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Doesn't this kind of stuff make you mad? Like the govt wants to tax street performers who are barely making ends meet while billionaires pay nothing? Sorry but I think you should just keep your busking money. It's ridiculous to pay taxes on pocket change.
While I understand the frustration, I have to caution against not reporting income. Even small amounts from busking are legally required to be reported. The penalties for unreported income can be severe and far outweigh any tax savings. It's worth noting that lower-income performers often qualify for tax credits and deductions that can significantly reduce what you owe or even result in a refund. Many street performers making under certain thresholds may end up owing very little in actual tax. The self-employment tax (Social Security/Medicare) is usually the bigger concern for gig workers.
I guess you're right about the risk. I just get frustrated with the system. My friend did get a letter from the IRS about unreported income and ended up paying way more with penalties than if he'd just reported it honestly in the first place. Still think the system is unfair to small earners though! But I reported my DJing income this year just to be safe.
One thing I haven't seen mentioned - if you make more than $400 in self-employment income for the year (which it sounds like you have), you'll need to make quarterly estimated tax payments going forward. Otherwise you might face penalties when you file next year.
How do you even calculate quarterly payments when busking income is so unpredictable? Some weekends I make $300, others barely $50.
Great question! For unpredictable income like busking, you can base your quarterly payments on your estimated annual total. Since you mentioned making around $6,200 so far in 6 months, you might project $12,000+ for the year. You can use Form 1040ES to calculate estimated payments, or make it simpler by setting aside about 25-30% of your busking income each time you perform. Put that money in a separate savings account for taxes. If you overpay during the year, you'll get a refund when you file. Another option is to make "safe harbor" payments - if you pay 100% of what you owed in taxes last year (110% if your income was over $150k), you won't face penalties even if you underpay for the current year. This works well for variable income situations.
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pro tip: sign up for informed delivery with usps. sometimes the check comes before the wmr updates js
Iowa resident here! Filed Feb 3rd and still waiting on my state refund too. It's nerve-wracking when you have bills coming up. The 14-21 day timeframe Sebastián mentioned seems pretty accurate from what I've seen others post. Hang in there - at least we don't have to deal with the PATH Act delays for state like we do with federal!
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Has anyone used TurboTax to report a personal injury settlement? Wondering if it handles this situation well or if I should go to an actual tax preparer this year.
I used TurboTax last year for a similar situation. It asks you some questions about the settlement and walks you through which parts are taxable vs non-taxable. Worked fine for me, but my settlement was pretty straightforward personal injury compensation with no punitive damages or interest.
Congrats on the settlement! For a class action personal injury settlement like yours, the good news is that most of it will likely be tax-free under IRC Section 104(a)(2). However, you'll want to carefully review the settlement documentation to see if it breaks down different components. Key things to look for in your paperwork: - Compensation for physical injuries/medical costs (non-taxable) - Punitive damages (taxable) - Interest on the award (taxable) - Attorney fees (may affect your reporting) Since this was for defective airbags that presumably caused physical injuries, the bulk should be non-taxable. But class action settlements sometimes include punitive damage components that would be taxable. I'd recommend keeping detailed records of the settlement breakdown and consider getting professional guidance if the documentation isn't clear. Better to be certain upfront than deal with issues later during tax season!
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Don't forget to get something in writing from the festival organizers! My accountant says the number one mistake people make with bartering arrangements is not having documentation of the agreement. A simple email that outlines what you'll be doing and what you're receiving in exchange can save you major headaches if you get audited. Also, save a copy of what the festival pass normally costs (screenshot of their website pricing) to document the fair market value of what you received. The IRS doesn't just take your word for these things!
This is crucial advice. I got audited on a similar situation and the first thing they asked for was proof of the arrangement and documentation of the fair market value. Without it, they might treat all your deductions as personal expenses.
This is a really helpful thread! I'm dealing with a similar situation where I'm providing DJ services at a wedding expo in exchange for booth space (valued at $300). Reading through all the advice here, it sounds like I need to report that $300 as income and can deduct my legitimate business expenses. One thing I'm still confused about - if my travel expenses end up being more than the value of what I received in the barter, can I still deduct the full amount of legitimate business expenses? Or am I limited to only deducting up to the $300 in bartering income I'm reporting? Also, has anyone had experience with the IRS questioning the "primary purpose" of a trip? I'm worried about how to prove that business was the main reason for travel when part of the arrangement involves networking at what could be seen as a social event.
Aisha Mahmood
Hey has anyone mentioned capital gains rates yet? Since OP only held the land for 10 months, that's gonna be short-term capital gains, right? Taxed as normal income?
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Ethan Clark
•Yes, it's short-term if held less than a year. But what's interesting is that the holding period for inherited property is automatically considered long-term regardless of how long you actually owned it. So the directly inherited half would qualify for lower long-term capital gains rates. The traded half would be short-term since it's been less than a year since the trade.
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Makayla Shoemaker
This is a really complex situation, but you're asking all the right questions! One thing I haven't seen mentioned yet is that you should definitely document the land swap with your cousin, even if it was informal. The IRS will want to see that this was a legitimate like-kind exchange and not just a gift. For the documentation, I'd recommend getting a written statement from your cousin confirming the details of the trade - when it happened, what parcels were exchanged, and the basis they had in their inherited portion. This will help support your tax position if the IRS ever questions the transaction. Also, since you mentioned your tax software is asking these questions, you might need to report this as two separate transactions on your return - one for the inherited half and one for the traded half - each with their own basis calculations and holding periods. The software should be able to handle this if you input the data correctly, but having all your documentation organized first will make the process much smoother. Keep all your records - inheritance documents, any appraisals, comparable sales data, and documentation of the land swap. The IRS has up to 3 years to audit, so you'll want everything well-organized just in case.
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