I didn't use a payroll service last year, which is probably why I'm in this mess now! Do you know if these services can help with fixing past mistakes if I wasn't using them before? Or is it too late?

They can definitely help with past mistakes even if you weren't using them before! Both Homepay and SurePayroll offer "catch up" services where they'll help you file the missing forms from previous years. You'll need to provide them with the payment information for your household employee from 2023, and they can generate the proper W2 and W3 forms. They usually charge a one-time fee for this service rather than making you sign up for ongoing payroll. It's totally worth considering if you want to make sure everything gets done correctly without having to learn all the details yourself.

This is really important advice. I accidentally used the wrong year form once and it was a nightmare to fix. Another tip - keep copies of EVERYTHING you send to the SSA. I had to reference my copies when there was a mix-up with my household employee's Social Security earnings.

What exactly happens if you can't get someone to fill out a W-9? Like if they refuse or you just can't reach them anymore? Are you still supposed to issue the 1099 somehow?

If someone refuses to complete a W-9 or you can't reach them after payment, you're technically supposed to begin backup withholding at a rate of 24% on any future payments to that person. This means holding back that percentage and remitting it to the IRS. For the 1099-NEC, you should still issue it with whatever information you do have. If you're missing their tax ID number, the IRS may send you a B-notice requesting the missing information. The best protection is documenting your attempts to get their information (emails, certified letters, etc.). The IRS understands these situations happen, but they want to see you made a good faith effort to comply.

So what's the actual difference then? Like how much control can you have before they're considered an employee? I sometimes need people to be at certain places at certain times because, you know, that's when the client expects us.

The key to avoiding the hobby loss rule is showing that you're running your D&D sessions as a business with the intent to make a profit. Keep good records, have separate business accounts, track all expenses properly, create a business plan, and be professional about how you operate. The IRS generally uses a "3 out of 5" guideline - if you show a profit in 3 out of 5 consecutive years, they typically consider it a legitimate business. Since OP mentioned they were "hit hard with taxes," it sounds like they're profitable, which helps their case significantly.

That makes sense, thanks! I've been profitable 2 of the last 3 years, so I think I'm on the right track. I do have separate tracking for all my game master income and expenses, but I should probably open a dedicated bank account to make it even clearer.

Do you need to have a business bank account to do the separate credit card thing? Or can you just use a personal card that you designate for business only?

You can absolutely use a personal credit card that you designate for business only - that's what I do! You don't need a formal business account unless you have an LLC or corporation. The key is consistency - just make sure you ONLY use that specific card for business expenses and nothing personal. Makes it super easy to download your year-end statement and have all your deductions in one place. I also take photos of receipts for cash expenses using a free app that organizes them by date.

That's a really helpful rule of thumb! I had no idea how much to set aside. If I start setting aside 30% of my freelance income going forward, should I just make quarterly payments with that? And when are those even due?

Exactly - set aside that 30% and make quarterly estimated tax payments with it. The quarterly due dates are April 15, June 15, September 15, and January 15 of the following year (for 2025, the dates would be April 15, 2025, etc.) You can pay online through the IRS Direct Pay system or through their EFTPS (Electronic Federal Tax Payment System). Either way works fine. Just make sure you select "estimated tax" as the payment reason. Some freelancers I know set calendar reminders a week before each due date so they never miss one.

That's an interesting approach I hadn't considered. Would this FDE structure eliminate the need for the funds to flow through my wife's account? Also, would my father-in-law's involvement be easier to structure with this approach?

Yes, with an FDE structure, the funds could flow directly from your US partnership to the Peruvian entity's account without going through your wife's personal account. This creates a cleaner audit trail and likely reduces your FBAR complexity. For your father-in-law's involvement, you have options. He could be a local director or manager of the Peruvian entity (compensated through fees) while not being a US tax partner. Alternatively, he could be a true partner in the US partnership with the foreign withholding requirements that entails. The FDE structure gives you flexibility either way. The biggest advantage is that for US tax purposes, it's as if your partnership owns the property directly, while for Peruvian legal and banking purposes, you have a local entity that can operate more easily.

I thought FIRPTA only applied to foreign persons selling US real property interests, not US persons selling foreign property? OP is a US citizen selling Peruvian property, so I don't think FIRPTA withholding would apply here.