One additional consideration that hasn't been mentioned yet is the impact on your FSA or HSA contributions if you have them. When switching from bi-weekly (26 pay periods) to semi-monthly (24 pay periods), your pre-tax deductions will be spread across fewer paychecks, which means a slightly larger deduction per paycheck. For example, if you contribute $2,600 annually to an FSA, that's $100 per bi-weekly paycheck but about $108 per semi-monthly paycheck. This doesn't change your total contribution or tax savings, but it does affect your per-paycheck take-home amount. Also, with your salary increase to $72k, you might want to consider increasing your retirement contributions if you weren't already maxing out your 401(k). The higher income gives you more room to save pre-tax dollars, which can help offset some of the additional tax burden from being in a higher bracket for part of your income. The timing of when you start the new job in January is actually perfect for tax planning - you'll have the full year to let the new withholding work properly, rather than trying to catch up mid-year.

The pay frequency change itself won't impact your taxes at all - you'll owe the same amount whether you're paid bi-weekly or semi-monthly. The main difference is that with semi-monthly pay, you'll get 24 larger paychecks instead of 26 smaller ones, so your withholding per paycheck will be proportionally higher. However, your salary increase from $58k to $72k is definitely something to address on your W-4. That's a significant jump that will likely push some of your income into the 22% tax bracket. Since the W-4 was redesigned in 2020, the old "claiming 0" system doesn't apply anymore - the new form is actually much more straightforward. I'd strongly recommend using the IRS Tax Withholding Estimator tool on irs.gov when you start your new job. It will walk you through exactly how to fill out your W-4 based on your new salary and help ensure you're not under-withheld. Starting a new job in January is actually perfect timing since you'll have the full year for proper withholding rather than trying to catch up mid-year. One bonus tip: with your higher salary, consider whether you want to increase your 401k contribution rate to take advantage of the additional income while reducing your taxable income at the same time!

Has anyone used TurboTax to figure this out? I'm in a similar situation and wondering if the software will help determine what "year" I'm in or if I need to figure it out myself beforehand.

This is such a common confusion! I went through the exact same thing a few years ago. The key thing to understand is that the IRS doesn't care about how many calendar years you've been taking classes - they care about your academic progress. Since you mentioned you've never claimed education credits before and have been taking classes "here and there" without a formal degree program, you're likely still eligible for the American Opportunity Credit if you haven't completed the equivalent of 4 academic years (roughly 120 semester credits). I'd recommend getting a transcript from your community college that shows your total completed credits. Then you can use the rough guideline: 0-30 credits = 1st year, 31-60 = 2nd year, 61-90 = 3rd year, 91-120 = 4th year. Even if you've been taking classes for 6+ calendar years, if you're only at 60 credits, you'd be considered in your 2nd year for tax purposes. The American Opportunity Credit is worth up to $2,500 per year and is partially refundable, so it's definitely worth figuring out if you qualify rather than defaulting to the Lifetime Learning Credit!

Can someone clarify if Etsy fees are considered "commissions and fees" or "other expenses" on the Schedule C? I've seen conflicting advice.

Great question about documentation! As someone who's been through a Schedule C audit for my small business, I can't stress enough how important it is to keep detailed records from day one. For your mixed purchases, you're absolutely right to calculate the business portion of shipping and taxes. Here's what saved me during my audit: I created a simple Google Sheet with columns for Date, Store, Total Purchase, Business Items & Cost, Personal Items & Cost, Business %, Shipping (Business Portion), Tax (Business Portion), and Total Business Deduction. One thing I learned the hard way - always keep the original receipt AND take a photo of it. Receipts fade! I also write on the back of receipts what the business items were specifically used for (like "sterling wire for February inventory"). Since you're just starting out, consider getting a business checking account and debit card even if you're a sole proprietor. It makes everything so much cleaner for tax purposes and shows the IRS you're treating this as a legitimate business, not a hobby. The IRS looks closely at businesses that show losses for multiple years, so good documentation now will help if you have lean years while building up. Keep tracking everything - you're doing great by starting early!

Has anyone ever been audited on this specific issue? I'm in the same boat (S Corp with about $275k in assets) and I've been scared to take distributions beyond my salary because I'm worried about triggering an audit.

This is exactly the situation I was in last year! One thing that really helped me was understanding the difference between your stock basis and your AAA (Accumulated Adjustments Account). Even though you've paid taxes on the S Corp profits over the years, if you've taken distributions along the way, those reduce your basis. Here's what I learned: your basis starts with your initial investment ($4k in your case), then increases with your share of S Corp income each year, and decreases with distributions you've already taken. So if your S Corp made $400k in profits but you took $396k in distributions over the years, your basis would still be around $4k. The key is getting an accurate calculation of your current basis before taking any large distribution. If you take distributions above your basis, the excess gets treated as capital gains (typically 15-20% tax rate depending on your income). Not the end of the world, but you want to plan for it. I'd definitely recommend working with a CPA who specializes in S Corps to run the numbers before you make any moves. They can help you optimize the timing and amount to minimize the tax hit.

This thread has been absolutely fantastic! As someone who just hired a house cleaning service for the first time, I was completely stressed about potential tax obligations. Reading through everyone's experiences and the consistent professional advice has been so reassuring. What really helped me understand this was seeing how the "personal vs. business" distinction is the key factor, not the dollar amount or whether someone is an independent contractor. Since I'm paying for cleaning services for my personal residence (not a business property), no 1099 is required regardless of how much I pay annually. The IRS language about payments made "in the course of your trade or business" that keeps being referenced throughout this discussion makes it crystal clear. Personal household services simply don't fall into that category, which is why the $600 threshold that applies to business contractor payments isn't relevant here. I'm also going to follow the advice about keeping simple payment records (dates, amounts, payment method) even though it's not required for tax compliance. It seems like good practice for budgeting and could provide helpful documentation if any questions ever arise later. Thanks to everyone who shared their knowledge and experiences - this discussion should definitely be saved as a reference for anyone dealing with household service tax questions!

This has been such a comprehensive and helpful discussion! As someone who was initially confused about this exact same issue, I really appreciate how everyone broke down the key distinction between personal and business expenses. What I found most valuable was learning that the IRS language specifically mentions payments made "in the course of your trade or business" - and since household services for your personal residence clearly don't fall into that category, no 1099 is required regardless of the amount. It's reassuring to see this principle apply consistently across so many different scenarios shared here. I'm definitely going to start keeping simple payment records for my household services too, not for tax compliance but for budgeting and peace of mind. It seems like such a small effort for potentially big benefits down the road. Thanks to everyone who shared their expertise and real-world experiences - this thread should be a go-to resource for anyone dealing with household service tax questions!