One thing I haven't seen mentioned yet is quarterly estimated tax payments. Since you're generating $13,500 in business income and will owe both income tax and self-employment tax on this, you might need to make quarterly payments to avoid underpayment penalties. The IRS generally expects you to pay taxes as you earn income, not just when you file your annual return. If you expect to owe $1,000 or more in taxes when you file, you should be making quarterly payments. For 2024, the deadlines are April 15, June 17, September 16, and January 15, 2025. You can calculate your estimated payments using Form 1040ES. Don't forget that self-employment tax is 15.3% on top of your regular income tax rate, so the total tax burden can be higher than people expect when they're used to just W-2 income. Setting aside about 25-30% of your cash sales in a separate savings account for taxes is a good rule of thumb. This way you won't be scrambling to come up with the money when quarterly payments are due or at tax time.

Another thing to consider is keeping a detailed log of your vintage clothing sales beyond just the money order deposits. Since you're selling at local markets, I'd recommend tracking which items you sold, what you paid for them originally (if you can remember/document), and any related expenses like booth fees, gas to get to markets, etc. The IRS likes to see that you're treating this as a legitimate business if you're claiming it as such. Having organized records showing your cost of goods sold, business mileage, and other expenses will help establish that this isn't just a hobby. Plus, these deductions can significantly reduce your taxable income. I'd also suggest taking photos of your inventory and keeping receipts for any clothing purchases you make specifically for resale. If you're sourcing from thrift stores, estate sales, or other places, those purchase receipts become your cost basis for calculating actual profit on each item sold. The money order deposits are just one piece of the puzzle - the real work is in documenting the entire business operation properly. Good luck with your vintage clothing business!

I went through this exact same situation two years ago! Filed as resident on F1 visa when I should have been nonresident. The good news is that the IRS generally doesn't penalize you for voluntary corrections, especially for residency status mistakes which are super common for international students. You definitely should amend using Form 1040X and file the correct 1040NR. The key is to do it proactively before they catch it. In my case, I actually ended up owing about $200 more because I had to give back some credits I wasn't eligible for as a nonresident, but it was way better than waiting and potentially facing penalties. One thing to check - make sure you look into any tax treaty benefits your country might have with the US. Some countries have special provisions for students that can actually reduce your tax liability. Also, if you had any scholarship income, the treatment might be different as a nonresident (sometimes better!). The whole process took about 8-10 weeks to get resolved, but the IRS sent me a letter confirming the adjustment and I paid the small difference. Much less stressful than I expected!

I'm dealing with this exact situation right now! Filed as a resident when I should have been nonresident (F1 visa, been in the US for 16 months). I was terrified about penalties but after reading everyone's experiences here, I feel much better about voluntarily correcting it. Quick question for those who have been through this - when you file the 1040X, do you need to include copies of your original return or just the amended pages? And should I send it certified mail or is regular mail okay? Also seeing all the mentions of tax treaties - I'm from South Korea, does anyone know if there are specific benefits for Korean students? My university's international office wasn't very helpful when I asked about this. Thanks to everyone sharing their experiences, it's so helpful to know I'm not the only one who made this mistake!

Slightly different perspective - I'd recommend talking to a tax attorney who specializes in partnership taxation, not just your CPA. While IRC 1341 seems like the right approach, there are nuances with carried interest that might affect your specific situation. For example, depending on how your partnership agreement was structured, there might be arguments for treating this as a capital loss rather than a Claim of Right issue, which could have different tax implications. A specialized attorney could also help if the IRS challenges your position.

This is a complex situation that touches on several areas of tax law. Based on your description, IRC 1341 does seem like the appropriate approach, but I'd strongly recommend getting specialized advice given the amounts involved. One thing to keep in mind is timing - make sure you're clear on when exactly the repayment obligation crystallized. For IRC 1341 purposes, it matters whether the repayment obligation arose in 2024 when you left, or if it was always contingent on not meeting the vesting requirements. Also, since you mentioned your accountant is researching this, make sure they're familiar with Revenue Ruling 2019-11, which provides guidance on applying IRC 1341 to partnership distributions. The IRS has been more active in this area recently, so having current guidance is important. The documentation everyone else mentioned is crucial - you'll want everything in writing showing the original allocation, the tax distributions made to cover your liability, and the subsequent repayment requirement. This creates a clear paper trail that supports your position. Given the complexity and dollar amounts, consider getting a second opinion from a tax professional who specializes in partnership taxation and carried interest. The intersection of these rules can create opportunities or pitfalls that aren't immediately obvious.

Has anyone used TurboTax Self-Employed for their prop trading taxes? I'm trying to decide if I should use that or hire an accountant.

I went through this exact situation last year when I started prop trading! A few key things I learned the hard way: 1. You'll definitely want to find a CPA who understands trading - it's worth the extra cost. Regular tax preparers often don't grasp the nuances of trader expenses and quarterly payments. 2. Start tracking EVERYTHING now - trading software subscriptions, home office space, computer equipment, even books and courses related to trading. The deductions can really add up. 3. For quarterly payments, I use the safe harbor rule (paying 100% of last year's tax liability divided by 4). It's simpler than trying to estimate variable trading income. 4. One thing that caught me off guard - you might need to pay both sides of Social Security/Medicare tax (15.3% total) on your net prop trading profits since you're self-employed. 5. Consider opening a separate business checking account for all your trading-related expenses. Makes record keeping much cleaner come tax time. The learning curve is steep but manageable once you get the systems in place. Don't stress too much - just start documenting everything and find that specialized accountant!

Make sure you're checking the right place in Robinhood for your documents! This confused me last year. You need to go to Account > Statements & History > Tax Documents, not the Documents section. Some people miss this. Also, they release them in batches. Most basic forms come out in early February, but if you had any special situations (wash sales, corporate actions, etc.) your forms might be in the later batch that comes out in March.

I had a similar issue with Robinhood last year! One thing that helped me was checking if there were any corporate actions on stocks I owned - like stock splits, mergers, or spin-offs. These can delay the 1099-B processing significantly because they have to adjust the cost basis calculations. In the meantime, you can absolutely file without the official form. Go to your Robinhood account and download your year-end tax summary or export your transaction history as a CSV file. You'll need to calculate your gains/losses manually using Form 8949 and Schedule D. Just make sure to keep detailed records of your cost basis for each transaction. For the dividends, those should definitely show up on a 1099-DIV since you earned over $10. Sometimes Robinhood issues a "consolidated 1099" that combines different types of investment income - double-check that your crypto 1099-B doesn't have additional sections. The IRS gives you until April 15th to file, but brokerages have until March 15th for corrected forms, so there's still time for it to arrive. Just don't let it delay your filing if you can reconstruct the information from your account statements.