You make a really good point about the regulatory compliance stuff. I hadn't even thought about the FDA labeling requirements. I'm going to ask him specifically about packaging, shipping supplies, and the labels since those definitely couldn't have been "gifted years ago" - they would be ongoing expenses. I've been trying to give him the benefit of the doubt, but the more I think about it, the more impossible it seems to run any business with zero expenses. I'm going to have a more direct conversation with him and explain that I'm trying to help him avoid unnecessary IRS scrutiny.

Glad I could help! The FDA requires supplements to have specific labeling including ingredients, nutrition facts, serving sizes, and various disclaimers. He's definitely paying something for compliant labels unless he's operating completely under the table (which would be a whole different problem). Also consider asking about things like shipping costs, payment processing fees (Venmo might charge business accounts), any social media or advertising costs, and home office expenses if he's producing these at home. Sometimes clients don't realize these all count as legitimate business expenses that would actually reduce his tax liability.

Do business Venmo fees show up separately somewhere? I've been paying them but haven't been tracking them for my small business.

Is Publication 15 easy to understand for someone who isn't great with tax stuff? Or is there a simplified version somewhere? Also, what specific parts should I look at to check my withholdings?

Publication 15 isn't the most user-friendly document if you're not familiar with tax terminology, but the withholding tables are actually pretty straightforward. Look for the section called "Income Tax Withholding Tables" - there are separate tables for different pay periods (weekly, biweekly, monthly). The key sections to check are the Federal Income Tax tables, the Social Security tax rate (currently 6.2% on earnings up to a certain limit), and Medicare tax (1.45% on all earnings). For most people, verifying these three calculations will catch the majority of potential errors. If you have state income tax, you'll need to check your state's department of revenue website for those rates.

I work in HR for a large company that uses ADP. Most bigger companies finish processing W-2s around mid-January, but they often don't release them until closer to the January 31 deadline. Sometimes this is because they're still making final adjustments or quality checks. With ADP specifically, employees can usually get early access through their online portal before paper copies are mailed. Check if you have an ADP login - if so, your W-2 might be available electronically 1-2 weeks before the paper version is sent.

Thanks for the insider info! I do have an ADP login but never really use it except to download paystubs occasionally. I'll definitely check there in mid-January. Hopefully I can get a head start on filing since we're planning to use our refund for a down payment on a house!

How do you determine the exact point when you're "in business" versus still in startup phase? I set up my LLC in January 2023 but didn't start making sales until March 2023. Would expenses in that January-February period count as startup costs?

Yes, those January-February expenses would likely qualify as startup costs under Section 195. The IRS generally considers you "in business" when you begin your actual business operations - which usually means when you start offering goods or services for sale. Since you formed your LLC in January but didn't begin making sales until March, the expenses incurred in that January-February window would typically be considered startup expenses subject to the Section 195 rules, including the $5,000 first-year deduction limit with the remainder amortized over 180 months.

I had the opposite problem - TurboTax didn't recognize my legitimate startup costs at all until I manually selected the form. Make sure you're entering your business start date correctly in the software. That's usually what triggers these categorization issues.

I actually double-checked this. The points were definitely on the original 1098 that I provided to my CPA. I found my copy and it clearly shows the points in Box 6. I think it was just an oversight on their part.

In that case, they definitely should fix this for free. Since you have proof the information was provided to them correctly on the original 1098, this is 100% their responsibility to correct without charging you. Make sure to emphasize that when you talk to them. If they give you any pushback, consider finding a new CPA next year. Mistakes happen, but how they handle fixing those mistakes tells you a lot about their professionalism.

That's only if the amendment changes your AGI significantly enough to affect your premium tax credit calculation. Adding mortgage points as a deduction would likely lower AGI, which could actually increase potential premium tax credits rather than reduce them.

This is super helpful, thank you! Do you know if I would need to file any US tax returns if I'm classified as a non-resident alien? And if I do submit a W-8BEN to PayPal, how long does it typically take for them to process it and stop the 30% withholding?

Yes, you would likely need to file Form 1040NR (U.S. Nonresident Alien Income Tax Return) if you have U.S. source income above certain thresholds, even as a non-resident alien. For income received through PayPal that's considered U.S. sourced, you'd generally need to report it. For the W-8BEN processing, PayPal usually takes about 1-2 weeks in my experience, though sometimes it can be faster. The tricky part is determining if your income through PayPal is actually U.S. sourced or not - it depends on where the services were performed or where the payer is located, not just where your PayPal account is based. If you're performing services while physically outside the U.S. for non-U.S. clients, that income might actually be foreign-sourced and not subject to U.S. taxation at all.

This is such a good point! I had a similar situation and ended up double paying taxes because I didn't understand the source rules. Does anyone know if there's a way to explain to PayPal that the income isn't US-sourced even though it's going into a US account?