Thanks for breaking this down! So for my $7,800, if I have say $1,200 in expenses for software, equipment etc., I'd pay the SE tax on $6,600, right? And should I be making quarterly payments even though I just started mid-year?

Yes, if you have $7,800 in income and $1,200 in legitimate business expenses, you'd pay SE tax on the $6,600 net profit. The SE tax would be about $1,010 (15.3% of $6,600). For quarterly payments, if this is your first year with self-employment income, you might qualify for an exception to the penalty. However, it's generally a good idea to start making them as soon as you realize you'll have tax liability. For the current year, you can catch up by making larger payments in the remaining quarters. The IRS website has a form (1040-ES) to help calculate your estimated payments.

The QBI deduction is amazing! But isn't there an income limit? I think I remember reading somewhere that it phases out if you make too much.

Thanks for bringing this up! My situation was slightly different - my Roth contribution actually lost about $300 in value before I realized I was over the income limit and needed to recharacterize. So I moved less than my original contribution to the Traditional IRA. Will that cause any issues? Should the loss be reflected somewhere on my tax forms?

No, that won't cause any issues. You're doing everything correctly by recharacterizing the reduced amount. The loss occurred while the money was in the Roth IRA, and when you recharacterize, it's as if you originally contributed that lower amount to the Traditional IRA instead. When you later converted that amount back to a Roth via the backdoor, you'd only convert the lower amount. The 1099-R with code N should show the actual amount that was recharacterized (the lower amount after the loss). This loss doesn't get reported separately on your tax return - it just means you're moving and potentially paying taxes on a smaller amount during the backdoor conversion portion.

I used TurboTax for exactly this situation. When you enter the 1099-R with code N, it will ask something like "Did you move this money to another retirement account?" rather than specifically using the word "rollover." Just answer "yes" to that question. TurboTax will then take you through additional screens to confirm it was a recharacterization. Make sure you also complete Form 8606 if you did the backdoor Roth conversion afterward. TurboTax has a separate section for entering that conversion transaction. It's a bit hidden in the Deductions & Credits section under "Retirement & Investments.

Thanks! I didn't even think about CRS reports. How recent is the energy tax policy report you mentioned? And do you know if it covers the changes from the Inflation Reduction Act since those modified a bunch of the energy credits?

The most recent comprehensive CRS report was updated just a few months ago, so it definitely includes all the Inflation Reduction Act changes. It has a really helpful table comparing the pre-IRA and post-IRA versions of each credit with expiration dates. The report actually excels at showing the evolution of energy tax credits over time, which could be super valuable for your debate prep - especially when discussing the policy rationale behind various incentives. It also distinguishes between permanent features of the tax code versus temporary provisions, which is important when you're evaluating long-term energy policy impacts.

This is key advice. In my last policy debate, the other team destroyed us because they had industry critiques we weren't prepared for. The Heritage Foundation and Cato Institute also have analyses criticizing energy tax credits as inefficient. Do you know which recent JCT report has the most comprehensive scoring?

This is really helpful! I hadn't thought about asking the university if we could operate under their nonprofit status. We are officially recognized by the school - we have a faculty advisor and everything. Do you happen to know if we would still need our own EIN in this case, or would we use the university's for banking purposes?

Yes, you'll likely still need your own EIN for banking purposes, but the tax exemption would flow through from the university. When we set ours up, we filled out an SS-4 form to get our EIN, specifically noting we were a student organization affiliated with the university. The key is to get formal documentation from your school stating that your organization is an official student group operating under their auspices. Your student activities office should have a standard process for this. With that documentation, you can open a bank account with your EIN but without having to file for separate tax-exempt status or pay the filing fee.

This is sooo important. My friend's environmental club got hit with state taxes even though they were federally exempt because they missed the state filing. And yeah the retroactive thing is crucial - if you go over $5k and haven't filed, it can be a mess to fix later. Good advice!

How much did appealing cost you? My CPA is charging $250/hour, and he estimates it would take at least 10-15 hours to prepare and handle an appeal. That's potentially $3,750, and with no guarantee of success. I'm trying to figure out if it's worth the fight or if I should cut my losses.

For my first audit appeal, I handled it myself and spent about $500 on organizing documents and preparing my case. It took about 25 hours of my time, but I saved almost $8,000 in disallowed deductions. For the second appeal, I hired a tax attorney for a flat fee of $2,500. This was more complex involving rental property deductions. We ended up saving about $12,000 in taxes, so the investment was worth it. The key is analyzing the potential savings versus the cost of fighting. If your total tax difference is less than $5,000, self-representation might make more sense. For larger amounts, professional help often pays for itself. Remember that if you win, you're not just saving the immediate tax bill but also setting precedent for future years of similar deductions.

Not OP, but this is important info. Many people don't realize that employee business expenses (including home office for W-2 employees) are completely suspended right now. The only workaround is if your employer would provide an accountable plan where they reimburse you for these expenses.