Thanks for the straight talk. I know I messed up big time. Do you think being in Canada offers any protection, or does that actually make it worse? And roughly what percentage of the collected amount would penalties typically be?

Being in Canada doesn't protect you - it potentially complicates things. US states can work with Canadian authorities, plus they can go after your US assets including marketplace accounts/funds. eBay and other platforms also comply with tax authorities when legal action is involved. Regarding penalties, it varies by state, but for intentional fraud (which is what this would be classified as), you're typically looking at: - 100% of the tax collected - Interest (varies by state, typically 4-10% annually) - Fraud penalties (50-100% of the tax amount) - Possibly collection fees and other costs So worst case, you could be looking at 2-3 times the amount you collected. With voluntary disclosure, you might get the fraud penalties waived, which would be huge. But you'd almost certainly still owe the base tax amount plus interest.

That used to be the case, but it all changed after the South Dakota v. Wayfair Supreme Court decision in 2018. Now states can require remote sellers (including international ones) to collect sales tax once they pass certain economic thresholds - usually around $100k in sales or 200 transactions. So if OP was selling enough to US customers in specific states, they would legally be required to collect and remit sales tax to those states, even though they're physically located in Canada.

I haven't tried Stride - does it integrate directly with any tax filing software? The project-based spreadsheet approach is interesting too. How time-consuming do you find it to maintain throughout the year?

Stride generates tax reports you can download, but doesn't directly integrate with filing software like TurboTax. You'll still need to transfer the info, but at least it's all calculated and organized. The spreadsheet takes me about 10 minutes a week to maintain. I just update it every Friday with that week's expenses and receipts. The key is consistency - if I wait more than a week, it becomes a pain to remember details. The project-based approach has actually helped me adjust my pricing too, since I can see exactly how much each type of shoot costs me in expenses.

I was literally about to comment about my receipt shoebox system! But seriously, I switched to Expensify last year and it's way better than my old "system." The receipt scanning feature saves so much time, and it's actually pretty accurate at pulling the data.

What about the psychological factor though? I know financially it makes sense, but I LOVE getting a big refund. It feels like a forced savings account and I usually use it for something fun or a big purchase I've been putting off.

That's actually a really good point! Personal finance isn't just about the math - psychology plays a huge role too. If getting a refund works as a "forced savings" mechanism for you and you enjoy that annual windfall, there's definite value in that approach for many people. I always tell clients to do what works best for their lifestyle and habits. For some people, the discipline of keeping that extra money each paycheck and investing it is tough. If you know you'd just spend that extra $50-100 per paycheck on random things, but would use a $1,200-2,400 refund for something meaningful, then by all means, set your withholding accordingly!

You're definitely not alone! I do the same thing. With interest rates on savings accounts being so low for so many years, I didn't feel like I was missing out on much. And there's something really satisfying about getting that big deposit all at once.

Wait, can you file the S Corp extension (Form 7004) electronically yourself? Or do you need a tax professional to do it? We're trying to save money where we can since our first year was so rough.

Yes, you can absolutely file the Form 7004 electronically yourself! You don't need a tax professional. You can use the IRS e-file system, or many tax software programs include the ability to e-file the extension. If you're really trying to save money, even the free versions of some tax software will let you prepare and e-file just the extension forms. Just make sure you still estimate any taxes owed properly, as the extension only gives you more time to file the paperwork, not more time to pay.

This is so important! My friend got an extension for his S Corp but didn't realize he still needed to make his quarterly payroll tax deposits on time. Ended up with some hefty penalties.

This is so true. My brother ignored his tax debt and eventually had his wages garnished - they took 25% of his paycheck until the debt was paid. The IRS doesn't mess around with collections.

Exactly. And garnishment is actually worse than a payment plan because you have no control over the amount taken. With a payment plan, you can at least negotiate a monthly amount that works for your budget.

I successfully got First Time Penalty Abatement last year. The key is that you need a clean compliance history for the 3 prior years. If you meet that criteria, they almost always approve it. I just called and specifically asked for "First Time Penalty Abatement under IRM 20.1.1.3.3.2.1" and the agent processed it right away.