Just wanted to chime in as someone who's been through this exact decision process! I switched from TurboTax to FreeTaxUSA last year specifically because of cost concerns, and I was also worried about losing audit protection. Here's what I found after using FreeTaxUSA's Deluxe with Audit Assist for a full tax season: it's honestly everything I needed. The guidance they provide is clear and practical. When I had a question about whether certain business expenses might raise red flags, their support team walked me through exactly what documentation I should keep and how to present everything clearly. The key thing to remember is that audit rates are actually pretty low for most taxpayers - around 0.4% for individuals making under $200k. So while it's smart to have protection, you're statistically unlikely to need it. FreeTaxUSA's approach of providing expert guidance rather than full representation makes sense for most people's risk level and budgets. Bottom line: make the switch! The money you save will more than pay for several years of Deluxe upgrades, and you'll still have solid audit support if you need it.

Thanks everyone for all the detailed responses! This has been incredibly helpful. I was definitely overthinking the audit protection aspect - hearing from people who actually made the switch and used FreeTaxUSA's Audit Assist gives me a lot more confidence. The cost savings really are significant when you break it down. I've been paying around $80-90 for TurboTax Deluxe with audit defense, and FreeTaxUSA Deluxe is under $10. Even if I never need the audit assistance, I'm saving over $70 per year just on the software alone. I think I was getting caught up in the "you get what you pay for" mindset, but it sounds like FreeTaxUSA's approach of providing guidance rather than full representation is actually appropriate for my situation. With just W-2 income and standard deductions, my audit risk is pretty minimal anyway. Going to make the switch this year - thanks again for sharing your real experiences rather than just the marketing fluff!

This thread has been absolutely invaluable! I'm currently in the exact same boat - formed an LLC about 10 months ago, got the EIN, but never actually used it for any business before deciding to dissolve it. What really stands out to me from reading everyone's experiences is how much anxiety and confusion could be avoided if the IRS just had clearer guidance on their website about this situation. It seems like SO many people go through this exact scenario of forming an LLC, getting an EIN, but then never actually operating the business. I'm definitely going to follow the process outlined here: wait for my state dissolution to be officially processed, then send that simple notification letter via certified mail. The template someone shared earlier ("I am writing to notify you that [LLC Name] with EIN [number] was officially dissolved on [date]. The LLC had no business activity and no tax returns were filed. Please update your records accordingly.") is perfect - straightforward and covers all the key points. One thing I'm curious about that I don't think was mentioned - has anyone ever had the IRS respond to their notification letter, or do they typically just process it silently? I'm trying to set my expectations for what happens after I send it. Thanks to everyone who shared their experiences and especially to Paolo for asking the question that so many of us needed answered!

This thread has been incredibly helpful for someone in my exact situation! I formed an LLC about 8 months ago, got the EIN, but never actually conducted any business before realizing it wasn't the right direction for me. Reading through all these detailed experiences has really demystified what initially seemed like a daunting process. The key insight that EINs are permanent and can't be "cancelled" - only properly notified about dissolution - was exactly what I needed to understand. I'm particularly grateful for the practical details shared here: waiting for official state dissolution confirmation before sending the IRS letter, using certified mail for proof of delivery, and keeping the letter content simple and straightforward. The template examples shared have been perfect for understanding what information to include without overthinking it. One small addition that might help others: when I called my state's business filing office to check on dissolution processing times, they mentioned they also email a PDF copy of the dissolution certificate in addition to mailing the physical copy. Having that digital copy made it easier to reference the exact dissolution date when drafting my IRS notification letter. Thanks Paolo for asking this question and to everyone who shared their experiences! This community knowledge is so much more practical and reassuring than trying to decode the confusing guidance on official websites. You've all made what seemed like a complicated administrative task feel completely manageable.

I've been following this thread because I'm in a very similar situation - had to resell some Broadway show tickets due to a COVID exposure and took about a $90 loss per ticket. Ticketmaster has been holding my payment for almost a month now demanding my SSN. What's really helped me understand this situation is learning that the tax ID requirement isn't just Ticketmaster being difficult - it's actually a legitimate IRS Form 1099-K reporting requirement that applies to all payment processors when transactions exceed $600 annually. Even though we're losing money, they have to report the gross payment amounts because they have no visibility into what we originally paid. The backup withholding threat is what finally pushed me to act. The idea of losing an additional 24% on top of my existing losses was just too much. I provided my SSN yesterday morning and got an email confirmation with a reference number, so hopefully my payment will come through by early next week based on everyone else's timelines. I'm actually somewhat relieved to learn about the Schedule D capital loss reporting. I had some good stock performance this year, so being able to use this ticket loss to offset those gains should help reduce my overall tax burden. It doesn't make up for the original loss and all the hassle, but at least there's some silver lining. Thanks to everyone who shared their experiences here - it really helped me understand that this is just an unfortunate reality of the current system rather than something personal. The whole ticketing industry fee structure is still predatory, but at least now I know how to navigate the tax implications properly.

I'm currently going through this exact same frustrating situation! Had to resell some sports tickets due to a family emergency, ended up losing about $70 per ticket, and now Ticketmaster has been holding my payment for over two weeks demanding my SSN. Reading through all the experiences shared here has been incredibly eye-opening. I had no idea about the IRS Form 1099-K reporting requirements or that this was actually a legitimate federal regulation rather than just Ticketmaster being difficult. The $600 annual threshold makes sense now from a regulatory perspective, even though it feels completely unfair when you're already taking a loss. What really sealed the deal for me was learning about the 24% backup withholding threat. I'm already out money on the tickets themselves, and the thought of losing an additional quarter of what I'm owed is just unacceptable. Based on everyone's timelines here, it sounds like payments typically process within a week of providing the tax information. I'm actually somewhat encouraged by learning about the Schedule D capital loss reporting process. I had some decent investment gains earlier this year, so being able to use this ticket loss to offset those gains on my tax return might help soften the blow a bit. Going to bite the bullet and provide my SSN tomorrow morning. Thanks to everyone who shared their experiences - it really helps to know this is a common issue with a clear path forward, even if the whole system feels designed to benefit the platforms at our expense.

As someone who just went through my first year as a freelance graphic designer while being claimed as a dependent, I wanted to share a few things that caught me off guard that might help you! One thing nobody mentioned yet - if you're using any part of your home exclusively for your art business (like a dedicated workspace), you might qualify for the home office deduction. Even if it's just a corner of your room that you only use for commissions, it could be worth looking into. You can either use the simplified method ($5 per square foot up to 300 sq ft) or calculate actual expenses. Also, don't forget about banking fees! If you open that separate business account that Ana mentioned, any monthly fees or transaction fees related to your business banking are deductible. Small amounts but they add up over a year. One more thing about being a dependent - make sure your parents know about your self-employment income because it might affect their taxes too, especially if they're claiming certain credits. It's better to coordinate with them early rather than finding out there's an issue when they file. Since you're tracking everything already, you're way ahead of where I was when I started. Just keep being diligent about those records and you'll be fine!

This is such a comprehensive thread! As a freelance illustrator who's been through this exact situation, I wanted to add one more piece of advice that really helped me in my first year. Consider keeping a simple business journal or log alongside your income spreadsheet. I track things like time spent on each project, client communications, and any business-related activities. This isn't just for tax purposes - it's been invaluable for understanding my hourly rates and pricing future projects more effectively. Also, since you mentioned you're tracking digital receipts, make sure you're backing them up in multiple places. I learned this the hard way when my computer crashed and I almost lost months of expense documentation. Cloud storage or even just emailing important receipts to yourself can save you a lot of stress later. One last thing about quarterly payments - even though you might not owe them for your first partial year, it's worth calculating what they would be using Form 1040-ES. This gives you a good sense of what to expect and helps you start budgeting for taxes as your income grows. The IRS has worksheets that make the calculation pretty straightforward once you know your expected annual income. You're already doing everything right by planning ahead and keeping good records. That puts you way ahead of most new freelancers!

Has anyone tried using the IRS Get Transcript tool online? Does it show everything you need or are there limitations? I'm in a similar situation but have anxiety about calling the IRS.

I went through something similar a few years ago when I was working seasonal jobs. One thing that really helped me was creating a simple spreadsheet with all my jobs from the past year - even ones I wasn't 100% sure about. I listed the company name, approximate dates worked, and any contact info I could find. Then I systematically went through each one to track down W2s. For companies that had closed or where I couldn't reach anyone, I used the IRS Get Transcript tool that others mentioned. It was actually kind of therapeutic to get organized about it! The key thing is not to let anxiety paralyze you. The IRS gets that people have complicated work histories, especially our generation. They're more interested in you making a good faith effort to report everything than in punishing honest mistakes. And honestly, dealing with it now is so much easier than getting that notice later and having to file an amended return.