Thanks for this perspective! How do you handle documentation for things like the business-use percentage for your laptop or phone? Do you keep a log of some kind or just estimate based on your typical usage?

I don't keep a daily log because that would be too cumbersome, but I do periodic sampling. Every quarter, I'll track my usage carefully for about a week, noting business vs. personal time. I document this in a simple spreadsheet showing dates, hours used, and business purpose. For my phone, I use my phone bill to identify business calls and texts versus personal ones during those sample periods. For my laptop, I use a time-tracking app that shows which programs and websites I'm using throughout the day, which helps distinguish between business and personal activities. This periodic sampling gives me a reasonable basis for my percentage rather than just pulling a number out of thin air.

I went through a correspondence audit two years ago. They focused heavily on my home office deduction and business travel. They wanted floor plans showing the dedicated office space, photos of the setup, and utility bills to verify the expenses. For travel, they wanted receipts, calendar invites proving business purpose, and mileage logs. The process took about 4 months from start to finish. In my case, I had good documentation for most things, but I did have to pay back some deductions for a conference where I extended the trip for personal reasons but claimed the full airfare. The lesson I learned was that partial-use situations are where they tend to dig in the most.

Do any of these let you file multiple state returns without paying extra? I lived in two states last year and TurboTax wanted to charge me for each state filing separately.

Unfortunately, all the major tax software options charge per state. FreeTaxUSA charges about $15 per state, which is still cheaper than TurboTax's $50+ per state, but you'd still need to pay for each state separately. If you have a very simple tax situation, you might consider using each state's free filing portal directly for the state returns after completing your federal return. Some states have surprisingly good free filing systems now.

I used the IRS Free File option last year with an AGI under $73k. It basically directs you to free versions of the major tax software options that participate in the program. I was directed to TaxSlayer and it was completely free for federal and state. Interface was decent, not as nice as TurboTax but definitely usable. Worth checking if you qualify!

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.

Oh wow, I hadn't even considered local taxes! I know I'll be working in Chicago for about a month - does anyone know if they have special local tax requirements? This is getting more complicated than I expected.

Chicago doesn't have a city income tax like some other major cities, so you're safe there. You'll just need to deal with Illinois state income tax for the period you're working in Chicago. However, if your contract takes you to New York City, Philadelphia, San Francisco, or certain cities in Ohio or Michigan (among others), you'll need to account for local income taxes as well. It's definitely worth researching each location before you go. Some cities have very low thresholds - Philadelphia, for instance, starts taxing non-residents from day one of working there.

The fees vary wildly by state. When I registered my LLC in Nevada, Colorado and Texas last year, the initial registration fees were around $150-200 per state. But then many states also have annual report fees or franchise taxes. California is notoriously expensive with their $800 minimum franchise tax regardless of whether you make any money there.