I've been following this conversation with great interest as our tennis booster club is facing the exact same dilemma. Ruby, I want to echo what others have said about avoiding the 501(c)(7) route - we almost made that mistake ourselves until our accountant warned us about the potential issues. One thing I haven't seen mentioned yet is the importance of having proper corporate structure in place BEFORE applying for tax exemption. Make sure you're incorporated as a nonprofit corporation in your state first, then apply for federal tax exemption. Many booster clubs operate as unincorporated associations, but the IRS generally prefers to see formal corporate structure for 501(c)(3) applications. Also, regarding the social events concern - don't worry about organizing family events! The IRS understands that educational support organizations often have social components. The key is that your PRIMARY purpose needs to be supporting the band's educational mission. Social activities can be secondary as long as they're not your main focus. I'd strongly recommend getting your documentation reviewed before submitting. After seeing all the positive feedback about taxr.ai in this thread, I'm definitely planning to use that service for our application. Better to catch any issues upfront than deal with rejection letters and delays later. Good luck with your application process! The fact that you're asking these questions now shows you're on the right track.

Great question about timing, Hiroshi! I can share our experience with the incorporation and tax exemption process since we just completed it for our swimming booster club. For incorporation, it varies by state but typically takes 2-4 weeks if you file online. Most states charge between $50-100 for nonprofit incorporation. You'll need to have your bylaws, articles of incorporation, and board members identified before filing. Some states offer expedited processing for an additional fee if you're in a hurry. Once you're incorporated and have your state certificate, you can immediately apply for your EIN (takes about 10 minutes online), then submit your 1023-EZ application. The IRS is currently processing most 1023-EZ applications in 2-4 weeks, so you're looking at roughly 6-10 weeks total from start to finish if everything goes smoothly. Regarding the 501(c)(7) red flags - our CPA pointed out that social clubs have very strict limitations on fundraising from non-members. Since booster clubs typically sell concessions and merchandise to the general public (not just member families), we'd likely violate the 35% non-member income limit that could jeopardize the exemption. Plus, social club members can't deduct their dues as charitable contributions, which would hurt our fundraising efforts. The educational support mission of a 501(c)(3) is a much better fit for what booster clubs actually do. I'd recommend starting your incorporation process now so you're ready for spring fundraising season!

I've been following this thread closely as someone who went through a very similar situation with our baseball booster club two years ago. We were handling about $580k annually with equally questionable practices - everything lumped together on tax forms, minimal documentation, and the same "we've always done it this way" resistance from long-time board members. What finally broke through the resistance was when I calculated the actual financial exposure. I showed them that our current practices could result in penalties of $10,000-$20,000+ based on similar cases, plus the catastrophic risk of losing our tax-exempt status (which would mean paying taxes on ALL our revenue retroactively). Compare that to maybe $4,000-$5,000 to get properly compliant, and it became an obvious decision. The key was framing it as insurance, not criticism. I presented three scenarios: do nothing and risk audit/penalties, do minimal fixes and still face significant risk, or invest in proper compliance and protect the organization's future. When you put it that way, the choice becomes clear. For those asking about timeline - we were able to get compliant within about 3 months working with a non-profit CPA. The hardest part wasn't the technical fixes but changing the culture from "casual volunteer group" to "organization handling significant public funds with real legal responsibilities." One practical tip: start documenting everything NOW. Take photos of current procedures, save copies of recent tax filings, and create a written record of the issues you've identified. If you do get audited, showing that you recognized problems and took corrective action can significantly reduce penalties. The peace of mind has been incredible. We now have proper controls, clean tax filings, and board members who understand their fiduciary responsibilities. Best money we ever spent.

I'm reading through all these experiences and I'm honestly shocked at how common this problem seems to be. I just joined the board of our school's band booster club last month and I'm seeing the exact same issues - we bring in about $400k annually but our financial practices are basically "throw everything in a spreadsheet and hope for the best." What's really concerning me after reading everyone's audit experiences is that we have NO documentation for cash handling at our events. We run several major fundraisers throughout the year involving thousands of dollars in cash, and there's literally no paper trail beyond "we deposited $X on Monday." No count sheets, no dual signatures, no separation of duties - nothing. The penalty amounts people are sharing ($3,800-$12,000+) are definitely concerning, but what's really terrifying is the potential loss of tax-exempt status. We've been operating under that status for over 15 years, and having to pay back taxes on all that revenue would literally destroy our organization. I'm going to steal several ideas from this thread - the compliance checklist approach, finding local examples of booster clubs that lost their status, and presenting it as a risk management investment rather than criticism of past practices. The fact that multiple people have successfully navigated this transition in 3-4 months gives me hope that we can get this fixed before it becomes a crisis. For anyone else dealing with resistant board members - the fiduciary duty angle seems to be really effective. Once volunteers understand they could face personal liability for ignoring known compliance problems, the "we've always done it this way" excuse tends to disappear pretty quickly. Thanks to everyone who shared their experiences. This thread has been incredibly valuable for understanding both the risks we're facing and the practical steps to address them.

This thread has been such a goldmine of information! I'm dealing with this exact same Box 18/19 situation right now and was completely panicking when TurboTax flagged it. Reading through everyone's experiences has really put my mind at ease. What I found most helpful was learning that this is actually a common occurrence and doesn't necessarily mean there's an error. The explanation about Box 19 showing local wages subject to tax while Box 18 shows what was actually withheld makes perfect sense now that I understand it. I'm definitely going to follow the advice here and check my municipality's website to see if we have local income tax requirements. Better to be proactive about it now than get surprised later! Thanks to everyone who shared their stories and solutions - this community is incredibly helpful for those of us navigating tax season for the first time or dealing with unusual situations like this.

I've been following this thread and wanted to add my experience for anyone else dealing with this Box 18/19 situation. I had the exact same issue last year - Box 19 filled in with local wages but Box 18 completely empty for local tax withheld. After some research, I discovered that I live in a municipality that has a local earned income tax, but my employer is based in a different state and wasn't set up to withhold our local taxes. This meant I was responsible for paying the local tax directly to my city's tax collector. The good news is that most local tax authorities are pretty understanding about this situation since it's common with remote work and multi-state employers. I ended up owing about $400 in local taxes but was able to set up a payment plan with no penalties since it was my first year dealing with this. My advice: Don't ignore it, but don't panic either. Contact your local tax authority directly - they can usually tell you exactly what you owe and your payment options. Many have online calculators where you can input your Box 19 amount and get an estimate immediately. Also, make sure to adjust your withholdings or set aside money for next year if this is an ongoing situation with your employer!

I've been helping students navigate these exact tax situations for years, and I want to address the most important points clearly: **You MUST report this income** - Period. The $600 threshold only determines when payment apps send 1099-K forms, but you're legally required to report all income regardless of amount or source. **Privacy solution**: File your own complete tax return including both your W-2 and Schedule C (self-employment) income. Use "Digital Content Creation" as your business category - it's legitimate and appropriately vague. Check the box indicating someone else can claim you as a dependent so your parents keep their deduction while you maintain complete privacy. **Immediate action items**: - Start tracking every payment NOW (date, amount, platform) - Set aside 30% of each payment for taxes (you'll owe both income tax and self-employment tax) - Consider opening a separate account for this income - Track business expenses (phone, internet, equipment, props) **The good news**: You can deduct legitimate business expenses against this income, and filing independently doesn't affect your parents' ability to claim you as a dependent or education credits. Don't let anxiety about taxes keep you from being compliant. The IRS doesn't care what you're selling - they just want their share. Handle this properly now and you'll avoid much bigger problems later.

I'm a tax professional who works with a lot of college students in similar situations, so I wanted to jump in with some practical advice. First, yes - you absolutely need to report this income. The good news is that handling this properly while maintaining privacy from your parents is totally doable. Here's my recommended approach: 1. **File your own complete tax return** - Include both your W-2 from your barista job AND your self-employment income on Schedule C. Use "Digital Content Creation" or "Online Content Sales" as your business category - completely legitimate and appropriately discrete. 2. **Coordinate with your parents correctly** - Check the box on your return that says "Someone else can claim me as a dependent." This lets them keep their dependent deduction while you maintain complete control over your tax information. 3. **Track everything starting now** - Every Venmo/PayPal payment, every business expense (props, lighting, phone upgrade, etc.). I recommend a simple spreadsheet or even just a dedicated folder for screenshots and receipts. 4. **Set aside taxes immediately** - At your income level, plan on about 25-30% going to taxes (income tax + self-employment tax). Open a separate savings account if possible and transfer this percentage after every payment. The key thing to remember: the IRS doesn't care what you're selling, just that you report the income correctly. You're being smart by wanting to handle this properly from the start rather than trying to fix problems later. Feel free to ask if you need clarification on any of these steps!

One thing nobody's mentioned - with your income level, you might benefit from bunching deductions in certain years if you're close to being able to itemize. We're also W2 employees around $400k combined, and we've saved by planning charitable contributions strategically. Our CPA helped us set up a donor-advised fund that lets us bunch multiple years of charitable giving into a single tax year to exceed the standard deduction threshold, then take the standard deduction in off years.

Haven't seen anyone address the new baby situation specifically. With your income level, you won't qualify for the child tax credit (phases out for married couples filing jointly with income over $400k), but you might qualify for the dependent care credit if you pay for childcare. That's something software should catch, but a professional might help optimize. Also worth checking if your employers offer dependent care FSAs - with two W2s you could potentially each set aside $5k for a total of $10k pre-tax for childcare expenses.