Is there any advantage to using an FSA instead of an HSA for braces? I have both options at my work and never know which one to pick during open enrollment.

HSAs are generally better since the funds don't expire and you can invest them, but FSAs sometimes make sense if you know you'll have a large expense in that specific year. For braces specifically, one advantage of FSAs is that many allow you to access your full annual election amount at the beginning of the plan year, even before you've made all the contributions. So you could pay a large orthodontic bill in January but the money comes out of your paycheck gradually throughout the year.

That's really smart! Did you end up getting a decent tax refund from being able to deduct it? I'm trying to decide if it's worth all the hassle of tracking these expenses versus just using my HSA.

Do you just use Excel or is there a specific app you recommend for tracking? I'm terrible at keeping organized and my "system" is basically a shoebox of receipts lol.

That's a really good point! I never thought about the teaching part possibly being different from the actual woodworking hobby. So would I split it into two activities? Like report the teaching income ($1,785.90) as self-employment on Schedule C with related expenses, but still treat the $25 pen sale at the craft fair as hobby income on Schedule 1?

Yes, that's exactly right! You would treat the teaching income as self-employment on Schedule C, where you can deduct legitimate expenses related to teaching (portion of tools used in classes, materials, mileage, possibly even a home office if you prepare for classes at home). The pen sale would technically be hobby income reported on Schedule 1, Line 8. However, for such a small amount ($25), many tax professionals wouldn't be concerned if you included it with your teaching business or even omitted it entirely due to its minimal value. If you do more craft fairs in the future and start selling regularly, you might want to evaluate whether that activity could also qualify as a business.

I filed an amended return last July because of a late K-1 and it took almost 6 months to process. The IRS is still catching up from the pandemic backlog. Just make sure you keep copies of EVERYTHING and consider sending it certified mail so you have proof of when you submitted it.

Unfortunately, the IRS still considers it your responsibility to report all income accurately, even when the delays are caused by third parties like partnerships sending late K-1s. The penalties and interest aren't meant to be punitive so much as to compensate the government for the time-value of the money you owed but didn't pay on time. That said, you can request an abatement of penalties (though not interest) by showing reasonable cause, which could include receiving documents late. You'd need to document your efforts to get the information timely and show you acted reasonably. Success with this approach varies, but it's worth trying if you face significant penalties.

Does the tax software ask for information about each individual bet, or just the totals from your yearly statement? Also, do you need to keep records of every single bet in case of an audit?

The software typically just asks for your totals, not each individual bet. Usually you'd enter your total winnings and total losses based on the statements from your sportsbetting platforms. As for records, yes, you should definitely keep documentation of all your bets in case of an audit. The IRS requires "adequate records" for gambling activities, which means either a betting log or statements from the platforms showing all your activity. Most tax professionals recommend keeping these records for at least 3 years after filing (the standard audit window), though some suggest 6 years to be extra safe.

That's a good point! I received a 1099-K from one platform but nothing from another, even though I definitely won money on both. Does that mean the second platform didn't report my winnings to the IRS?

This is super helpful! I've been keeping receipts but wasn't sure what counts as a legit business expense. For my home office, is there a specific formula to calculate that deduction? And do I need any special documentation for these deductions?

For your home office, you can use the simplified method of $5 per square foot (up to 300 sq ft) or the regular method where you calculate the percentage of your home used for business and apply that to your housing expenses. Most freelancers find the simplified method easier unless you have a large dedicated space. As for documentation, keep all receipts and maintain a log that notes the business purpose for each expense. For things like mileage, keep a log of dates, destinations, and business purposes. Digital receipts are fine - just make sure they show what was purchased, date, and amount. The IRS doesn't require you to submit these with your return, but you'd need them if you're ever audited.

Same thing happened to me my first year. If you can show reasonable cause (like you didn't know about the requirement), sometimes you can get the penalty waived. Worth calling the IRS to ask about penalty abatement for first-time offenders.