Just be careful that your "business" isn't just a tax shelter. I tried something similar with a "photography business" a few years back and got audited. The IRS disallowed all my deductions because they determined I didn't have a profit motive. Their exact words were that I had "significant income from other sources" (my stock trading) and was using the business primarily to offset that income. Cost me thousands in back taxes plus penalties.

This is a great question that many traders face. The key thing to understand is that yes, legitimate business losses can offset your short-term capital gains, but the IRS will scrutinize whether your business is real or just a tax avoidance scheme. Since you have an IT consulting background, you're in a much stronger position than someone starting a random business just for tax purposes. Here are some critical steps to ensure you're protected: 1. **Document everything from day one** - Business plan, client contracts, invoices, expense receipts, time logs 2. **Separate business finances** - Get a business bank account and credit card, never mix personal and business expenses 3. **Price your services at market rates** - Don't undercharge just to show losses 4. **Actively market your services** - Keep records of your marketing efforts and client outreach 5. **Get proper business licenses/registrations** where required Regarding your specific expenses, equipment purchases over a certain threshold may need to be depreciated rather than fully expensed in year one, unless you elect Section 179 or bonus depreciation. Software subscriptions and marketing costs are typically fully deductible. The $15k loss scenario you described could work, but make sure those expenses are truly necessary for the business and not things you'd buy anyway. The IRS looks for ordinary and necessary business expenses tied to profit-generating activities. Consider consulting with a tax professional who can review your specific situation and help structure everything properly from the start.

Just a heads up - if you're going during tax season (Feb-Apr), expect longer wait times even with an appointment. I went in March last year and what should have been 45 mins turned into almost 2 hours because they were swamped. Try to schedule early morning appointments if possible! Also, make sure your phone is charged - they have you wait in different areas and you might want to track your refund status while you're there.

I went through this last month and it was pretty straightforward! Definitely bring your original Social Security card, government photo ID, and a copy of your tax return. Also helpful to have the IRS letter that told you to verify your identity. One thing I wish someone had told me - they'll ask you personal questions from your tax history to verify it's really you, so review your return beforehand. The actual appointment was about 30 minutes, but I'd budget an hour total including wait time and security. Good luck!

After verification they processed my refund in like 2 weeks. Way faster than I expected ngl

Had my appointment last month and honestly it wasn't as scary as I thought! The agent was actually pretty nice and walked me through everything. Main things they asked: confirm SSN, previous addresses from last 3 years, and details about my 2023 tax return. Whole thing was done in 45 mins including wait time. Pro tip: bring a bank statement too - they asked for it to verify my direct deposit info for the refund.

Has anyone here tried adjusting their W-4 using the Two-Jobs Worksheet instead of just adding an extra withholding amount? I'm wondering which approach is more accurate.

This is such a frustrating situation that so many dual-income couples face! I went through the exact same thing when my spouse and I got married. We went from both getting refunds as single filers to owing about $2,800 every year despite maxing out our withholdings. What finally worked for us was using the IRS Tax Withholding Estimator mid-year to recalculate our withholdings. The tool showed us that we needed to add an extra $180 per paycheck from the higher earner's salary. It seems counterintuitive that "maximum withholding" isn't actually enough when you're married with two incomes, but the withholding tables just weren't designed for our situation. One thing that helped me understand it better: when you select "Married" on your W-4, the system assumes your spouse either doesn't work or earns significantly less. When both spouses earn similar amounts (especially in higher brackets), you're essentially underwithholding on both incomes. The good news is once you fix the withholding, the problem goes away completely. We've gotten small refunds the past two years after making the adjustment.

This is such a helpful thread! I'm dealing with a similar situation with my 8-year-old's UTMA account. After reading all these responses, I'm realizing I need to completely rethink my approach. I've been doing the same gain harvesting strategy as Jessica, but now I'm understanding that between the kiddie tax threshold, potential financial aid implications, and the compounding effect of keeping money invested, I'm probably shooting myself in the foot. The state tax angle is particularly eye-opening - I'm in New York where we definitely have capital gains taxes, so even the "0% federal" scenario isn't truly tax-free for us. One question I haven't seen addressed: for those who switched from annual harvesting to a buy-and-hold strategy, did you have any issues with the cost basis tracking? I'm worried about having a messy mix of different purchase dates and basis amounts when it comes time to eventually sell everything.

This thread has been incredibly enlightening! I'm in a similar boat with my 10-year-old's UTMA account and have been doing the annual gain harvesting for three years now. After reading all these insights, I'm realizing I may have been overthinking this. The kiddie tax threshold at $2,300 is particularly concerning - I hadn't fully grasped that gains above that amount would be taxed at MY rate, not my daughter's. Given that I'm in the 32% bracket, this completely defeats the purpose of my strategy if we ever exceed that threshold. What's really got me thinking is the compounding argument. Even if I'm only paying small amounts in taxes each year, that money could be growing for another 8+ years. The financial aid implications are also something I never considered - definitely don't want to inadvertently hurt her college funding prospects. I think I'm going to stop the harvesting and just let it ride. Worst case scenario, if she has significant income at 18, we can reassess then. But for now, the potential downsides seem to outweigh the modest tax benefits, especially when you factor in state taxes (I'm in Massachusetts) and all the administrative complexity. Thanks everyone for sharing your experiences - this community is amazing for working through these complex scenarios!