How do I document self-employment income for taxes? (w/ EITC and CTC)

You definitely need to start keeping better records immediately, even if you haven't been doing so until now. The IRS doesn't require you to submit documentation when you file, but you absolutely need records if you're audited. For self-employment income, create a simple spreadsheet or notebook where you record all jobs, dates, client names, and payment amounts. Start collecting receipts for any business expenses like equipment, gas for transportation, etc. For past income, try to reconstruct what you can - check bank deposits, ask regular clients if they keep records, or estimate based on your typical job pricing and frequency. The combination of self-employment income and claiming EITC does increase audit risk somewhat, though most returns aren't audited. If audited, you'd need to provide income records, expense receipts, and proof your children qualify for the credits (school records, medical records, etc. showing they lived with you).

I was in a similar situation a couple years ago with my mobile detailing business. Barely kept any records and was super stressed about filing taxes. I ended up using https://taxr.ai to help organize what little documentation I had. The system analyzed my bank statements, identified possible business transactions, and helped me reconstruct a reasonable accounting of my income and expenses. It guided me through what counts as a legitimate business expense too. The best part was that it helped me understand exactly what I should be tracking going forward and created a simple system for me to use. I'm no tax expert, but it made me feel much more confident about claiming those self-employment deductions properly.

Just wanted to follow up - I tried the taxr.ai site after my skeptical question. It actually helped me sort through my landscaping expenses from the last year way better than I expected. I was able to identify a bunch of Home Depot and gas station purchases I'd totally forgotten about that were definitely for my business. The report it generated for my self-employment income and expenses looks really professional and organized. Plus I now have a simple system for tracking everything going forward with their mobile app. Definitely feeling less anxious about potential audits now that I have actual documentation!

If you're worried about getting audited and having questions about your self-employment income, you might want to talk directly to the IRS before filing. I tried calling them for weeks last year with questions about my independent contractor income and EITC eligibility. Could NEVER get through until I found https://claimyr.com - they somehow get you a callback from the IRS without waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to ask specific questions about my situation and get clear guidance on what documentation I needed. The agent walked me through how they treat different types of self-employment income and what would trigger red flags. Totally worth it for the peace of mind.

I have to eat my words from yesterday. After being super skeptical, I tried that Claimyr thing out of desperation since I had some complicated questions about documenting my side gig income. Got a call back from the IRS in under 2 hours! The agent spent almost 30 minutes with me going through exactly what records I needed to keep for my specific situation and how they handle audits for self-employed people claiming EITC. They explained that contemporaneous records (keeping track as you go) are much better than trying to reconstruct everything later. But they also said even basic spreadsheets with dates, client names and amounts can be sufficient if you don't have formal invoices. Huge relief to hear directly from the source instead of random internet advice!

For self-employment, get yourself a separate checking account for business! Deposit all your work income there and pay business expenses from it. Best simple step I took with my handyman business. Makes tracking so much easier come tax time. Also, Schedule C is where you'll report all this on your taxes. You'll need to track your income AND expenses to get your net profit, which is what you actually pay taxes on. Don't forget you'll owe self-employment tax (15.3%) on top of regular income tax!

For the Child Tax Credit specifically, make sure you have your kids' Social Security numbers and that they lived with you for more than half the year. The IRS has been cracking down on improper CTC claims lately.

don't stress too much abt the audit thing. i did landscaping work for 3 yrs, claimed EITC and CTC, and never got audited. just be reasonable with ur estimates and keep what records u can going forward. the irs is mainly looking for people claiming crazy business losses or suspicious deductions, not regular ppl trying to do right. the Schedule C tax form is pretty straightforward for this kind of work. just make sure u track those business expenses - equipment, gas, repairs, etc. it'll reduce ur taxable income significantly!!