This is not a complete answer and it's not legal or accounting advice, but hopefully it helps. You're in the U.S. as I recall? First, in your tax bracket, do those earnings change anything significantly? Do you have other ways to offset them (a business with expenses, etc.)? If it's a minor hit, you might just pay the taxes on it or find some other expenses that are loosely connected. If you're planning to start the legal delegate this year, then you'll have some more expenses on the way, but not for the previous tax year. Second, I don't think they were your employees, but if you paid them as independent contractors, you can 1099 them. It may be okay not to do so if the amount is small (I seem to remember that threshold is $600 apiece, but you'd have to confirm that). If you gave it to them (as in 'gifted' it), then there shouldn't be any gift taxes since it's way under the exclusion amount. You'd need to document those gifts and I'm not sure what info you'd need to include on that, but it may require names and social security numbers. Sorry, I haven't dealt with gifts before, but I'm hoping we'll all become quite familiar with these questions soon.