Thanks for this suggestion! I hadn't considered FreeTaxUSA. What's the difference in features compared to TurboTax? Is it as user-friendly for first-timers?

FreeTaxUSA has all the same forms and capabilities for small business owners, but the interface is slightly less polished than TurboTax. Still very user-friendly though - it asks you all the same questions to find deductions and walks you through Schedule C step by step. The big difference is price - usually under $20 for state filing compared to TurboTax's $120+ for self-employed. The federal filing with FreeTaxUSA is completely free, even with business income. It doesn't have the fancy import features for certain banks, but if you're organized with your numbers, it works perfectly.

Do you pay for the Self-Employed version of TurboTax or can you get by with the cheaper options? I'm in a similar situation and trying to decide which version to buy.

What about convention/event attendance? If I go to Maker Faire or similar events, can I deduct those expenses if I'm networking and getting ideas for content?

Convention attendance can absolutely be deductible if your primary purpose is business-related. That includes registration fees, travel expenses, meals (though these are usually limited to 50% deductible), and lodging. The key is being able to demonstrate the business purpose - so keep records of any business cards you collect, take notes on content ideas you develop there, document any meetings with potential sponsors, etc. If you're creating content at the event or about the event, that's even better proof of business purpose.

Having a full-time job doesn't prevent your content creation from being a legitimate business. The IRS looks at your "profit motive" and how you conduct the activity - not whether it's your primary source of income. To strengthen your case that it's a business and not a hobby: 1. Keep separate business records and maybe even a separate bank account 2. Have a business plan showing how you intend to grow your channel 3. Act in a businesslike manner (regular posting schedule, professional production) 4. Show that you're actively working to increase revenue (seeking sponsors, optimizing for monetization

This is such a good point that I didn't consider! I'll definitely call the state tax department directly tomorrow and ask about this. Do you think I should mention this to my auditor first, or just go directly to the taxpayer assistance division? Also, when you said they just needed you to "verify some details" - what kind of information did they ask for? I want to make sure I'm prepared before I call.

I would contact the taxpayer assistance division first, then let your auditor know what they said. Sometimes auditors are limited in what assistance they can provide, while the taxpayer help division is specifically there to solve these kinds of issues. For verification, they asked me to confirm my social security number, the employer's name (which they had on file), and the approximate total income I had reported from that employer. They also asked for my current address to update their records. Some states may ask for additional identity verification like your date of birth or information from your most recent tax return. Having a copy of your 2016 tax return handy would be helpful even if you don't have the W-2.

Most states follow a 3-year statute of limitations similar to the IRS, BUT there are important exceptions. If they suspect substantial underreporting of income (usually 25%+), many states can go back 6+ years. And if they suspect fraud, there's typically no time limit at all. Some states also have different rules - California and a few others have 4-year standard limits, and certain tax situations can extend deadlines.

Thanks for this info! Do you think it would be better for her to deposit it in smaller chunks over time to avoid the hold? She's planning to use some of it for textbooks next semester.

I wouldn't recommend breaking it into smaller deposits to avoid a hold, as that could actually look more suspicious. Banks are trained to watch for "structuring" which is when people deliberately break up deposits to stay under reporting thresholds. If she needs immediate access to some of the money, she could deposit most of it and keep what she needs for textbooks in cash. Otherwise, she can just explain to the bank teller that it's a graduation gift and ask if there will be a hold. Many times if you explain the situation upfront, the bank can make accommodations or tell you exactly when funds will be available.

Is this true for all states too? Some states have weird extra tax rules, right?

Thank you! This sounds very similar to what might have happened to me. Did your husband end up owing taxes on the distribution? And did he have any luck getting the money back after all that time?

Yes, he did owe some taxes because they processed it as a distribution rather than a direct rollover, which was super annoying. We had to pay about $1,600 in taxes on it. We probably could have fought it, but the amount wasn't worth hiring a tax pro for. He was able to claim the remaining money though! We contacted the company, verified his identity, and they sent a check for the remaining amount (after the withholding they'd already taken out). Took about 3 weeks to get the check. If your situation is similar, definitely call them ASAP to claim your money before it potentially gets sent to the state as unclaimed property.

That unclaimed benefits site is legit. I found an old pension I didn't even know I had from a summer job in college. Only about $3,200 but hey free money!