Are CPAs really worth the cost for someone who's just starting out? My business only made about $27,000 last year total, and I'm trying to save where I can.

For someone making $27,000, it could still be worth it for your first year. A good CPA will not only file correctly but teach you things about business deductions you might miss. For example, mine showed me how to deduct a portion of my rent as a home office, track mileage, and properly deduct phone/internet expenses. The peace of mind alone can be worth it, plus they might find enough deductions to pay for their fee. That said, if money is really tight, something like FreeTaxUSA is quite good for self-employment income and costs much less than TurboTax while offering similar guidance.

This is exactly right. I switched from TurboTax to FreeTaxUSA last year and saved almost $100. The interface isn't as pretty but it does the exact same thing and asks all the same questions about business income.

Wait for real? So if I have a doctor's visit that costs $200 today and I pay out of pocket, I could technically withdraw that $200 from my HSA in like 5 years and it's still tax-free? That seems too good to be true.

Yes, that's absolutely correct! There's no time limit on when you need to reimburse yourself for qualified medical expenses. The only requirement is that the HSA must have been established before you incurred the medical expense. This is one of the best HSA strategies - pay medical expenses out of pocket when you can afford to, keep good records of those expenses, and let your HSA investments grow tax-free. Then years later, you can take tax-free distributions to reimburse yourself for those old expenses whenever you need the money. It's completely legitimate and one of the reasons HSAs are considered such powerful retirement accounts.

Yes! You can make HSA contributions for the previous tax year until the tax filing deadline (usually April 15th). Just make sure you tell your HSA provider that the contribution is for tax year 2024, not 2025. I just did this exact thing last week!

This is terrible advice. Never estimate W-2 income on your taxes. The IRS automatically matches W-2 data with what's reported on your return, and discrepancies will flag your return for review, potentially delaying your refund even longer or worse, triggering an audit.

Yep! And the IRS starts accepting returns usually by like Jan 23rd... so there's this awkward week where you COULD file but don't have all your docs yet. Super annoying especially if you're expecting a big refund!

How do you handle partial usage? Like I have boots that I wear mostly for faires but occasionally in regular life because they're comfortable. Can I still deduct those or is it an all-or-nothing thing?

You can actually claim a percentage deduction based on business vs. personal use. For those boots, you'd estimate what percentage of time they're worn for business purposes. If you wear them 80% for faires and 20% for personal use, you can deduct 80% of their cost. Just be reasonable with your estimates and be prepared to explain your calculation if asked. You should also keep a log of when you wear them for business versus personal use if it's a significant deduction. Some performers I know take dated photos of themselves at events in costume as additional documentation. The key is being honest but thorough about tracking legitimate business usage.

Documentation is everything! I got audited 2 years ago for my performer expenses. The IRS approved ALL my costume deductions because I had: 1) receipts, 2) photos of me performing in each item, 3) contracts stating costume requirements, and 4) a log showing when/where each piece was used professionally. Without that evidence, I'd have been denied too.

Thanks for the heads up! I am the only owner of the LLC. Do I need to do anything special to make sure I'm being taxed as a sole proprietor? I don't think I filled out any additional forms after creating the LLC.

You're already set then! Single-member LLCs are automatically treated as "disregarded entities" for tax purposes, which means you'll report your business income and expenses on Schedule C of your personal tax return. No additional tax forms are needed to select this treatment - it's the default. You'll use your personal SSN for most tax purposes, though you should have an EIN (Employer Identification Number) for your LLC as well. This setup is the simplest for your situation and allows you to deduct all legitimate business expenses like your Fiverr payments directly against any income the business generates.

This is super important. I've been creating comics for years and the IRS did question my expenses once. What saved me was having a detailed log of hours worked, draft versions showing progress, and a marketing strategy document. Even though I wasn't profitable yet, I could show I was seriously trying to be.