Do you have a separate business bank account for your styling purchases? My accountant keeps telling me I need to stop mixing personal and business expenses but setting up a business account seems complicated.

Yes, having a separate business account is absolutely essential! It doesn't have to be complicated - I started with a simple second checking account at my regular bank specifically for business transactions. Using separate accounts creates a clear audit trail that shows the IRS you're treating your styling work as a legitimate business, not a hobby. Most banks offer basic business checking with minimal fees, and the organization it provides is worth every penny. It made my tax preparation so much simpler since I wasn't trying to sort through mixed personal and business transactions at tax time. This separation is probably the single most important step you can take to legitimize your deductions.

This is super helpful context, thank you! Would you mind sharing what kind of documentation ended up satisfying the auditor for the editorial pieces? Did you have to show the actual clothing items or just photos of them being used professionally?

Can you explain more about cash vs accrual accounting? I think this might be what's confusing me with my own small business. When should I be using each one?

Cash accounting is when you record income when you receive payment and expenses when you actually pay them. It's simpler and many small businesses start with this method. Accrual accounting records income when you earn it (even if not paid yet) and expenses when you incur them (even if you haven't paid yet). For inventory-heavy businesses like reselling, accrual often gives a more accurate picture because it matches the expense of goods with the revenue they generate. This prevents situations where you buy a ton of inventory one year but sell it the next, which would distort your profit picture on cash basis.

The IRS actually has some decent guides! Check out Publication 538 (Accounting Periods and Methods) and Publication 334 (Tax Guide for Small Business). Also, many community colleges offer free or cheap workshops for small business owners on basic accounting and taxes.

Does this also apply if the distribution was from a Roth IRA? I took money out in 2020 but thought Roth distributions aren't taxable anyway?

For Roth IRAs, it's a bit different. If you've had the Roth for at least 5 years and are over 59½, then qualified distributions are tax-free. However, if you took an early distribution from a Roth in 2020 that would normally be partially taxable (like earnings withdrawn before 5 years), you could still use Form 8915-E to spread any taxable portion over 3 years. If your Roth distribution was entirely from contributions (not earnings), then it wouldn't be taxable regardless, and the 3-year spread wouldn't apply since there's no tax to spread.

Form 8915-F is the new form for reporting qualified disaster distributions in 2021, but it's for NEW disaster distributions. If you're reporting the SECOND year of a 2020 coronavirus distribution that you already started reporting on 8915-E, you continue with 8915-E for all three years.

Do you know if there's a way to see if my forms are still being processed or if they're just not going to send them? The tax deadline is getting closer and I'm getting nervous.

You can check the status of your tax forms by going to the Tax Documents section I mentioned and looking for a notice about "Remaining Forms." Robinhood usually indicates if you have forms that are still being processed. If there's no indication of pending forms, you may want to contact support directly. Another option is to look at your "Account Statement" for the year - it will show all your activity including stock trades and dividends. While not a substitute for official tax forms, it gives you the information you need to report your taxes properly.

This is terrible advice. The threshold isn't $20 for stock sales reporting. Brokers are required to report stock sales on 1099-B regardless of amount. The $20 threshold is for interest income on 1099-INT.

I actually just checked my mail more carefully and found a letter from the IRS that I thought was junk! It's a CP12 like you mentioned. Looks like they disallowed part of my Schedule C deductions because they said I didn't provide enough documentation. Is there a way to appeal this or provide the documentation now?

Yes, you absolutely can appeal this decision! The CP12 notice should include instructions for how to respond if you disagree with their adjustments. Typically, you have 60 days from the date of the notice to submit your appeal. To appeal, you'll need to write a letter explaining why you disagree with their adjustment and include copies (never originals) of any supporting documentation for the deductions they disallowed. This might include receipts, invoices, bank statements, credit card statements, or other records that prove these were legitimate business expenses. Make sure to reference your tax ID number and the CP12 notice number in your response.

This happened to my sister too! They held her whole refund for like 2 months. The annoying part was they didn't clearly tell her it was for identity verification - she only found out when she finally got through to someone on the phone.