Thanks for the specific advice. Do you think having a notarized statement from my parents (who live with us and helped care for my daughter while spouse was traveling) would be helpful to include with the cover letter?

Yes, a notarized statement from your parents would be very helpful since they're third-party witnesses to your child's living situation. The IRS values documentation from people other than the parents involved in the dispute. Having your parents include specific dates they helped care for your daughter while living in your home would add credibility to your claim. Just make sure they're precise about timeframes and their statement aligns with your overall documentation. This kind of supporting evidence can really strengthen your case with the IRS.

That's not what Form 8379 is for though? Injured Spouse is when you file jointly and want to protect your refund from your spouse's debts. OP is filing separately, so this wouldn't apply. I think you're thinking of something else.

That's actually really smart paying off the CC first. I should probably do the same but I've been eyeing a new gaming laptop for months lol. Thanks for the tip about the app - just downloaded it! Any idea how long it usually takes between "sent" status and the money actually showing up in your account?

For direct deposit, it's usually super quick after it shows "sent" - I got mine the very next day. Some banks might take 1-2 business days depending on how they process incoming transfers. If you got a paper check, it'll take about a week after the "sent" status appears before it arrives in your mailbox. And seriously, pay off that credit card first! The interest you save will help you buy an even better gaming laptop in a few months.

Same experience here! I think they're just understaffed and the tracking system doesn't get updated in real-time. Mine was "processing" forever and then suddenly I just got the deposit with no warning. First purchase: new tires for my car that I've been putting off for way too long!

This is super helpful! Do you track your electricity use daily or just do a sample period? And for the solar panels, would it help if I kept logs showing the power production and how much is being directed to the mining rigs versus household use?

I do a sample tracking period of about 2 weeks each quarter to establish an average, then apply that to my bills. Seasonal changes affect both mining performance and solar output, so regular monitoring helps establish a realistic business percentage. Absolutely keep detailed logs for your solar setup. Document the total production and what portion powers your mining operation. Photos of your setup can help too. I actually have my mining rigs on a separate circuit with its own meter, which makes it extremely clear what power is being used for business versus personal. That kind of separation makes audits much easier if they ever happen.

Good point about state differences. I'm in California and they basically follow the federal treatment but I've heard some states have exemptions for certain crypto activities. Anyone know which states are most crypto-friendly tax-wise? Considering relocating my mining operation...

Wait, seriously? So even with taking the standard deduction, I'd still owe over $4,000 in taxes on my $28,000 profit? Is there any way to reduce this self-employment tax?

Yes, you'd still owe the self-employment tax. There are a couple ways to potentially reduce it though: You can deduct half of your self-employment tax on your tax return, which helps a little bit with your income tax (though not with the SE tax itself). Another option is to form an S-Corporation instead of operating as a sole proprietor/single-member LLC. With an S-Corp, you can pay yourself a "reasonable salary" and take the rest as distributions, which aren't subject to self-employment tax. However, there are additional costs and paperwork with an S-Corp, so it's usually only worth it when your profit is higher.

This is so important! I learned this the hard way my first year of self-employment and got hit with penalties. Now I just set aside 25-30% of every payment I receive into a separate savings account for taxes.

That's a great system! I actually use a similar approach but with percentages based on my tax bracket. I put 15.3% away for self-employment tax plus another 12% for income tax (since I'm in that bracket). Makes tax time way less stressful when the money is already set aside.

Oh wow, I hadn't even thought about state underpayment penalties. Does anyone know if they generally use the same calculation methods as the federal government? I'm in Illinois if that matters.

Illinois does have underpayment penalties similar to federal. They generally expect you to pay 90% of your tax liability throughout the year or 100% of last year's tax. The one difference I've noticed with Illinois is that they're sometimes a bit more flexible with the waiver process for first-time penalties, especially if you can show you made a good-faith effort to correct the issue mid-year. The IL-2210 form works similarly to the federal one for calculating and potentially reducing the penalty.

This is actually really smart! Does this work for all employers or do some not allow you to change your W-4 multiple times per year?