9 One thing nobody has mentioned yet - as a dependent with earned income, make sure you understand the difference between a tax RETURN and a tax REFUND. The return is the form you file, while the refund is the money you get back if you overpaid. Also, at your income level (~$14.5k), you'll probably owe very little in federal income tax after the standard deduction, so most of what was withheld from your paychecks should come back to you as a refund. Just make sure to file - I made the mistake of not filing one year in college because I thought "dependents don't need to file" and missed out on a nice refund!

4 Don't forget about state taxes too! Everything people are saying about federal returns is true (yes, file your own return even as a dependent), but depending on your state, you might need to file a state return as well to get back state income taxes that were withheld.

Has anyone successfully claimed a deduction for JUST the materials portion of a combined job? Our company did something similar ($55k project, about $35k materials and $20k labor) and I'm worried about how to document this correctly without raising audit flags.

Based on my experience handling similar situations for construction companies, I can confirm what others have mentioned - you can deduct the materials but not the labor portion. However, I want to add a crucial point that hasn't been fully addressed yet. Since your materials were valued at $28,000 (over $5,000), you'll need a qualified appraisal for the non-cash contribution. The appraiser needs to be independent and meet IRS qualifications. Don't use your own internal valuations or supplier quotes - the IRS is very strict about this for larger donations. Also, timing matters for S-Corps. Make sure the donation was actually completed in 2024 (meaning the non-profit took possession of the materials and you have their acknowledgment letter dated in 2024). The deduction flows through to shareholders' K-1s based on ownership percentages. One more tip: keep detailed records of your material costs, purchase receipts, and any delivery documentation. If you're ever audited, the IRS will want to see the complete paper trail showing how you arrived at the $28,000 valuation and that the materials were actually transferred to the non-profit.

I went through this exact same confusion last year! After doing a lot of research and talking to other indie developers, I can confirm that 511210 (Software Publishers) is definitely the right code for video game development companies. What helped me feel more confident about this choice was understanding that the IRS classifies businesses based on their primary economic activity, not necessarily the creative aspect. Since we're developing and publishing software products (games), we fall under software publishing rather than traditional entertainment categories. One tip that might help for next year - keep good records of your revenue streams. If you ever branch out into things like merchandise, licensing, or other non-software activities, you'll want to make sure game development/publishing is still your primary revenue source to justify using this code. But for most indie studios, 511210 is spot on. Don't beat yourself up about trying to do it yourself - we all learn these things somewhere! The important thing is you're getting it right now.

Great question! I run a small indie game studio and went through this same headache when filing our Form 1065. After consulting with our CPA and doing some research, we use NAICS code 511210 (Software Publishers) which is what most game development companies should use. The key thing to understand is that the IRS classifies video game developers as software publishers rather than entertainment companies, since we're primarily creating and distributing software products. Even though our games might be entertainment, the business activity itself falls under software publishing. A few additional tips from my experience: - Make sure your business description on the form matches this classification - Keep documentation showing that game development/publishing is your primary revenue source - If you do contract work or other services, those might need different treatment depending on the revenue split Code 511210 has worked well for us for three years now with no issues from the IRS. Don't overthink it too much - this is the standard classification that most indie studios use successfully!

11 Quick question - what about my car? I use it for business sometimes but also personal. Is that 50% deductible or based on actual business use?

Great question! The basic rule is that business expenses are generally 100% deductible if they're "ordinary and necessary" for your business. The IRS specifically carved out exceptions for certain categories: **100% Deductible:** - Office supplies, software, equipment - Contractor payments (yes, what you pay freelancers is fully deductible!) - Advertising and marketing - Professional services (legal, accounting, etc.) - Business travel (flights, hotels, car rentals) **50% Deductible:** - Business meals and entertainment - This limitation exists because the IRS assumes there's always some personal benefit to eating For your freelancer question - absolutely deductible at 100%! Just remember to get their W-9 form upfront and issue 1099-NECs if you pay them $600+ in a year. The key is keeping good records. For mixed-use items (like a laptop used for both business and personal), you deduct based on the business percentage. There's no "magic rule book" but IRS Publication 535 (Business Expenses) is your best friend for the details!

I've been self-employed in Texas for 5 years now and the best advice I can give is to set aside 25-30% of your earnings right away in a separate savings account. That way when tax time comes, you're not scrambling. Also, don't forget that Texas has no state income tax, which is one less thing to worry about compared to folks in other states!

The safe harbor rule that Nina mentioned is huge and could save you from penalties! Since you worked a regular W-2 job through July 2023, there's a good chance you already had enough taxes withheld to meet the safe harbor requirements. Here's what you need to check: Look at your 2022 tax return (Form 1040, line 24) to see your total tax liability. If your 2023 W-2 withholding equals or exceeds that amount, you're completely protected from underpayment penalties regardless of when you pay your self-employment taxes. For your situation with $5600 in self-employment income from October-December, you're looking at roughly $861 in self-employment tax (15.3%) plus regular income tax on that amount. If your W-2 withholding already covered your safe harbor requirement, you can simply pay everything when you file your 2023 return by April 15th without any penalties. Going forward for 2024, definitely start making quarterly estimated payments since you'll have self-employment income all year. The 25-30% rule Ruby mentioned is spot on - I'd lean toward 30% to be safe since you'll owe both regular income tax and the 15.3% self-employment tax.