This! I got audited because my gaming channel had a similar setup where my friend and I split everything 50/50 but all revenue came to me. IRS determined we were a partnership and we had to refile 3 years of taxes. Better to get it right from the start!

Oh wow, that's concerning. How do I know if we qualify as a partnership vs me just having a contractor? We don't have any formal business structure set up - just Venmo him his half when I get paid.

Thanks for the reminder! Do you know what the threshold is for when quarterly payments are required? And how do I calculate how much to pay each quarter?

Generally, you need to make quarterly estimated payments if you expect to owe $1,000 or more in taxes when you file your return. For self-employment income like content creation, that threshold is pretty easy to hit. For calculating the amount, you have two options: pay 100% of last year's tax liability (110% if your income was over $150,000), or pay 90% of what you'll owe this year. Most people go with the first option since it's easier to calculate. The IRS Form 1040-ES has worksheets to help, or most tax software can calculate this for you. Payments are due April 15, June 15, September 15, and January 15 (of the following year).

Do paper I-bonds still exist? I thought Treasury phased those out years ago. And if I get paper bonds through my tax refund, how would I convert them to electronic later?

Paper I-bonds do still exist, but ONLY through the tax refund process. It's the only way to get them since Treasury Direct otherwise went fully electronic. To convert paper bonds to electronic, you'd use the Treasury Direct "SmartExchange" feature after creating an account. You fill out a form with your paper bond information, mail the bonds to Treasury, and they add them to your electronic account. It takes a few weeks for processing, but then you can manage them online like any other Treasury Direct holdings. Some people actually prefer this method since the paper bonds can be held for safekeeping and don't require online account access until you're ready to redeem them.

The Taxpayer Advocate Service saved me too! But they're super backed up these days... took almost 2 months to get an appointment at my local office. Definitely worth trying though, just don't expect immediate help.

Wait - so does that mean health insurance premiums increase your FICA taxes in an S Corp since they're added to your W-2? That seems like it could eat into the tax savings.

That's a good question and a common misconception. The health insurance premiums are added to your W-2 for income tax purposes only, not for FICA tax calculations. So they're included in Box 1 of your W-2 (wages subject to income tax) but not in Boxes 3 and 5 (wages subject to Social Security and Medicare taxes). Then you deduct those same premiums on your personal tax return via the self-employed health insurance deduction, which essentially makes them income-tax-neutral. It's just a weird reporting requirement that makes the accounting more complicated but doesn't actually increase your tax burden.

You definitely need QuickBooks Online Plus at minimum for an S Corp, not the Self-Employed version. The Self-Employed version is really just for Schedule C filers and doesn't have the features you need for proper S Corp accounting like tracking owner's equity, creating shareholder distributions, or proper financial statements.

How far back should you check your SSA records? Just the current year or should you go back several years to be safe?

You should definitely check at least the past three years. Identity thieves sometimes start small to see if you notice before ramping up their activity. In my case, they had actually used my information for almost two years before I caught it. Also, while you're on the SSA website, set up account notifications so you'll be alerted to any future changes or activity. This way you'll know immediately if someone tries to use your SSN for employment again.

This happened to me! In my case, PayPal had counted some transactions twice. Also, they were counting the full amount of money that moved through my account, including stuff that wasn't income (like when friends reimbursed me for group purchases). You need to contact PayPal tax department specifically, not just regular customer service, and request a corrected form.

1 That's really helpful advice! When you organized your documents the second time, did you group them by category (like all travel expenses together) or by date? And did you have to provide originals or were copies acceptable?

22 I grouped them by the categories on Schedule C - so all advertising expenses together, all office expenses together, etc. This matched how they appear on the tax form which made it easier for the auditor to reconcile. For your second question, copies are generally fine - I've never had to provide originals. I scanned everything and made a PDF file for each category, then also brought physical copies to the audit. The auditor actually seemed impressed with the digital organization and mainly reviewed those files. Just make sure the copies are clearly legible, especially for receipts that tend to fade.

13 Is an attorney better than a CPA for audit representation? I've heard mixed things. Also, what's a reasonable price range for either one? I'm trying to figure out if I can afford it.