Do the free versions of those tax programs actually include self-employment forms? I tried using one of the big free tax sites last year for my regular job and it kept trying to upsell me for everything.

You're right to be cautious. Many "free" tax sites do try to upsell, especially for self-employment forms. FreeTaxUSA includes Schedule C in their free version, but you pay about $15 for state filing. TaxSlayer's free version covers simple returns but charges for self-employment - their "Classic" tier ($29.95 last I checked) includes all self-employment forms. The IRS Free File program is also worth checking - if your income is under a certain threshold (usually around $73,000), you can access truly free filing options including self-employment forms. The key is to access these through the IRS Free File portal rather than going directly to the company websites.

I think we're overcomplicating things for someone who made $2,700. At that income level after taking the standard deduction, they'll likely only owe the self-employment tax portion. That's about $381 in SE tax (15.3% of $2,500 assuming minimal expenses).

What about state taxes? If someone reports this "other income" on federal taxes, do states have different rules about reporting and information sharing with law enforcement?

State tax authorities generally have their own reporting requirements, and information sharing between federal and state agencies does occur. States vary significantly in how they handle information and their relationships with law enforcement. Some states have stronger information sharing agreements with law enforcement than the federal government does. California and New York, for example, have robust tax enforcement divisions that do coordinate with other agencies. So while federal tax law has certain protections, state-level reporting could potentially create different risks.

It's actually real! While there's no specific form just for stolen property, the IRS guidance explicitly states that stolen property must be reported as income. Publication 17 has historically mentioned this requirement. The IRS doesn't have a "stolen items" line, but they do expect you to report it as "Other Income" on Schedule 1 of Form 1040. It's one of those bizarre tax code realities that exists because the tax system is designed to collect revenue from all income sources, regardless of how that income was obtained.

This is actually addressed in IRS Publication 503. If you're divorced and sharing expenses, you can only claim expenses for qualifying persons (dependents). So if you're claiming 1 child and your ex is claiming 2, you can only claim the expenses you paid for your 1 dependent child.

Thanks for pointing me to Publication 503. I just looked it up and you're right - it clearly states I can only claim expenses for qualifying persons. Feels frustrating to be paying for childcare that I can't get any tax benefit for, but at least I know the correct way to file now.

How do you apply for that First Time Penalty Abatement thing? Is it automatic or do you have to specifically request it? And what counts as "good compliance history"?

You need to specifically request First Time Penalty Abatement - it's not automatic. You can do this after you file the late return and receive a bill. Call the IRS using the number on your bill and specifically ask for "First Time Penalty Abatement" for your 2019 taxes. For "good compliance history," the IRS generally looks for no penalties in the prior three years and that you've filed all required returns and paid (or arranged to pay) any tax due. So if you didn't have issues with 2016, 2017, and 2018 taxes, you might qualify. Even if you're not sure you qualify, it's worth asking - the worst they can say is no.

I'm not OP, but I had a similar situation with unfiled 2018 taxes, and the IRS didn't contact me until almost 3 years later. With COVID, they got super backlogged. When they finally did reach out, the penalties had piled up like crazy.

Do you know if leasing an EV works differently for the credit? I heard something about dealers being able to claim the credit on leases even if the consumer's income is too high for the MAGI limits. Is that true or just a rumor?

Leasing absolutely works differently! When you lease, the credit actually goes to the leasing company (technically they own the vehicle), not to you as the consumer. Many dealers will pass the savings on to you through reduced lease payments, but they don't have to. The big advantage is that the MAGI limits don't apply to leases since you're not claiming the credit personally. The leasing company claims it as a business, and they can pass along those savings regardless of your income. This has become a popular workaround for higher-income folks who exceed the income limits.

Thanks for pointing this out! That's probably why I was getting confused. I was looking at info for the used EV credit but trying to apply it to a new purchase. The instructions aren't super clear that these are separate things with different forms.