Has anyone here actually been audited for this kind of thing? I've been doing something similar with electronics and credit card rewards for years and just reporting the sales as income and purchases as expenses without factoring in the cashback. Now I'm worried I've been doing it wrong...

This is a really complex situation that highlights how cash back rewards in business contexts are treated differently than personal rewards. I've been following this thread and it seems like there's solid consensus that you need to treat the cash back as reducing your cost of goods sold rather than ignoring it entirely. One thing I haven't seen mentioned yet is the potential quarterly estimated tax payments. Since you're making consistent profits from this activity, you may need to make quarterly payments if you expect to owe more than $1,000 in taxes for the year. The IRS can penalize you for underpayment even if you file correctly at year-end. Also, keep in mind that as a California resident, you'll need to handle state taxes too. California generally follows federal treatment for business income, so the same principles should apply for your state return. I'd strongly recommend keeping detailed records going forward - not just for the cash back calculations, but also for any expenses related to your coin business (gas for pickups/deliveries, storage costs, etc.) since these can be legitimate business deductions on Schedule C.

This is such helpful information for anyone doing gig work! I've been doing occasional UserTesting sessions myself and had no idea about the separate bank account strategy - that's going to make tracking so much easier going forward. One thing I wanted to add for anyone reading this: if you're doing UserTesting while unemployed like the original poster, don't forget to check if your state has any specific requirements for self-employment income reporting. Some states have different thresholds or additional forms beyond what's required federally. Also, since you mentioned you're job hunting - keep in mind that any expenses related to your job search (resume services, interview travel, etc.) might also be deductible depending on your situation. It's worth looking into all the deductions available to you while you're between regular employment. The record-keeping advice everyone's given is spot on. I use a simple spreadsheet with columns for date, amount, and description of each UserTesting payment. Takes maybe 30 seconds to update after each test, but it'll save hours come tax time!

One thing I'd add to all this excellent advice - if you're doing UserTesting regularly while job hunting, consider treating it as a legitimate business from day one. This means not just tracking income and expenses, but also keeping records of the time you spend, the types of tests you complete, and any skills you're developing. I've been doing various gig work for a few years now, and what surprised me was how much more confident I became discussing my "freelance UX testing experience" in job interviews. It's real work experience that demonstrates initiative, tech skills, and the ability to provide detailed feedback - all valuable qualities employers look for. Also, regarding the record-keeping everyone's mentioned - I'd recommend setting up a simple system right away rather than trying to reconstruct everything later. Even if you're only making $50/month now, good habits will save you massive headaches if your gig income grows. I use a basic Google Sheets template with tabs for income, expenses, and mileage (if applicable), and I update it weekly. Takes maybe 5 minutes but makes tax prep so much smoother. Good luck with both the gig work and the job search! Having that extra income can definitely take some pressure off while you're looking for the right opportunity.

Don't forget that if you owe more than $1,000 and didn't have proper withholding or make estimated payments throughout the year, you might face an "underpayment of estimated tax" penalty (Form 2210) regardless of when you file or pay the balance due.

This is exactly the situation I was in last year! Here's what I learned the hard way: while there's no interest benefit to paying early (since interest starts accruing after April 15th regardless), filing early gives you peace of mind and more options. What really helped me was getting on a payment plan as soon as possible. Even if you can't pay the full amount by April 15th, paying SOMETHING reduces the balance that penalties and interest accrue on. For example, if you owe $5,000 but can scrape together $2,000 by the deadline, you'll only pay penalties and interest on the remaining $3,000. Also, don't beat yourself up too much about the withholding mistakes - it happens to more people than you'd think, especially when income changes or life circumstances shift. The key is learning from it and adjusting for next year. I immediately updated my W-4 after dealing with my tax debt and started making quarterly estimated payments to avoid the same mess this year. One last tip: if you're really stressed about the numbers, consider using the IRS Online Payment Agreement tool. It shows you exactly what your monthly payments would be and the total interest/penalties you'd pay under different scenarios. Having that concrete information really helped calm my nerves.

For your eBay business selling vintage video games and collectibles, I'd recommend looking at 451120 - "Hobby, Toy, and Game Stores" since video games seem to be your primary focus. This code specifically covers retailers of video games and would be most accurate for your business. If you're selling a really mixed variety where no single category dominates, then 454110 - "Electronic Shopping and Mail-Order Houses" would be the safer general e-commerce option. The key is to track your sales by category for a month or two and see what makes up the majority of your revenue. That should guide your NAICS code selection. And don't worry too much - you can always update it as your business evolves! One tip: make sure you're keeping detailed records of your inventory costs and shipping expenses. These are often the biggest deductions for eBay sellers regardless of which NAICS code you choose.

Great question! I went through this exact same process last year when I started treating my eBay selling more seriously. For your situation selling vintage video games and collectibles, I'd definitely lean toward 451120 - "Hobby, Toy, and Game Stores" since video games seem to be your main focus. This code is specifically designed for businesses that sell games and hobby items, which sounds like a perfect fit. However, if your sales are really mixed across different categories without one clear winner, then 454110 - "Electronic Shopping and Mail-Order Houses" gives you more flexibility as a general e-commerce classification. One thing that helped me decide was looking at my sales data for the past few months and calculating what percentage came from each category. If 60%+ of your revenue is from video games, go with the hobby/game store code. If it's more evenly split, the general e-commerce code is safer. Also, don't stress too much about getting it "perfect" - the IRS cares more about accurate reporting of your income and expenses than having the absolutely perfect NAICS code. You can always adjust it next year if your business focus changes!

9 Hi all, small business landlord here. Please make sure you're sending those 1099s correctly! I've had tenants who either don't send them at all (which is a problem) OR who report the same payment across multiple years (even worse). As others have said, just report what you actually paid in the calendar year. And please double-check the mailing address - I get so many 1099s sent to old addresses even though I've updated my W-9 multiple times.

This is such a common issue for small business owners who had payment difficulties during tough times. I went through something similar when I had to catch up on several months of contractor payments after a slow period. The key thing to remember is that 1099 reporting follows the "cash method" - you report payments in the year you actually made them, regardless of when the work was performed or when the debt was originally incurred. So for your situation, all the rent payments you made in 2024 should be reported on your 2024 1099-MISC to your landlord, even if some of those payments were for rent that was originally due in 2023. Don't worry about the timing mismatch - this is exactly how the IRS expects it to be handled. Your landlord will report this as 2024 income on their tax return, which will match your 2024 1099 reporting. Just make sure you have good records showing the dates you actually made each payment, and you should be all set. The IRS is used to seeing these situations where businesses catch up on past-due obligations.