment processor, you don't need to issue 1099-NECs to individual freelancers - that's Fiverr's responsibility. However, make sure you're keeping detailed records beyond just the Fiverr payment receipts. Save the project descriptions, delivered files, and any communication that shows how each illustration directly relates to your comic book business. I also recommend creating a simple spreadsheet tracking each payment with the chapter number, artist name, and brief description of work. One thing that helped me was setting up a separate business bank account and credit card exclusively for LLC expenses. This creates a clear paper trail and makes it much easier to track business vs personal expenses during tax season. The IRS wants to see that you're operating with a genuine profit motive, so document your business plan, marketing efforts, and steps you're taking toward monetization. Even if you're not profitable yet, showing you're actively working toward profitability helps establish legitimate business intent.

I feel your pain on this one! This is such a common trap that catches new business owners off guard. The IRS really should make this rule more prominent when people are filing their first year of business taxes. One thing worth double-checking - make sure you're calculating your actual expenses correctly for 2024. Beyond the obvious gas and maintenance, don't forget about: - Depreciation (this is usually the biggest one people miss) - Business percentage of insurance premiums - Registration and license fees - Loan interest if you financed the vehicle - Parking fees and tolls for business trips - Any modifications made for business use I've seen cases where people thought they were way behind on actual expenses but were actually much closer to standard mileage once they included everything properly. That said, if there's still a significant gap and you're planning to keep driving high business miles, selling and getting a different vehicle for business use might genuinely be your best financial move. Just make sure to start fresh with proper mileage tracking from day one with any new vehicle!

The frustration you're feeling is completely understandable - this is honestly one of the most confusing and poorly communicated tax rules out there. I went through the exact same thing when I started my consulting business three years ago. While you are indeed stuck with actual expenses for that specific vehicle, don't give up on maximizing what you can claim. A lot of people underestimate their actual expenses because they're not tracking everything properly. Make sure you're including depreciation (which can be substantial), the business percentage of your auto insurance, registration fees, and even things like car washes if you're meeting clients. The vehicle replacement strategy others mentioned is actually pretty common in the business world. If the math works out (and with a $10k annual difference, it very well might), treating it as a business investment rather than a personal inconvenience can help with the decision. You'd essentially be upgrading your business asset to optimize your tax situation. Also, for future reference - and this might help others reading this - always research both methods before making the election in your first year. The standard mileage rate gives you flexibility to switch to actual expenses later if needed, but not the other way around. It's one of those "know before you go" situations that unfortunately catches a lot of new business owners.

For the Turo situation, I think you might be missing potential deductions. If you received $13,500 for damages and paid $13,500 for repairs, you should record both transactions. Report the $13,500 damage payment as income (Turo will likely issue a 1099-K), and then deduct the $13,500 repair cost as a business expense. Even though it's a wash income-wise, documenting both sides properly will keep your books clean and defendable if you're ever audited. Ask your repair shop for an itemized receipt for your records.

Great questions! As a fellow small business owner who's dealt with similar situations, here are some key points to consider: For Situation 1 (Vrbo property management): You're correct to be thinking about 1099s. Since you're receiving the full amount from Vrbo and then paying your client their portion, you should issue them a 1099-NEC if you paid them $600+ during the tax year. This creates the proper paper trail - you'll report the full Vrbo income, deduct what you paid to the property owner as a business expense, and your client reports their portion as income. For Situation 2 (door replacement): Since you paid the contractor directly for services and it was over $600, you should issue them a 1099-NEC. The reimbursement from your client doesn't change your obligation to report what you paid the contractor. Your client reimbursing you isn't taxable income to you since it's just reimbursement. For Situation 3 (Turo damage): This one's tricky and depends on how Turo classifies the payment. If they treat it as insurance proceeds for property damage, it might not be taxable income. But if they issue you a 1099-K, you'll need to report it and offset it with the repair expenses. Either way, no 1099 needed for the body shop since repair services to your business property generally don't require 1099 reporting. I'd recommend consulting a tax professional for the Turo situation specifically, as the tax treatment can vary based on the exact nature of their damage coverage program.

Chime user here! Just FYI, I got my refund about 2 days faster with Chime than my wife did with her traditional bank. We filed on the same day (married filing separately for specific reasons). Mine showed up on Wednesday, hers on Friday. Not a huge difference but still nice!

Yes, Chime does send push notifications when you have a pending deposit! You'll typically get notified as soon as the deposit is initiated by the sender (in this case, the IRS). The notification will show the amount and expected availability date. In my experience with tax refunds specifically, Chime usually shows the pending deposit about 1-2 business days before it becomes available, similar to what you described with your credit union. You can also check pending deposits in the app under your account balance - it'll show "Pending" with the amount and expected date. The nice thing about Chime's early direct deposit feature is that once they receive the deposit information from the IRS, they often make it available up to 2 days sooner than the official settlement date. So you might see your refund hit your account on a Wednesday when other banks wouldn't release it until Friday.