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Something no one's mentioned yet is that if you're doing sports betting through official channels (legal sportsbooks), they will keep track of your wagers. At the end of the year, you can request a win/loss statement that shows your total betting activity. This is super helpful for tax documentation. Also, if you hit certain thresholds (varies by type of gambling but usually over $600 with high odds), they'll issue you a W-2G form that is reported directly to the IRS, so definitely don't skip reporting those winnings!
Do offshore betting sites send any tax forms? I've been using [redacted site] for years and never received anything, but also never reported any of it. Now I'm worried...
Offshore betting sites typically don't issue tax forms or report to the IRS since they're operating outside US jurisdiction. However, that doesn't exempt you from the obligation to report your gambling winnings - all gambling income is technically taxable regardless of where it comes from. The lack of reporting from offshore sites creates a documentation gap that puts the burden entirely on you to track and report accurately. If you've had significant winnings, you might want to get your past reporting in order. The IRS has been increasingly focused on unreported gambling income, especially with cryptocurrency transactions sometimes being used for offshore gambling.
Am I the only one who thinks it's totally unfair that gambling losses can only offset gambling wins? If I invest $5000 in a small business that fails, I can usually deduct that loss against my regular income (with some limitations). But if I lose $5000 gambling, I can't deduct anything unless I also won money gambling? Makes no sense.
The tax code distinguishes between investments and gambling based on the nature of the activity. Business investments are considered productive economic activities, while gambling is viewed as recreational. That said, if you can document that your gambling activities constitute a trade or business (extremely difficult to prove - requires regular, full-time activity with a profit motive), you might be able to deduct losses on Schedule C instead of Schedule A. But for the vast majority of people who gamble occasionally, the IRS will only allow losses to offset wins when itemizing.
Don't forget about Form 1096! It's basically a cover sheet that you submit to the IRS with your 1099-NECs. A lot of new business owners miss this one. Also, if you're in certain states (CA, NY, NJ especially), check if you need to file state equivalents of the 1099. Some states require separate filings even though the federal 1099 is done.
You're absolutely right - Form 1096 is only required if you're paper filing your 1099s. If you e-file directly with the IRS, you don't need to submit a 1096. E-filing is actually required if you have more than 10 forms, and it's generally easier anyway. But for a small startup with just a few contractors, either method works.
Quick tip for new LLC owners - start collecting W-9s BEFORE you pay your contractors, not after! I made this mistake and had to chase people down months later. Some contractors disappeared or changed contact info, and it was a nightmare getting their tax information.
This is great advice. I'd also recommend keeping a spreadsheet tracking all contractor payments throughout the year. Makes it way easier when January rolls around and you need to figure out who exceeded the $600 threshold.
Make sure you're accounting for all your business expenses from Etsy! Don't forget: - Packaging materials - Shipping costs - Marketplace fees (Etsy takes a cut) - Any tools or equipment - Home office deduction if you have dedicated space - Portion of internet/phone used for business - Mileage for supply runs or post office trips - Business cards or marketing materials I missed a ton of these my first year selling online and paid way more than I should have.
Can you really claim home office if you're just making jewelry at your dining table? I thought you needed a dedicated room that's ONLY for business?
You're right that the rules for home office deduction are strict. You need a space used "regularly and exclusively" for business, so a dining table that's also used for family meals wouldn't qualify. However, if you have a dedicated corner of a room with a desk that's only used for your business activities (taking product photos, listing items, managing orders, etc.), that specific area might qualify. You'd calculate the percentage of your home's square footage that this space represents. Many people miss out on this deduction because they think they need an entire separate room, but even a dedicated portion of a room can sometimes qualify.
My tax bill jumped this year too! I thought I was going crazy. TurboTax was showing I owed $3400 when I usually get a refund. Switched to FreeTaxUSA and it showed I owed $3300 so the calculation was right. Turns out my employer had messed up my withholding all year! Check your W-4 and make sure they're taking out enough.
Same thing happened to me!! My HR department "updated their system" and somehow my withholding got set way too low. I didn't notice on my paychecks because I got a raise at the same time so the take-home amount seemed fine. Definitely check your pay stubs against last year!
19 I'm an accountant and see this question a lot. One thing nobody's mentioned yet is that if the roof replacement extended the useful life of the structure or improved it beyond its original condition (like upgrading to better materials or adding insulation), the IRS would almost certainly consider it a capital improvement requiring depreciation. Look into Form 3115 "Change in Accounting Method" if you've been incorrectly deducting capital improvements as repairs in previous years. Better to fix it proactively than wait for an audit.
21 Is there a minimum dollar threshold where the IRS doesn't really care? Like would they really make a big deal about a $9,800 repair vs. improvement on a rental property tax return? Seems like they'd be more concerned with bigger issues.
19 There's no specific dollar threshold where the IRS "doesn't care" - the rules apply regardless of amount. However, in practical terms, larger amounts are more likely to trigger scrutiny. The real issue isn't about the dollar amount but about following proper tax treatment. Even relatively small incorrect classifications, if discovered during an audit, can lead to adjustments, interest, and potentially penalties. More importantly, they could cause the IRS to expand the scope of their audit to look for other issues, which nobody wants.
22 Random question - did you tell your insurance company about the roof leak? I had a similar issue and didn't realize my homeowner's policy actually covered part of the repair cost, which changed the tax situation since I was only paying out of pocket for a portion of it.
A Man D Mortal
My cousin was in almost the exact same situation - 12 years of no filing as a home contractor. What eventually happened was a client listed payments to him on THEIR taxes as a business expense, which created a mismatch that triggered IRS attention. He ended up owing around $178,000 in back taxes, penalties and interest. He had to sell his vacation property and take out a second mortgage. The IRS did put him on a payment plan, but the stress caused serious health issues and contributed to his divorce. Don't let your friend wait any longer. The IRS is way more reasonable if you come forward voluntarily versus them finding you first.
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Douglas Foster
β’Thanks for sharing that real-world example. Did your cousin face any criminal charges, or was it just the financial penalties? My friend is terrified of actually going to jail over this.
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A Man D Mortal
β’No criminal charges in his case. The IRS generally pursues criminal cases only when there's evidence of intentional fraud, hiding assets, or extremely large amounts. They're mostly interested in collecting the money. That said, he did have to deal with a revenue officer who monitored his compliance for several years, which was stressful. The biggest impact was financial - the penalties and interest nearly doubled what he would have paid if he'd filed on time. And the stress definitely took a toll on his health and marriage.
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Declan Ramirez
I worked for an accounting firm that specialized in tax resolution, and saw cases like this regularly. Here's what your friend should expect: 1) The IRS generally only pursues criminal charges in cases of active fraud (fake documents, hidden offshore accounts, etc.) rather than just non-filing 2) They'll typically only go back 6-7 years for assessment unless they suspect fraud 3) If he files voluntarily before being contacted by the IRS, he'll likely avoid the worst penalties 4) The initial bill will be terrifying, but an experienced tax attorney can often negotiate it down 5) Payment plans are standard and can sometimes stretch 5+ years
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Emma Morales
β’Can someone actually get caught up without using a lawyer or professional service? Like, are there resources to DIY this if you can't afford professional help?
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