Do the sites tell you upfront how they'll classify the payments? I just started doing surveys and never thought about checking the tax implications. Now I'm worried because I've earned about $1,700 across multiple platforms this year.

Most sites don't make it obvious how they'll classify payments. You usually have to dig through their terms of service or tax information pages to find out. Some will mention it during signup, but it's often buried in the fine print. With $1,700 across multiple platforms, you should definitely report the income regardless of whether you receive any forms. A good practice is to check each site's help center or support for their tax classification policies. You can also reach out to their support teams directly to ask how they report payments to the IRS.

Does anyone actually get audited for survey income though? It seems like small potatoes compared to what the IRS usually goes after.

I did check that actually! I have health insurance through my job that takes about $85 per paycheck, and I'm contributing 4% to my 401k. But I was specifically looking at just the tax withholding line items when I calculated the 22%. Good thought though!

Ah, gotcha. Then yeah, it sounds like what others have said is right - the 22% is a combination of federal income tax, state income tax, and FICA taxes. The tax bracket percentages on the IRS site are just for federal income tax, which is only a portion of your total tax burden. Just to break it down for clarity, on your ~$43k income: - Federal income tax: probably around 9-10% effective rate - State income tax: around 4-5% depending on your state - Social Security: 6.2% - Medicare: 1.45% That adds up to about 21-23% total for taxes, which matches what you're seeing on your paystubs.

You're forgetting the standard deduction though. In 2023 it was $13,850 for single filers, so you don't pay any federal income tax on that amount. So someone making $43k would only pay taxes on $29,150 of income, which would be $3,306 in federal tax (about 7.7% effective rate).

You're absolutely right, I forgot about the standard deduction! That makes the effective federal tax rate even lower, which explains why the withholding seems high compared to the tax bracket. With the standard deduction, someone making $43k would have a taxable income of about $29k. That would be $1,100 (10% of the first $11k) plus about $2,160 (12% of the remaining $18k) for a total of about $3,260 in federal tax. That's only about 7.6% of their gross income. Add 7.65% for FICA and about 5% for state (varies widely), and you get to around 20-21% total, which lines up with what the original poster is seeing on their paychecks.

Thank you for breaking this down so clearly! My photography losses weren't huge (between $800-1500 each year), but it sounds like I should still file the amended returns. Do you think I should include some kind of explanation letter with my amendments to explain why I'm filing them now? And how do I document "intent to profit" for past years?

Yes, I would definitely include a brief explanation letter with your amendments explaining that you recently learned about the requirement to file Schedule C even with losses. The IRS appreciates transparency, and this shows good faith. For documenting intent to profit for past years, gather any evidence showing you were serious about the business - things like business cards you had printed, websites or social media accounts promoting your services, photography equipment purchases, workshops or classes you took to improve your skills, client communications, or advertising efforts. Even a basic business plan or rate sheet from those years would help. The key is showing you were genuinely trying to make the business profitable, not just pursuing a hobby.

I used TurboTax to amend my 2020 return to add a Schedule C for my candle business. It was pretty straightforward - you just indicate it's an amendment, enter your original return info, then make the changes. The software recalculates everything and generates the forms. Just make sure you have good records of your income and expenses from that year.

What exactly counts as "capital improvements"? Does regular maintenance count? Like if I replaced the dishwasher when it broke, is that an improvement or just a repair?

Great question about capital improvements vs. repairs. The basic rule is that improvements add value to your home, prolong its useful life, or adapt it to new uses, while repairs just keep your property in good working condition. Replacing a broken dishwasher with a similar model is generally considered a repair and not a capital improvement. However, if you upgraded to a significantly better dishwasher or remodeled the entire kitchen, that would count as a capital improvement. Examples of capital improvements include: adding rooms, replacing the entire roof, paving the driveway, installing central air conditioning, replacing all windows, or adding a fence. Regular maintenance like painting, fixing leaks, or replacing broken fixtures usually doesn't count.

I used TurboTax last year when I sold my primary residence. It was pretty straightforward - it walks you through a series of questions about how long you owned and lived in the home, and then calculates whether you qualify for the exclusion. The software also helps you calculate your adjusted basis including improvements.

Does Xero handle revenue recognition well for subscription services? We're having issues with our current setup properly spreading annual payments across 12 months.

Xero handles subscription revenue recognition pretty well. You can set up automated journal entries to spread annual payments across 12 months. It takes some initial setup with a template, but once it's running, it works smoothly. We have clients who pay annually, quarterly, and monthly, and the system keeps it all straight. For really complex subscription setups, we did add a Xero plugin called "Deferred Revenue" that adds some extra functionality, but most startups won't need that until they're at a larger scale.

Wave is definitely underrated! I do have issues with it handling my AWS and GCP invoices tho. Constantly miscategorizes them as personal expenses for some reason.