This thread has been incredibly valuable! I went through this exact process about 6 months ago with my unused LLC. One thing I'd add that hasn't been mentioned yet - if you ever need to reference this dissolved LLC in the future (like on loan applications or business forms that ask about previous entities), having that paper trail of proper dissolution is golden. I recently applied for a business loan for a new venture, and they asked about any previous business entities I'd owned. Being able to show the state dissolution papers and my certified mail receipt for the IRS notification letter made that part of the application process completely smooth. The lender actually commented that it was refreshing to see someone who had properly closed out their previous entity rather than just letting it go dormant. For anyone still on the fence about sending that notification letter to the IRS - it's really worth the small effort and cost of certified mail. Even though it's not technically required, it creates a clean paper trail that protects you and demonstrates you handled everything properly. Future you will thank present you for taking care of it the right way!

This thread has been incredibly thorough and helpful! I'm in a nearly identical situation to Paolo's - formed an LLC about a year ago, got the EIN, but never conducted any business before deciding to dissolve it. One additional consideration I wanted to mention that might be relevant for others: if you used any online services or platforms to form your LLC initially (like LegalZoom, Incfile, etc.), some of them offer dissolution services too. While you can absolutely handle the state dissolution yourself, I found it helpful to check if my formation service had a dissolution package that included guidance on both state and federal requirements. The service I used provided a checklist that covered the EIN notification letter to the IRS, state final filings, and even reminders about things like closing any business bank accounts or credit cards. It cost a bit extra, but for someone like me who was anxious about missing steps, having that structured guidance was worth the peace of mind. That said, based on all the excellent advice shared here, it's definitely something you can handle yourself if you're comfortable following the steps everyone has outlined. The key takeaways seem to be: get your state dissolution completed first, send that notification letter to the IRS via certified mail, and keep good records of everything. Thanks to everyone who shared their experiences - this community is incredibly helpful for navigating these business admin challenges!

This is exactly why divorce and taxes get so complicated! Your friends' accountant is being smart about timing. Here's the key issue: while married filing jointly, they can exclude up to $500k in capital gains from their primary residence. But once divorced, they each get their own $250k exclusion. The tricky part is the "use test" - both spouses need to have used the home as their primary residence for 2 of the last 5 years before the sale. If one moves out during divorce proceedings and they sell while still married, they might lose the full $500k exclusion if the moved-out spouse doesn't meet the use test. By waiting until after divorce and having proper language in the divorce decree (as others mentioned), they can ensure both qualify for their individual $250k exclusions. With $450k in gains, this covers them completely. Also consider: if their income drops after divorce (filing separately vs jointly), they might have better options for using those rental property losses. The passive activity loss rules at higher income levels can be brutal.

Another angle to consider - if they're selling multiple properties in the same year, they might want to look into a 1031 exchange for the rental properties instead of taking the losses all at once. Even though they're divorcing, they could potentially defer the capital gains on the rentals by exchanging into new investment properties. This could simplify the tax planning around the primary residence sale since they wouldn't be trying to coordinate the rental losses with the home sale timing. Plus, if one spouse wants to stay in real estate investing post-divorce, the 1031 could set them up better for the future. Of course, 1031 exchanges have their own complexity and strict timing requirements, but it might be worth discussing with their accountant as an alternative strategy. The key would be making sure the exchange is completed before the divorce is finalized so they can act as a unified entity for the exchange process.

Great question! I've been through a similar situation and want to add a few practical considerations that might help with your decision-making process. One thing to consider is the timing of when you actually close on the sale versus when your divorce is finalized. Even though both happen in 2024, the exact sequence can affect how you handle the paperwork and coordinate with your attorneys. We found it smoother to have our divorce decree explicitly state how the house sale proceeds would be divided, even though we sold before the divorce was final. Also worth mentioning - make sure you're both equally involved in the sale process (listing agent selection, pricing decisions, etc.) since you're both on the title. This can prevent disputes later and ensures you're both comfortable with the decisions being made. The buyout option you mentioned can work well, but factor in the transaction costs of a cash-out refinance versus a sale. In our case, the refinance costs plus the higher interest rate environment made selling the better financial choice, even with realtor commissions. Sounds like you're already planning to get professional help, which is smart. A CDFA can run the numbers on both scenarios to show you the exact financial impact over time.

One additional consideration that might help with your planning: make sure you understand how the capital gains calculation works if you've made significant improvements to the home during your ownership. You can add the cost of major improvements (not regular maintenance) to your original purchase price to reduce your overall gain. For example, if you bought the house for $350k and are selling for $850k, that's a $500k gain. But if you spent $50k on a new roof, kitchen renovation, or other qualifying improvements, your adjusted basis becomes $400k and your gain drops to $450k. With that lower gain, you'd each report $225k instead of $250k, giving you both some buffer under the exclusion limit. Keep good records of any improvement receipts - your tax preparer will need documentation. This could make the difference between owing some capital gains tax and owing none at all, especially if your actual sale price ends up being higher than your $850k estimate. Also, don't forget about closing costs from your original purchase and selling costs (realtor commissions, legal fees, etc.) which can also reduce your taxable gain. Every bit helps when you're trying to stay under those exclusion thresholds!

I actually went through this exact process last month as a freelance writer with multiple 1099s. Here's what worked for me: First, I used a simple spreadsheet to track all my income sources and business expenses throughout the year. This made a huge difference when I walked into Jackson Hewitt because I could show them clear documentation of my earnings patterns. The key thing they wanted to see was consistency - even though my monthly income varies, I was able to show steady work over the past 12 months. They also really cared about my business expense deductions (home office, equipment, software subscriptions, etc.) because those significantly impact your expected refund. I got approved for a $900 advance, but like others mentioned, the fees were substantial - about $120 total between the advance fee and tax prep. The process took about 2 hours at their office because they had to manually review all my 1099 documentation. One tip: if you use any business banking apps or accounting software, bring those statements too. They seemed more confident when I could show organized financial records rather than just a pile of paper 1099s.

As someone who's been self-employed for 3 years now, I want to add that timing really matters for these holiday advances. Jackson Hewitt typically starts their Early Refund Advance program in mid-November, but availability can get limited as we get closer to the holidays because of high demand. If you're planning to apply, I'd suggest getting all your documentation together ASAP. Beyond what others have mentioned (previous year's return, bank statements, 1099s), also bring any business license or EIN documentation you have. It helps establish legitimacy of your self-employment. One thing that caught me off guard my first time - they'll want to see proof that you're actually going to file with them for tax prep, not just get the advance and leave. So factor in their tax preparation fees when deciding if the advance is worth it financially. The advance is really tied to using their tax services. Also, if you have any major life changes this year (got married, had a kid, bought a house), mention that upfront because it affects your tax situation and refund estimate significantly.

This has been such an informative discussion! I'm in a very similar situation - received about $1,800 through Apple Pay last year from selling some old tech equipment, friends paying me back for concert tickets and group meals, and a couple small amounts from babysitting for neighbors. Reading through everyone's experiences has really helped me understand the key distinction between personal transactions versus actual income. The tech equipment sales were definitely at a loss (sold my old laptop and gaming console for way less than I originally paid), and the friend reimbursements were clearly just people paying me back - so those don't sound taxable based on all the great advice here. But those babysitting payments were actual compensation for services, so I should report those on Schedule C even though they were small amounts. I had no idea there wasn't a minimum threshold for reporting self-employment income - that's such important information! The clarification about the current $20,000 AND 200 transactions threshold still being in effect has been really helpful too. I was getting so much conflicting information online about whether the $600 threshold had already taken effect. I'm definitely going to start keeping much better records going forward. Maybe I'll start adding quick notes to my transactions as they happen - "Mike's share of dinner" or "babysitting for the Smiths" - anything to avoid this stress next year! Thanks to everyone for sharing their knowledge and experiences.

This entire discussion has been incredibly reassuring! I'm in almost the exact same boat as the original poster - received about $2,100 through Apple Pay last year and was completely stressed about potential tax implications. Like so many others here, most of my transactions were personal - friends paying me back for shared Uber rides and group dinners, selling some old textbooks and electronics from college (definitely at a huge loss compared to what I originally paid), and a few small payments for dog-walking services for neighbors. Reading through everyone's responses has really helped clarify the key distinction between personal transactions versus actual business income. The textbook/electronics sales and friend reimbursements clearly aren't taxable since they were personal transactions and sales at a loss. But I should definitely report the dog-walking payments on Schedule C since those were actual payments for services, regardless of the small amounts. The information about the current $20,000 AND 200 transactions threshold still being in effect (not the $600 threshold) was particularly helpful - I was seeing so much conflicting information online and getting really confused about what rules actually applied. I'm absolutely going to start keeping better records going forward. Maybe a simple note system like others suggested - "Jake's half of dinner" or "dog-walking for Mrs. Chen" - anything to avoid this anxiety next year! Thanks to everyone for sharing their experiences and knowledge. This community has been such a lifesaver for navigating these confusing payment app tax situations!