I found the summary page on my Robinhood statement but I'm still confused about one thing. Some of my trades are marked as "covered" and others as "uncovered" - do I need to separate these when entering them into FreeTaxUSA?

Yes, you should separate covered and uncovered transactions when entering them into FreeTaxUSA. "Covered" means your broker is reporting the cost basis to the IRS, while "uncovered" means they're not (usually for older securities or ones transferred from another broker). FreeTaxUSA will have separate entry sections for covered vs. uncovered transactions. The tax calculation is the same, but the IRS wants them reported separately because they can verify the covered transactions against what your broker reported, while uncovered transactions are based solely on your records.

Do you know if FreeTaxUSA allows you to import a CSV file directly? That would save so much time compared to manual entry.

Thanks for confirming my suspicion! I used the calculator and it's showing we might be slightly underwithholding overall. Is it better to adjust both our W-4s slightly or just have one of us make a bigger adjustment? Does it matter which approach we take?

Either approach works from a tax perspective - the IRS doesn't care which spouse has the withholding as long as your household total is correct. For simplicity, I'd recommend just having one person make the adjustment - usually the higher earner or whoever has the more stable income. Remember that if your incomes are fairly high, the "married" withholding tables assume that one spouse might not work, so with two similar high incomes, you might need more withholding than the standard tables suggest. The calculator should account for this, but it's always good to recheck your withholdings around June each year to make sure you're on track.

Is this still the best approach with the redesigned W-4? I thought the new form was supposed to fix these issues with the two-earner worksheet?

Thanks for the tip! I just looked at the actual Schedule D form in the PDF and you're right - there's a discrepancy. The main software screen shows $0 carryover, but Schedule D Line 16 is showing the $4,000 remaining loss amount. So it looks like the calculation is correct in the actual forms but just displaying wrong in the summary screen? Do you think I should contact the software company about this display issue or just ignore it since the actual form seems correct?

If the actual Schedule D shows the correct $4,000 carryover amount, then your tax return is being filed correctly and you should be fine. This is definitely just a display issue in the software interface. It's still worth reporting to the software company since others might be confused by the same issue. Take screenshots of both the incorrect summary page and the correct Schedule D to include with your report. But as far as your taxes are concerned, you're good to go - the IRS receives the actual forms, not the software's summary screens.

This is good advice. Numbers get fuzzy when we rely on memory. I've messed up carryovers before because I was working from memory instead of having my previous return open while doing my current taxes.

This is super helpful, thank you! Looking at these factors, I'm definitely more on the hobby side. My financial records are pretty basic, I primarily do it for enjoyment, and the income is small compared to my day job. One more question - if I do decide to formally track this as a hobby on my taxes, should I be keeping receipts for all my bonsai-related purchases even though I can't deduct them? Just in case the IRS ever has questions?

Good question! Yes, I would recommend keeping basic records of both your sales and expenses, even though you can't deduct the expenses for a hobby. This serves two important purposes: First, if the IRS ever questions whether this is truly a hobby, your records can help demonstrate the financial reality of your activity. Second, if you eventually transition to business status, having historical records will be valuable. Also, while you can't deduct hobby expenses against hobby income anymore (thanks to the Tax Cuts and Jobs Act), keeping track of expenses helps you understand the true economics of your activity. Just keep it simple - a basic spreadsheet and a folder for receipts should be sufficient. No need for elaborate bookkeeping if it's truly just a hobby.

Getting a 1099-K means Etsy is reporting that income to the IRS, so you definitely need to report it on your tax return. Starting in 2022, platforms like Etsy are required to issue 1099-Ks for $600+ in sales (used to be $20k). This doesn't automatically make your activity a business, but it does mean the IRS knows about the income. You'd still apply the same hobby vs business tests others mentioned. If it's a hobby, report on Schedule 1 (Other Income). If business, Schedule C.

Thanks for the validation. I've already started asking around for recommendations for next year. Did you find any specific questions that helped you separate the knowledgeable CPAs from those just claiming to understand crypto?

I ask them to explain how they handle specific crypto situations that I know are tricky - like liquidity pool rewards, token airdrops, or NFT transactions. The ones who give vague answers or just say "we can handle any crypto situation" without details are the ones to avoid. The good ones will be honest about what they know and don't know. My current CPA straight up told me he specialized in DeFi and mining operations but wasn't as familiar with NFTs. That honesty was refreshing, and he ended up partnering with an NFT tax specialist for that portion of my return. Transparency about their limitations is a huge green flag.

Eh, I disagree. The CPA did complete part of the work, so paying nothing would be unfair. The $250 partial payment makes sense. And honestly, most CPAs are overwhelmed during tax season - it sounds more like miscommunication than intentional deception.

This is why I just do my own taxes now. I spent $600 on a CPA two years ago only to find a mistake that could have cost me $1200. H&R Block software is like $70 and has handled everything I've thrown at it including rental property and some basic stock trades.