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Hey, just wanted to add some practical advice as someone who's worked cash jobs through high school and college. Keep a simple notebook or use a notes app on your phone and write down EVERY payment - date, amount, and what it was for. Take a picture of the cash before you deposit it too. When you deposit cash, don't do it all at once. Small regular deposits that match the work you're doing won't raise flags. And remember, banks are required to report cash deposits over $10,000, but they also report patterns of deposits just under that amount (called "structuring" which is actually illegal).
Is there a specific app you'd recommend for tracking cash payments? And do you actually need to take pictures of the physical cash? What does that prove exactly?
I just used the regular notes app on my phone, nothing fancy. The key is consistency - record everything right when you get paid so you don't forget. Taking pictures of cash isn't absolutely necessary for tax purposes, but I found it helpful when I needed to look back and verify amounts. It's more a personal record-keeping tip than a legal requirement. The most important thing is documenting when and how much you earned so you can accurately report it at tax time.
Just so you know, your parents might still need to be involved here. Since you're 15, they'll still claim you as a dependent on their taxes. If you make enough from your jobs (both regular and cash), you might need to file your own return, but your status as a dependent doesn't change. Also, most banks require an adult co-signer for minors under 18 anyway, so your parents probably have access to see your deposits. Better to be upfront with them now than have them surprised later!
That's actually not completely true. The rules for dependents filing their own returns depend on both earned and unearned income. For 2025, if your earned income is over $12,950, you need to file your own return even if someone claims you as dependent.
Thanks for the clarification. You're right about the filing threshold for earned income. The important thing for the original poster to understand is that being a dependent doesn't mean your parents file for your income on their return - you'd still need to file your own if you meet the thresholds. The point about bank accounts is still relevant though - as a minor, the parents will have visibility into banking activity in most cases, so having a conversation about the cash income is important.
My tax guy always says that even a short-term property sale won't trigger self-employment tax unless you've been making substantive improvements with the intention to sell for profit. Living in it as your primary residence indicates personal use, not a business activity. Your brother should keep good records though - document that he's living there as his primary residence, keep all utility bills, change his address officially, register to vote there, etc. The more evidence he has that this was his home (not an investment property), the better position he'll be in if questions ever come up. I think your brother's plan makes sense given the rent increase. Even with potential capital gains tax, he might still come out ahead compared to paying the higher rent for three years.
Does he need to do anything special on his tax forms to show it was his primary residence even though he didn't meet the 2-year test? Is there a specific form or something?
There's no special form specifically for declaring a primary residence that doesn't meet the 2-year test. He would report the sale on Schedule D and Form 8949 like any capital gain, but the key is keeping those supporting documents we discussed in case of questions. If he qualifies for a partial exclusion due to work-related move, health reasons, or unforeseen circumstances, he would need to fill out Form 2119. But from what you've described, planned retirement and moving overseas probably wouldn't qualify as an unforeseen circumstance, so he should plan on paying the full capital gains tax.
My parents just went through this! They bought a house, then dad got transferred unexpectedly and they had to sell after only 14 months. The tax part was actually pretty straightforward - they just paid capital gains tax on the profit (thankfully housing prices hadn't gone crazy in their area so it wasn't much). One thing they learned - if you have a legit reason for selling before 2 years, like job transfer, health issues, or certain other "unforeseen circumstances," you might qualify for a partial exclusion of capital gains. Doubt retirement plans would count though since that's a known, planned event.
Did they use TurboTax or some other tax software to figure all this out? I'm trying to decide if I need an accountant for my situation or if the tax software can handle these kinds of scenarios.
Just wanted to add that self-filing a 1065 is definitely doable but pay special attention to the partner basis calculations. That's where I messed up last year and had to file an amended return. Make sure you're tracking each partner's capital contributions, distributions, and share of liabilities correctly. It gets complicated fast.
Thanks for pointing this out. I'm a bit worried about the basis calculations. Does TaxAct walk you through determining each partner's basis properly? We had some complicated transactions this year with one partner contributing equipment instead of cash.
TaxAct does have a basis worksheet that helps guide you through the calculations. For non-cash contributions like equipment, you'll need to enter the fair market value and adjusted basis of the property. The software should handle the Section 704(c) allocations if set up correctly. However, this is exactly the kind of situation where careful attention is required. Make sure you have proper documentation of the equipment's value and basis. The software will ask you these questions, but you need to have the right information ready. If the contribution happened this tax year, you'll also need to complete Form 8824 for the non-cash contribution. The preview method you originally suggested would likely miss these interconnected forms.
Whichever way you go, make sure you keep track of the Section 199A information that needs to be reported on each K-1. I self-filed our partnership return last year and totally forgot about reporting each activity separately for the qualified business income deduction. Cost both partners a lot in missed deductions on our personal returns.
One thing not mentioned yet - if these were employment taxes, you need to understand the Trust Fund Recovery Penalty (TFRP). The IRS can assess personally against BOTH of you the portion of taxes that was withheld from employee paychecks but not remitted. This is critical because even if your business was an LLC or corporation, the TFRP bypasses that protection. And it applies to anyone who was "responsible" for collecting, accounting for, and paying those taxes. Since you were both owners, they can come after either or both of you. Definitely work with your tax attorney on this part specifically. If your spouse was the one handling finances, there might be a way to argue you weren't a "responsible person" under the TFRP rules, though it can be an uphill battle.
This is terrifying. So even though my spouse handled all the finances and made the decision not to pay these taxes without telling me, I could still be held personally liable? Do they ever consider these kinds of circumstances?
They do consider circumstances, but you'll need to prove you weren't a "responsible person" as defined by the IRS. The fact that you were an owner and involved in the business creates a presumption that you had authority. However, your tax attorney can help build a case based on your specific role. Key factors they look at: Who had check-signing authority? Who made financial decisions? Who had the power to determine which creditors got paid? If you can demonstrate your spouse exclusively controlled these functions and deliberately kept you in the dark, you may have a case. Document everything about your roles and responsibilities in the business.
Random tip from personal experience - request your IRS transcripts ASAP! You can get them online through the IRS website. They'll show exactly what's been assessed, when, and give a complete history of your account. My ex-husband hid tax problems from me too, and when I finally got my transcripts, I discovered some of the "tax due" letters were actually for periods that had already passed the 10-year collection statute of limitations. The collection agency was still trying to collect, but they legally couldn't! Also, make sure to ask your tax attorney about "innocent spouse relief" - it might apply in your situation since your spouse concealed the tax issue from you.
Brianna Muhammad
I ran into this same issue a few years back. One thing to watch out for - if you do end up overpaying, make sure you claim the excess Social Security tax withheld when you file your tax return. It's not automatic like someone mentioned above. You need to claim it on your Form 1040. If you use tax software, there should be a section where you can enter the total Social Security tax withheld from all your W-2s, and it will calculate if you overpaid and include that in your refund. Just don't overlook this step!
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Millie Long
โขThanks for pointing this out. Is this something that's easy to miss in tax software? I usually use TurboTax - will it prompt me about this or do I need to look for a specific section?
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Brianna Muhammad
โขIn TurboTax, it should automatically calculate this when you enter your W-2 information, as long as you enter all your W-2s. The software will see that the combined Social Security withholding exceeds the maximum and should apply the excess to your refund. However, it's always good to double-check this calculation yourself. Take all your W-2s, add up box 4 (Social Security tax withheld) from each, and if the total exceeds the maximum (which is 6.2% of the wage base limit), then you should get the difference back. If the refund amount doesn't seem to include this excess, there's usually a section in TurboTax for "Payments & Estimates" where you can verify all credits and payments are accounted for.
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JaylinCharles
One thing nobody has mentioned yet - make sure you're actually over the limit before you tell your new employer to stop withholding! The 2024 Social Security wage base is $168,600, not $160k or $150k like it used to be. I made that mistake in 2022 - thought I was over the limit but had calculated based on the previous year's threshold. Told my new employer to stop withholding and ended up having to pay the difference plus a small penalty at tax time. Double check your numbers!
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Eloise Kendrick
โขThis is such a good point. The SS wage base increases almost every year. For reference: 2022: $147,000 2023: $160,200 2024: $168,600 Always check the current year's limit!
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