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You can't unconditionally take losses for three years in a row.

If you don't ever expect a profit, it's a hobby. Nothing else matters. They're not selling anything, they're competing for prizes. Not a business until they get good enough to win big prizes consistently and turn a profit.

I don't believe that is correct statement. Under section 183(d) there is a "presumption" that the activity is for profit if gross income exceeds expenses for three out of five years. Meeting the 3 out of 5 year rule is not a slam dunk. Presumption is the key word. For example you cannot shuffle income and expense around to show a meager profit.

The 3 out of 5 (different for horses) is a safe harbor. Within that, the IRS would have to prove you're not a biz. Outside the safe harbor, the biz has to prove they're a biz using the IRS factors and other reasonable issues. It's possible a biz is changing to get out of losses or that the losses were due to natural disasters and take time to rebuild or...for more years. We usually can tell when our clients are just dabbling and it's a hobby. I had an artist who worked hard on her art and on her biz, memberships, shows, sales. But over the years, she got busier with her kids and seemed to be treating her art less businesslike. We had a chat about 3 out of 5 and IRS scrutiny, and changed her treatment to a hobby.

I feel like this is kinda like stock car racing. A big no. It's a hobby. But I am wondering if the LLC isn't a good idea in case of legal action. Then the personal assets are protected. So this is why they want an LLC, but it is not really a business. I have a client that set up LLC for his stock car racing. Of course it's nothing but a grown up play toy. I have another client that has set up a recreational building for members of our community to play indoor soccer or basketball in the winter, or practice baseball and softball. He got himself an LLC. Again - never expects to make money and only takes money from vending machines. I don't know what to do with their LLCs other than pay NYS their $25.

LLC is a disregarded entity and subject to Hobby Loss rules.

Not true. You can deduct cost of goods sold, but in this case, there are no goods.

Yes. I have multiple payroll clients on Medlin

And, it certainly does NOT change what our clients have to report on their tax returns -- worldwide income.

It is my understanding that the tuition credit follows the exemption; regardless of who actually pays it.

No you don't. Desktop authenticators are available. I found a simple desktop authenticator called Authme. Authme is a simple, cross-platform two-factor (2FA) authenticator app for desktop. It allows you to manage your 2FA codes directly from your computer, making it convenient to access and use them without needing your phone. I entered: https://authme.levminer.com into my desktop browser search bar and downloaded. It even placed a shortcut on the desktop! Once open, I clicked on the import icon, then the ‘Setup a key’ button. Required 2 entries: Name (ATX 2024 or such), and the long alphanumeric value which is associated with the authentication QR Code (the third field for email address is optional) Click ‘Confirm”. Done!!!!

One client averages 13-15 per payroll run twice per month, the other clients are small 1-5 at most. At this point I am willing to spend the extra time not to give Quickbooks that 2800.00 for something I use to pay only a few hundred dollars for. Last year they doubled from the year before, this year they more than doubled, and I get it, they are competing with me for the same clients. In time I realize the desktop will not be available and only their on-line version. Again why not? My one desktop can handle multiple clients, on-line each has to have a separate subscription. It just really sucks!

My largest client on Medlin has 13 employees and it's my most complicated payroll. Entering payroll in Medlin is fairly quick for me. I do have another client with 60 employees but I use a different online program for that payroll.

"Clear" is a far cry from how the irs has gone about issuing and changing guidance on this issue. But the guidance currently states: Nowhere in the guidance does it state a company is not to file 1099Ks for amounts under $5000. There's also the fact that the irs guidance doesn't change the law, which says the threshold is $600.

I have used Medlin for 3 years now for 6 different clients with one license. It's desktop software not online. You and/or your clients are responsible for making all of the payroll tax deposits. Medlin prints Forms 94x so you can paper file these reports. Medlin is located in Napa CA so your CA payroll issues should be well taken care of. The software works well and I really have no complaints and the price is very reasonable. https://medlin.com/

If he paid independent contractors for services or labor, then he should send Forms 1099-NEC on a calendar-year basis. (Other qualifiers, such as non-corporation, over $600, etc., still apply.)