I hadn't even thought about the Medicaid implications. That's a really important point since she might need that level of care eventually. Is there a way to use the proceeds for her benefit that wouldn't trigger Medicaid issues while still meeting her needs?

You should use the proceeds only for your mom's benefit and keep meticulous records of every expenditure. Maintaining a separate account specifically for her funds managed under the POA is essential. This money can be used for her care, living expenses, medical costs not covered by insurance, and quality of life improvements. For Medicaid planning, some families work with elder law attorneys to establish properly structured trusts, but you need professional guidance specific to your state as the rules vary. The key is demonstrating that funds were used for her benefit rather than gifted away to avoid Medicaid spend-down requirements.

This is so important! My parents sold their house last year and we forgot to account for the $30k kitchen renovation they did in 2010. Would have lost out on that adjustment to the basis if the closing agent hadn't mentioned it. Old credit card statements can help prove these expenses if you don't have the receipts anymore.

I tried Free File Fillable Forms last year and made a huge mistake on my Schedule C. Ended up having to file an amended return which was a massive headache. Sometimes paying a little for guidance is worth it if you're not super tax-savvy.

Thanks for this recommendation! I'll definitely check out Cash App Taxes. That sounds exactly like what I'm looking for - something that can handle Schedule C without surprising me with fees halfway through. Really appreciate everyone's suggestions here!

16 That's a really good point! How did you handle the amounts on the 1099-NEC? Did you just report the check amounts or the total? I'm in this exact situation with a web designer I've been using.

21 I only reported the check amounts on the 1099-NEC I issued. The PayPal payments were handled by their 1099-K reporting. My accountant explained that if I included the PayPal amounts on my 1099-NEC, the contractor would have the same income reported twice to the IRS (once on my 1099-NEC and once on PayPal's 1099-K). It was a bit confusing because my tax software wanted me to enter the total paid to each contractor, and I had to manually adjust the reportable amounts. Definitely keep separate payment records by method for each contractor if you're using multiple payment types!

13 The $600 reporting threshold for third-party payment networks is supposed to be in effect for 2024 (filed in 2025). The IRS issued Notice 2023-10 for the delay that affected 2023 filings, but unless they issue a new notice, we should assume the $600 threshold applies for 2024 payments. It's always possible they'll announce another delay though.

Wait seriously?? I have to pay EXTRA tax on top of regular income tax? I thought the whole point of writing off the equipment was to pay less taxes. Does this mean I'll end up owing more than if I just didn't report the photography income at all?

You do need to pay self-employment tax, but don't panic! You'll still benefit from deducting your equipment expenses. Here's how it works: your business profit (income minus expenses) is what gets taxed. By deducting legitimate expenses like your camera equipment, you're reducing your taxable profit. Not reporting income isn't a good strategy. It's legally considered tax evasion, and the penalties can be severe if you're caught. Plus, reporting your business properly builds tax history that helps with things like qualifying for loans, retirement accounts, and health insurance. The short-term tax hit is worth the long-term benefits of having everything properly documented.

There's also Section 179 deduction that lets you deduct the full cost of equipment in one year up to a certain amount. I think it's like $1,080,000 for 2023 so way more than most photographers would spend!

How much interest are we really talking about though? Like if someone gets a $3000 refund, how much are they actually losing by letting the government hold it?

The interest amount depends on what you would have done with the money instead. Using your $3000 example, if that refund built up gradually over the year (about $250/month): If you'd put it in a high-yield savings account at 3.5%, you'd have earned roughly $60 in interest over the year. Not life-changing, but it's something. If you used that monthly amount to pay down credit card debt at 18% interest, the impact would be much more significant - potentially saving around $300 in interest charges over the year. And if you invested it in the market with an average 7% return (obviously with more risk), that theoretical long-term value would be about $110 in potential growth. So it really depends on your personal financial situation. If you have high-interest debt, the cost of overwithholding is much higher than if you'd just park it in a savings account.

Isn't that just a result of how the withholding tables are designed though? Like they're intentionally set up to withhold a little extra so people don't end up with surprise tax bills? I don't think most people are consciously choosing to overpay.