Don't panic - you're likely in much better shape than TurboTax is showing! Since you lived in the house for 2.5 years before selling and your profit was $75k, you almost certainly qualify for the Section 121 primary residence exclusion, which lets you exclude up to $250,000 of gain from taxes. Here's what I'd do in order: 1. **Check your closing documents first** - sometimes the 1099-S is buried in there 2. **Call your title company** - ask if they filed a 1099-S or if they determined one wasn't required due to your exclusion eligibility 3. **Don't rely on TurboTax's initial calculation** - it's probably wrong because it doesn't know you qualify for the exclusion yet Even without a 1099-S, you still need to report the sale on Form 8949 and Schedule D, but you'll claim the Section 121 exclusion. Make sure to include any qualifying home improvements in your basis calculation - things like new roof, HVAC, kitchen remodel, etc. can reduce your taxable gain even further. The $13k tax bill you're seeing will likely disappear once you properly report the sale with the exclusion. Take a deep breath - this is a common situation and very fixable!

I just went through this exact situation a few months ago! First, don't panic about that $13k tax bill - TurboTax is almost certainly calculating it wrong because it doesn't know about your primary residence exclusion yet. Since you lived there 2.5 years and made $75k profit, you definitely qualify for the Section 121 exclusion (up to $250k tax-free for single filers). Here's what worked for me: 1. **Contact your title company ASAP** - they should be able to tell you immediately if they filed a 1099-S or not. In many cases where you qualify for the full exclusion, they're not even required to file one. 2. **Gather ALL your home improvement receipts** - new HVAC, roof repairs, kitchen updates, even that new fence you installed. These all increase your "basis" and reduce your taxable gain. 3. **Don't finalize your return yet** - once you properly enter the sale info and claim your exclusion in TurboTax, that scary $13k bill should drop dramatically or disappear entirely. The key thing is you still need to report the sale even without a 1099-S, but you'll use Form 8949 and Schedule D to claim your exclusion. I went from owing $8k to getting a refund once I did this correctly. You've got this!

Serious question - what happens if your friend just ignores the W-2G? Like the casino sent the form to the IRS, but if he has no other income and has been a non-filer for years, would the IRS really come after him for a small jackpot? Just wondering if it's even worth the hassle.

I went through something similar a few years ago. Had a decent casino win with a W-2G but was basically broke otherwise. The key thing to understand is that even though your friend has been a non-filer, that W-2G creates a filing requirement regardless of his other income. However, the good news is exactly what Sophia pointed out - if that $1600 is his only income for the year, it's well below the standard deduction threshold. He'll need to file a return to report it, but he won't actually owe any federal income tax. The IRS just needs to see that return to match against their records. I'd definitely recommend he files rather than ignoring it. The IRS matching system is pretty good at catching unreported gambling income, and it's much easier to file a simple return now than deal with notices and penalties later. Most free tax software can handle a basic return with just a W-2G.

One thing that might give you additional peace of mind is understanding that the IRS receives millions of bank transaction reports annually, and they're primarily looking for patterns that suggest unreported business income or tax evasion - not legitimate expense sharing between partners. Your situation is actually very common. Many couples handle finances this way when only one person qualifies for the mortgage. The $800-900 monthly amount you mentioned is well within the range of normal household expense sharing and wouldn't raise any red flags. I'd suggest keeping it simple: maintain basic records of your shared expenses (maybe just save your monthly utility bills and mortgage statements), and if you want extra documentation, a simple text message or email chain between you two about the expense arrangement can serve as evidence of your intent. Also remember that even if somehow these transfers were ever questioned, the burden would be on the IRS to prove they represent unreported income rather than legitimate expense reimbursements. As long as you can show the money is going toward actual household costs you both benefit from, you're in good shape. Don't overthink it - you're being responsible by planning ahead, and your arrangement sounds completely legitimate!

I've been through this exact scenario and can share some practical insights. Banks typically don't report regular personal transfers between individuals unless they meet specific criteria - mainly the $10,000+ cash transaction threshold or suspicious activity patterns. For your $800-900 monthly transfers, these would be considered reimbursements for shared expenses rather than taxable income since you're not profiting from the arrangement. The key is that you're genuinely splitting household costs, not charging rent or providing services. A few practical tips from my experience: - Keep simple records of what expenses the transfers cover (even just a basic note in your phone) - If using payment apps, always categorize as "personal" not "goods & services" - Consider a brief written agreement outlining the expense-sharing arrangement The IRS distinguishes between income and reimbursement. Since your boyfriend is paying his fair share of costs you both benefit from (mortgage, utilities, etc.), these transfers are reimbursements. You're not making money off him living there. Your situation is incredibly common among unmarried couples where only one person qualifies for the mortgage. As long as the amounts are reasonable for actual household expenses and you're not charging above-market rates, you should have no issues. The fact that you're thinking about this proactively shows you're handling it responsibly!

Don't forget state implications when you move! I moved my business from Texas to Pennsylvania and got hit with all kinds of unexpected tax issues. Since ur moving states make sure ur looking at Michigan's rules about recognizing previous business losses from another state. Some states are super weird about it.

One thing to consider with your woodworking business restart - the IRS actually views legitimate business interruptions due to family emergencies (like your wife's illness) more favorably than businesses that just fail to turn a profit. This works in your favor for the hobby loss analysis. Since you're essentially starting fresh in Michigan, treat this as a business pivot rather than just a restart. Document your market research for the new location, any adjustments to your business model, networking efforts, and how you're leveraging your existing equipment investment in the new market. The IRS wants to see that you're making businesslike decisions to improve profitability. Also, regarding the LLC question - while the legal structure itself doesn't guarantee legitimacy, operating through an LLC with proper business formalities (separate bank accounts, business insurance, formal record keeping) can strengthen your overall business case. Just make sure you're actually following through with professional business practices, not just the paperwork.

Don't forget about Section 195 of the tax code! It specifically addresses business startup costs and says you can deduct up to $5k immediately in your first year, with any excess amortized over 15 years. For your band equipment, look into Section 179 deduction which might let you deduct the full cost in year 1 rather than depreciating.

Great thread! As someone who went through a similar transition with my freelance graphic design work, I wanted to add that you should also consider opening a separate business bank account if you haven't already. Even though you can deduct those pre-LLC expenses, having clear separation between personal and business finances moving forward will make future tax seasons much smoother. Also, don't overlook smaller expenses like music streaming services for reference/research, software subscriptions, or even mileage to and from the studio. These can add up quickly and are often forgotten when calculating deductions. Keep a detailed log of everything business-related from here on out - your future self will thank you! One last tip: consider quarterly estimated tax payments now that you're generating "actual money" as you put it. The IRS gets cranky when you owe too much at year-end, and as your income grows, you'll want to stay ahead of it.