Has anyone actually been audited for large Goodwill donations? I'm curious what that process looks like. I donated about $8,000 worth of stuff last year and got a letter asking for more information, but nothing since then.

Based on everyone's experiences here, it sounds like you're actually in a good position with the professional appraisals already done. The $27k amount isn't automatically a red flag if you have proper documentation - it really depends on your AGI and whether you can substantiate the values. Since you mentioned this is from clearing out your mother-in-law's house, make sure you can prove ownership transfer to you before donation. The IRS sometimes questions whether the person claiming the deduction actually owned the donated items. Keep any estate documents or transfer records that show the items became yours before you donated them. Also, consider spreading the donations across multiple tax years if possible. Even though there's no dollar limit, claiming a massive charitable deduction in one year can trigger additional scrutiny. If you have items you haven't donated yet, you might want to hold some for early next year to smooth out the deduction amounts. The fact that you're asking these questions and keeping receipts puts you ahead of most people. Just make sure all your documentation is organized and easily accessible in case the IRS has questions later.

I'm dealing with this exact situation right now! I received about $850 total from various companies for completing coding challenges and design mockups during interviews last year. None of the companies sent me 1099s, but I kept detailed records of all the payments in a spreadsheet. Based on what I'm reading here, it sounds like Schedule C is definitely the way to go. For my situation, I think I'll use "Computer Systems Design Services" as my business code since most of the work was software development related. One thing I'm wondering about - can I deduct the time I spent on unpaid take-home assignments if they were part of the same interview processes? I probably spent 20+ hours on unpaid coding tests for every 1 hour of paid work. Obviously I can't deduct my time, but what about any resources or tools I purchased specifically for those interview processes? Also, does anyone know if there's a threshold where this stops being considered self-employment and becomes something else? Like if I only made $100 total instead of $850, would the same rules apply?

This is such a common situation that more people should know about! I went through the exact same thing last year with UX design trial projects. After lots of research and even consulting with a tax professional, I can confirm that Schedule C is definitely the right approach. For your "principal business or profession," don't overthink it - just use whatever type of work you were actually doing in these trials. So if you were doing marketing work, put "Marketing Consultant." If it was software development, use "Software Developer" or "Computer Programmer." The IRS cares about the nature of the work you performed, not your employment status. One important thing I learned: even though these payments feel different from "real" freelance work, the IRS treats them the same way. You were providing services and getting paid for them, which makes it self-employment income regardless of the context. The good news is that using Schedule C lets you deduct any legitimate business expenses related to completing these trials - things like software subscriptions, materials, or even a portion of your internet bill if you used it specifically for the work. Keep detailed records of everything, especially since you didn't receive 1099s for smaller payments. Don't let the business terminology on Schedule C intimidate you. Even a single paid project counts as business activity in the IRS's eyes.

I've been following this discussion and wanted to share my experience as someone who made a similar mistake last year. The advice about removing the SEP-IRA contributions is spot on - I had to do the exact same thing. When I called my custodian to request the excess contribution removal, I specifically said "I need to remove excess contributions due to having multiple employer-sponsored retirement plans for the same business." They knew exactly what I was talking about and had a standard form for this situation. The key thing that helped me was getting everything in writing from the custodian before they processed the removal. They sent me a letter confirming that the distribution would be coded as an excess contribution removal on the 1099-R (code P), not as a regular distribution. This documentation was crucial when I filed my taxes. One more tip: when you call, ask them to calculate any earnings on the excess contributions that also need to be removed. The IRS requires that both the excess contributions AND any earnings attributable to those contributions be distributed. The earnings portion will be taxable, but removing everything properly avoids the ongoing 6% penalty. You're definitely on the right track focusing on the Solo 401k going forward. It really is the better option for self-employed folks who want to maximize their retirement savings in one account.

I've been through this exact situation and want to echo what the CPA and others have said - you're definitely fixable, but you need to act quickly! The key insight that helped me was understanding that as a self-employed person, you can't split employer contributions between two different retirement plans for the same business. Your $23,000 Solo 401k employee contribution is totally fine - that's a separate bucket. But the $28,500 SEP-IRA contribution is competing with any employer contributions you might have made to your Solo 401k. I'd recommend calling your SEP-IRA custodian tomorrow and requesting a complete "excess contribution removal" for the entire $28,500 plus any earnings. Use that exact phrase - they'll know what you're talking about. Get the removal processed ASAP so you have documentation before filing your taxes. Going forward, just stick with the Solo 401k. You can actually contribute MORE with just that one account ($23,000 employee + up to 25% of net self-employment income as employer contributions) without all the complexity of managing two different account types. You caught this early enough to fix it properly - don't stress too much about penalties as long as you get the excess removed before your filing deadline!

The bonus withholding issue is super common! One thing nobody has mentioned yet is that you can actually ask your employer to withhold at a higher rate specifically for the bonus. Most payroll systems allow your employer to withhold at a different rate for supplemental wages (like bonuses) versus regular wages. You might want to talk to your HR or payroll department about withholding 25% or even 30% on that bonus instead of the standard 22% if you're worried about owing. I had my company do this for my annual bonus last year and it was the first time I didn't get hit with a tax bill in April!

Something else that might be happening - check if your employer is properly withholding for Social Security and Medicare (FICA taxes). I just went through this myself. My employer was withholding correctly for federal income tax but wasn't taking out enough for FICA. I didn't notice until I did my taxes and saw I owed a bunch. Apparently there was some setting in their payroll system that was calculating it wrong for my specific situation. Might be worth double-checking your paystubs to make sure everything looks right across all tax types, not just federal income tax!

Has anyone used QuickBooks Time or similar apps for tracking material participation? My accountant suggested it but it seems like overkill for just partnership documentation.

For what it's worth, I've been through a similar situation with health issues affecting my participation hours. One thing that helped me was realizing that time spent on administrative tasks like reviewing financials, insurance matters, vendor negotiations, and even business-related phone calls all count toward material participation - not just the obvious "management" activities. Since you mentioned health issues, don't forget that time spent dealing with business insurance, worker's comp issues, or even reviewing partnership agreements during your recovery could count. I kept a simple daily log in my phone's notes app during my recovery period, just jotting down "reviewed bank statements - 30 min" or "client follow-up call - 15 min" throughout the day. Also, consider the "facts and circumstances" test if you don't hit the hour thresholds. Given that you're a 50% owner actively involved in operations (even if reduced due to health), you might still qualify as materially participating. Documentation becomes even more crucial for this test though.