Thanks for mentioning this! My ex and I are actually on decent terms. Would we both have to file jointly together or could I still do head of household? I've already submitted my return as head of household based on the advice here...would I need to do an amendment if joint was better?

If you file jointly, both of you have to file together on one return. You can't have one person filing jointly and the other filing head of household - it's an all or nothing choice. Since you've already filed as head of household, you could amend if filing jointly would benefit both of you. However, you'd need to run the numbers both ways to see which is better, and your ex would need to agree. Remember that filing jointly also means you're both responsible for the entire tax liability, so there's some risk involved if you don't completely trust each other.

FreeTaxUSA actually handles this pretty well! I used it last year after my divorce. They ask straightforward questions about your marital status as of Dec 31, whether you have dependents, etc. and guide you to the right filing status. Their help sections explain the requirements clearly too.

I would recommend you double check with a professional if your situation is complicated. My sister used FreeTaxUSA after her divorce and it seemed fine but she missed some deductions related to the kids that her accountant caught the following year.

15 Is there any way to reduce that self-employment tax? That's a huge chunk of money on top of regular taxes!

5 You can reduce your self-employment tax by forming an S-Corporation instead of operating as a sole proprietor. With an S-Corp, you pay yourself a reasonable salary (which is still subject to self-employment tax) but can take the rest of your profits as distributions that aren't subject to SE tax. However, there are additional costs and complexities with an S-Corp, including payroll processing, separate tax returns, and other compliance requirements. Generally, it's not worth considering until you're consistently making at least $80-100K in profit. Given your income level, it might be worth consulting with a tax professional who specializes in small businesses to see if this strategy would benefit you.

8 BAD idea. The IRS has been cracking down hard on unreported income, especially from payment apps. As of 2022, platforms like CashApp, Venmo, PayPal etc. are required to report transactions to the IRS if they total over $600 in a year. Even if you don't get a form, they're sending the info to the IRS. Plus, if you have large deposits going into your bank account that don't match your reported income, that's a major audit flag. The penalties for intentional underreporting can include up to 75% of the unpaid tax plus interest, and potentially criminal charges for tax evasion. Not worth the risk with six-figure income!

Omg I totally didn't even think about state taxes! I'm in California - do you know if they have any special requirements for small online businesses?

California definitely has state income tax, and they're pretty thorough about collecting it! You'll need to report your income on your CA state tax return. California also technically requires a business license for most businesses, though many small online sellers operate without one initially. If your sales exceed $600 annually, you should register for a Seller's Permit with the California Department of Tax and Fee Administration, especially if you're selling any physical products alongside your digital content. For purely digital goods like photos, the rules can be a bit different, but it's still income that needs to be reported.

This is actually helpful tax advice for OP's question though? Maybe save the economic commentary for another thread.

I tried calling FreeTaxUSA but the wait times were crazy long and when I finally got through, the rep just kept repeating that I need to mail in my return. They didn't seem to have any way to override the system or resubmit electronically. Have wait times gotten any better for reaching them now that we're past peak filing season?

Wait times are definitely better now that the initial rush is over. Try calling first thing in the morning when they open (check their website for hours) - I've found that's when wait times are shortest. Ask specifically to speak with a tier 2 support agent who has experience with e-file rejections. The first-level support often just follows basic scripts, but the more experienced agents can sometimes find workarounds. Be polite but persistent about needing a solution other than mailing your return, as they sometimes have processes for special cases.

I think it might be related to their verification system. TurboTax charges premium prices partly because they invest more in their backend systems that communicate with the IRS. FreeTaxUSA is great for the price, but their error handling seems less sophisticated. I switched to TaxSlayer after having similar issues and haven't had problems since.

Do you have any tips for tracking DeFi staking rewards if you were, hypothetically, completely disorganized and didn't track anything all year? Asking for a friend... 😬

If your "friend" hasn't been tracking anything, there are a few options! First, check if the DeFi protocols you're using have any dashboard that shows historical rewards - some newer ones do offer this. For most cases though, you'll need to use a blockchain explorer like Etherscan, Solscan, etc. Look up your wallet address and filter for the contract addresses of the staking protocols you used. You'll need to go through the transactions and identify the rewards. It's tedious but possible. Some tax tools can also retroactively analyze your on-chain activity and categorize staking rewards automatically. Worth the investment if you have significant DeFi activity, especially across multiple chains or protocols.

How much staking would trigger that self-employment consideration? I'm running 3 Ethereum validators and about 10k in Polkadot. Is that enough to be considered a "business"?