I'm in a very similar situation - just started my reseller hosting business this year with about 4 clients. One thing I've been wondering about is the timing of income recognition. Since I collect monthly payments from clients but pay my hosting provider monthly as well, should I be using cash or accrual accounting method on Schedule C? Also, what about when clients prepay for several months at once to get a discount? Do I report that full prepayment as income in the year received, or spread it over the months it covers? I had two clients pay for 6 months upfront in December and I'm not sure how to handle that on my 2024 taxes. The advice here about keeping detailed records is spot on though - I've been tracking everything in a spreadsheet but might need to upgrade to proper accounting software soon as this grows.

This thread has been super helpful! I'm also running a small reseller hosting business and was confused about the same tax issues. One thing I wanted to add that I learned from my CPA - make sure you're also tracking any SSL certificates, premium themes, or plugins you purchase for client sites. These can all be legitimate business expenses if they're solely for client work. I've been using a simple Google Sheet to track everything: columns for client name, monthly payment received, date received, and then separate columns for my hosting costs, domain renewals, and any additional services. It's not fancy but it gives me a clear paper trail showing the business relationship between income and expenses. Also, if you're doing any website maintenance or troubleshooting as part of your hosting service, consider tracking that time. Even though you're not billing separately for it, documenting the work you do can help justify the business nature of your expenses if you're ever questioned about it. The cash accounting method mentioned earlier is definitely the way to go for this type of business - keeps things much simpler than trying to match revenue and expenses by month.

This exact situation happened to me two years ago and I was absolutely panicking! Here's what I learned the hard way: First, you're right to be concerned - you'll likely owe money at tax time since no federal taxes were withheld. But it's not the end of the world if you act quickly. Submit a new W-4 to your employer IMMEDIATELY to start withholding federal taxes from your remaining paychecks this year. Second, use the IRS Tax Withholding Estimator to figure out roughly how much you'll owe. Once you know that number, consider making estimated tax payments before year-end to reduce the amount you'll owe when filing. A few things that helped me: I increased my federal withholding significantly for the last few months of the year (you can request additional amounts be withheld beyond the standard calculation). I also made sure to track any tax credits I might qualify for - they can really help offset what you owe. The most important thing is don't wait! Every paycheck that goes by without proper federal withholding just makes the problem worse. I ended up owing about $3,200 that year, but it would have been much worse if I hadn't caught it when I did.

I see a lot of good advice here, but let me add something important that hasn't been mentioned yet - you may face an underpayment penalty even if you fix your withholding now. The IRS generally expects you to pay at least 90% of your current year tax liability or 100% of last year's tax liability (whichever is smaller) through withholding and estimated payments. Since you've had zero federal withholding all year, you're likely going to fall short of this safe harbor rule. However, there are some exceptions to the penalty: 1. If you owe less than $1,000 when you file, there's no penalty 2. If you had no tax liability last year, there's no penalty 3. If you're considered to have "reasonable cause" for the underpayment The key is to act NOW. Calculate your expected tax liability using the IRS estimator, then either increase your withholding dramatically for remaining paychecks or make estimated tax payments. The next estimated tax deadline is January 15th, but you can make payments anytime. You can make estimated payments online at irs.gov using Direct Pay, or mail in Form 1040ES with a check. Even if you can't eliminate the penalty entirely, paying something before year-end will reduce it significantly.

Here's another approach that might help - check if your husband's dealership uses any integrated payroll systems that might capture these manufacturer incentives. Some larger RV dealerships have started using platforms like Gusto or ADP that can consolidate various income sources, including third-party manufacturer payments. Also, since you mentioned he can't remember which manufacturer, try looking at his sales records for the months leading up to when he thinks the payment was earned. RV manufacturers often run targeted spiff campaigns around model year transitions (usually late summer/early fall) or during major RV shows. If he sold a lot of a particular brand's units during those peak promotion periods, that's likely your culprit. One more thing - many manufacturers now send spiff notifications through their dealer portals rather than direct email. Have him log into each manufacturer's dealer website and check for payment history or incentive tracking sections. These portals often have downloadable reports that show exactly what was paid and when. If all else fails and you do end up estimating, keep detailed notes about your research efforts. The IRS appreciates good faith attempts to report accurate income, and having documentation of your search process can be helpful if questions arise later.

As a tax professional, I want to emphasize something important that hasn't been fully addressed yet - the timing of when you discover missing 1099s can actually work in your favor if handled correctly. If you file now and later discover that 1099 when it arrives, you have a few options beyond just filing an amended return. You can call the IRS and explain the situation - often they'll make a note in your file that you're aware of the missing income and will be filing an amendment. This can help avoid automatic penalty assessments when their matching system flags the discrepancy. Also, for future years, I recommend your husband start keeping a simple spreadsheet of all spiff programs he participates in throughout the year, including approximate amounts and which manufacturers. Most salespeople I work with who do this never have these surprise 1099 issues because they're tracking everything in real-time. One more practical tip - many RV manufacturers use the same third-party processors for incentive payments (companies like Crossover or Dealer Rewards). If your husband can figure out which processor any of his previous spiffs came through, they might be able to tell you about other pending payments in their system under his SSN.

One thing I haven't seen mentioned yet is the timing aspect of Form 8863. Since you mentioned buying the computer "for schoolwork," make sure you actually paid for it during 2024 if you're filing your 2024 return. The IRS requires that qualified expenses be paid during the tax year you're claiming them, regardless of when the academic period occurs. Also, double-check your daughter's enrollment status. The American Opportunity Credit requires at least half-time enrollment for at least one academic period during the year. If she was only part-time for the entire year, you'd need to use the Lifetime Learning Credit instead, which would change your calculation since computers rarely qualify under LLC rules. Finally, keep all your receipts and the scholarship award documentation. Even though this seems straightforward, education credits are one of the areas the IRS pays attention to, especially when there are scholarships involved. Having everything organized will save you headaches if they ever ask questions about your Form 8863.

You're absolutely right to be cautious about the computer expense - the IRS is quite strict about that "required for ALL students" language. Since your school only "recommends" computers rather than requiring them, you can't include that $850 in your qualified expenses calculation. However, don't give up on optimizing your situation just yet! Since your merit scholarship doesn't appear to have specific restrictions (most merit scholarships don't), you should seriously consider the reallocation strategy others mentioned. If you can allocate even $2,000 of that $3,250 scholarship to room and board expenses, your calculation would become: $7,500 (tuition) - $1,250 (remaining scholarship applied to tuition) = $6,250 in qualified expenses This would maximize your American Opportunity Credit at $2,500 (100% of first $2,000 + 25% of next $2,000). The trade-off is that your daughter would have $2,000 in taxable scholarship income, but if she has no other significant income, her tax liability would be minimal - probably around $200-240 in federal taxes. Net benefit: $2,500 credit minus ~$240 in daughter's taxes = roughly $2,260 versus $1,700 credit with your current calculation. That's an extra $560+ in your pocket! Definitely worth reviewing your scholarship award letter to see if this strategy is available to you.

Just want to add another perspective here - I'm a tax preparer and see this Square/1099-K confusion constantly during tax season. The delayed implementation has definitely caught a lot of small business owners off guard. One thing that might give you peace of mind: the IRS isn't going to "flag" you for reporting income that you didn't receive a 1099-K for. They actually prefer when taxpayers report all their income accurately, even without forms. What gets people in trouble is NOT reporting income that payment processors DO report to the IRS. For your jewelry business, make sure you're treating this as a legitimate business on Schedule C. This means you can deduct not just materials and Square fees, but also things like craft show booth fees, photography for product listings, storage containers for inventory, mileage to buy supplies, etc. Keep receipts for everything business-related. Also, since you're already over $60k in revenue, you might want to consider whether forming an LLC would be beneficial for liability protection and potential tax advantages. Worth discussing with a local tax professional who can look at your specific situation.

As someone who's been dealing with similar Square payment processing issues, I can confirm everything the tax preparer mentioned is spot on. I didn't get a 1099-K either despite processing around $45k through Square last year - turns out I had only 185 transactions so I fell under the 200 transaction threshold. The relief I felt when I realized the IRS actually prefers accurate self-reporting was huge. I ended up downloading my full Square transaction history as a CSV file and used that to calculate my exact gross receipts for Schedule C. Pro tip: Square's dashboard lets you filter by date ranges, so you can easily pull just your 2023 data. One thing I learned the hard way - don't forget to account for refunds and chargebacks when calculating your net income. I initially reported my gross processing amount, but my accountant pointed out I needed to subtract any refunds I issued to customers throughout the year. Also seconding the expense tracking advice - I was shocked at how much I could legitimately deduct. Even things like the premium Canva subscription I use for product photos and social media posts counted as business expenses. Every little bit helps when you're paying self-employment tax on that income!