Have you had any issues with Wave at tax time? I tried it last year and my accountant complained that the reports weren't detailed enough for some of the deductions we wanted to take. Did you add any paid features to make it work better?

I did have some limitations with Wave during my first tax season, particularly around categorizing certain business expenses properly. I ended up using their paid receipt scanning feature ($8/month) which helped tremendously with organization and made my accountant much happier. For detailed job costing and tracking profitability by service type, Wave definitely has limitations. I supplement with a simple spreadsheet for that analysis. The payroll integration with OnPay has been flawless though - all my quarterly filings have gone through without issues and the reports are accepted by my accountant without complaints.

I switched from QuickBooks to Xero last year for my pool service company (5 employees) and it's been excellent. The inventory tracking is better for tracking chemicals and supplies, and the mobile app is way more user-friendly for entering expenses on the go. Their project tracking feature works well for tracking costs by customer property too.

Thanks for sharing your experience! That's helpful to know about the mobile app and project tracking - both would be really useful for my lawn care business. How was the transition from QuickBooks? Did you lose any historical data in the switch?

Ugh, I was hoping nobody would mention tips lol! How exactly does the IRS even know about cash tips though? And what apps do you recommend for tracking?

The IRS uses statistical analysis of your industry and location to estimate expected tip ranges. If you report significantly less, it can trigger questions. They also look at lifestyle indicators compared to reported income. For tracking, I use TipSee which lets you log daily, categorize by service, and generates reports for tax time. Some POS systems like Square have built-in tip tracking too. The key is consistency - even just a simple note in your phone each day works if you stick with it. Better to track and report properly than deal with potential penalties later!

This is a great point! I'm in Colorado and discovered we have a specific "small business deduction" that many self-employed people miss. Each state has different rules too - some allow you to deduct state licensing fees while others don't. Definitely worth checking your state's department of revenue website or asking a local tax pro.

You know what, that could actually be part of the problem. I didn't realize the W-4 had changed that significantly. I did fill out a paper form when I started and I remember putting "0" for allowances, but maybe that wasn't even the right field on the new form. I definitely didn't check anything about multiple jobs because my first job had already ended when I started this one. Do you think that could have somehow triggered zero withholding?

That could absolutely be the issue. The new W-4 doesn't have a place for "0 allowances" anymore, so if you were filling out an old form or using old terminology on the new form, it might have confused your payroll department. Even though your jobs weren't simultaneous, the Step 2 checkbox helps the withholding system account for your total annual income. Without it checked, the system might have been withholding as if this was your only income for the year, and depending on your pay rate, that might result in little or no withholding if the projected annual amount would be under the standard deduction.

That's a good point. If they gave you a W-2 but treated you as an independent contractor for withholding purposes, that's definitely something the IRS would be interested in knowing about. Companies can get in big trouble for misclassifying employees.

They definitely gave me a W-2, not a 1099. And they are withholding Social Security and Medicare taxes correctly - it's just the federal income tax that's showing $0. So I don't think I'm being classified as an independent contractor. It seems more like some kind of specific error with just the federal income tax withholding.

Thank you for mentioning this! I had no idea this was a thing. I'll definitely ask our CPA about the Voluntary Disclosure Program. Is there anything specific we need to do to qualify for this?

You're already taking the right first step by working with a CPA to file all the past returns. The key requirements are that you're coming forward voluntarily (before the IRS contacts you about the unfiled returns) and that you're filing accurate returns for all missing years. Make sure your CPA specifically requests penalty abatement using Form 843. They should cite "reasonable cause" and explain the circumstances that led to the unfiled returns. Having professional help with this process is crucial because the specific language and approach matter a lot in how the IRS responds.

That's not entirely accurate. The IRS doesn't immediately put liens on property, especially if you're voluntarily coming forward. They typically only place liens after multiple notices and lack of response or cooperation.

Wouldn't Schedule D be more appropriate for things like stocks or real estate? I've never heard of using it for selling used personal items. Seems like overkill compared to just using Schedule 1.

You're right that Schedule D is most commonly used for investments, but it can actually be used for any capital asset - which technically includes personal property. It's definitely more detailed than the Schedule 1 approach, and probably overkill for most situations. The Schedule 1 method that others mentioned is simpler and works perfectly fine for most people selling personal items at a loss. I just wanted to offer another technically correct option, especially for people who want to be extremely thorough in documenting everything. Either approach is valid - it just depends on how detailed you want to be.

I had this happen! Don't panic - it's just a verification notice. I sent back a simple letter explaining these were personal household items sold at a loss on eBay, included a list of what I sold with estimated original purchase prices, and that was it. Never heard anything else from them after that.