Another thing to consider - if you're filing with a different allocation than your W2 shows, make sure you understand how each state defines "resident" vs "non-resident" status. Some states use a simple day count (like 183 days), while others look at where your "domicile" is (permanent home, voter registration, driver's license, etc.). I had a friend who split time evenly between two states but was considered a resident of both because he maintained homes and voter registration in each! He ended up owing more than if he'd just been a resident of the higher-tax state. The rules can be really tricky, so definitely research both states' residency requirements before you file. You might find that your actual legal status is different from what you'd expect based on just time spent in each location.

One more option to consider - if your employer won't issue a corrected W2 and you're worried about filing with different allocations, you could also try contacting the IRS directly about the W2 error. They have a process for handling incorrect W2s where you can file Form 4852 (Substitute for Form W-2) if your employer refuses to correct it. The IRS can actually contact your employer on your behalf to request the correction. This might carry more weight than your direct request, especially if your HR department has been unresponsive. You'd still need to provide documentation of your actual time in each state, but having the IRS involved might make your employer take the issue more seriously. Keep in mind this route can take longer to resolve, so if you're close to filing deadlines, the other approaches mentioned (filing with proper documentation and explanations) might be more practical. But it's worth knowing you have this option if the employer correction route isn't working out.

Great question about cost segregation for smaller properties! I've actually done cost seg studies on properties ranging from $200k to $800k. The key is finding the right firm - some specialize in smaller properties and charge accordingly. For properties under $400k, I'd recommend getting quotes from multiple firms. Some charge a flat fee based on property size rather than a percentage of savings. I paid $2,800 for a $320k cabin and it identified about $68k in accelerated depreciation, saving me roughly $20k in taxes. The sweet spot seems to be properties with significant interior improvements, special electrical/plumbing systems, or unique features like commercial-grade appliances. Even smaller STRs often have these components that qualify for 5-7 year depreciation instead of 27.5 years. Don't let your tax preparer discourage you without getting an actual quote. Many firms will do a preliminary analysis for free to estimate potential savings before you commit to the full study.

This is an excellent discussion! I wanted to add a few important points from my experience with STR depreciation strategies: First, make sure you're tracking your properties correctly as business assets versus personal use. The IRS has specific rules about STR properties - if you use them personally for more than 14 days or 10% of rental days (whichever is greater), it affects your depreciation eligibility. Second, don't overlook Section 199A deductions in combination with bonus depreciation. Many STR operators qualify for the 20% pass-through deduction, and the increased depreciation from cost segregation can actually help you meet the income thresholds more easily. Finally, consider the timing carefully. With bonus depreciation phasing out, there's real value in getting those older properties amended sooner rather than later. I've seen people wait too long and miss the statute of limitations for certain years. One last tip - keep detailed records of when each property was "ready and available for rent" versus when you got your first booking. The IRS considers the "placed in service" date to be when it was ready for rental activity, not necessarily when you had your first guest. This can sometimes push you into a more favorable bonus depreciation year.

Just to add a real-world example - my company had a partial audit last year that included our meal expenses. We had a mix of casual lunches ($20-30 per person) and some high-end dinners ($200+ per person). The IRS didn't question the actual amounts but focused entirely on whether we had documented the business purpose and attendees. They disallowed several deductions where we had the receipt but couldn't provide notes on what business was discussed or only had first names of the attendees. The expenses they approved included both McDonald's meals and fancy dinners - the documentation was what mattered, not the price point.

As someone who works in tax compliance, I want to emphasize that the "ordinary and necessary" standard is really the key here. The IRS Publication 463 states that meal expenses cannot be "lavish or extravagant under the circumstances," but this is intentionally subjective. In practice, what I've seen trigger audits isn't necessarily the dollar amount, but rather patterns that don't make business sense. For example, consistently expensive meals with the same "client" might raise questions about whether these are actually personal expenses. A few practical tips: 1) Keep contemporary records - don't try to recreate documentation months later, 2) Note the specific business discussed, not just "client meeting," 3) Include full names and business relationships of all attendees, and 4) Be consistent with your industry norms. The $15 McDonald's lunch and $2000 steakhouse dinner can both be perfectly legitimate deductions if properly documented and appropriate for your business context. Focus on the documentation requirements rather than worrying about arbitrary dollar thresholds.

Has anyone ever been audited for not reporting tiny amounts of interest? I mean, if we're talking about $2-3 in some old account, is the IRS really going to care? Asking for a friend 😬

Just to add to what others have said about the reporting thresholds - I work in banking compliance and can confirm that banks are required to file information returns (Form 1099-INT) with the IRS for ANY amount of interest paid, regardless of how small. The $10 threshold only determines whether they're required to send YOU a copy. So even if you earned $2 in interest and didn't get a 1099-INT in the mail, the bank still reported that $2 to the IRS. This means their computers will expect to see that income on your tax return. The good news is that for small amounts under $1,500 total, you can just report the total on Line 2b of Form 1040 without having to fill out Schedule B. But definitely don't skip reporting it entirely - the IRS matching system is pretty sophisticated these days and will catch discrepancies, even small ones. For your situation with multiple inactive accounts, I'd recommend calling each bank's customer service line. They can usually provide you with a year-end interest summary over the phone, which will save you from having to dig through months of statements.

Based on your situation, using the county tax assessment of $235,000 as your step-up basis should be perfectly acceptable to the IRS. The fact that you sold for $243,000 three years later actually supports that the assessment was reasonably accurate - that's only about a 3.4% appreciation over three years, which is quite reasonable given normal market conditions. The IRS doesn't require a formal appraisal for inherited property; they just want to see that you made a good faith effort to determine fair market value at the date of death. County tax assessments are specifically mentioned in IRS publications as one acceptable method. To strengthen your documentation, I'd recommend keeping a simple file with: the official county assessment from 2021, any information about your county's assessment practices (whether they assess at full market value or use a percentage), and maybe a few comparable sales from that time period if you can easily find them online. Since your numbers are so reasonable and close together, I wouldn't worry too much about this triggering any red flags. The IRS is mainly looking for obvious discrepancies or situations where someone clearly undervalued property to avoid taxes.

I'm in a very similar boat with my mother's property that we inherited in 2023. Reading through all these responses has been incredibly helpful! One thing I want to add from my experience is that it's worth checking if your state has any specific rules about using tax assessments for inheritance purposes. In my state, I discovered that the county assessor's office actually keeps records of their "market value estimates" separate from the assessed value used for taxes. When I called them, they were able to provide me with both numbers from 2023, and the market value estimate was about 8% higher than the tax assessment. This gave me a more defensible FMV number that was still based on official county records. Also, since you mentioned this is for three siblings, make sure you're all using the same basis calculation method for consistency. The IRS would definitely notice if siblings reported different stepped-up basis amounts for the same inherited property! Your situation with the assessment at $235K and sale at $243K after three years actually looks very reasonable. That level of appreciation is totally normal and shouldn't raise any eyebrows.