Has anyone used QuickBooks Self-Employed for tracking both methods simultaneously? I heard there's a way to set it up to compare them at tax time.

As someone who's been through this exact scenario with my photography business, I completely understand your frustration! The "locked in" rule for actual expenses is one of those tax traps that catches a lot of small business owners off guard. Given your high mileage (15,782 business miles), the standard mileage deduction would give you about $10,337 this year alone (at 65.5 cents per mile). With actual expenses, you're probably looking at significantly less unless you have unusually high vehicle costs. Here's my take: if you're planning to keep this car for several more years and maintain similar mileage patterns, paying the $2,750 now is likely worth it. You'll probably recoup that cost within the first year of using standard mileage, and then continue saving thousands annually. Before making the final decision, I'd recommend calculating your total actual expenses for this year (including depreciation, gas, insurance, repairs, registration, etc.) and comparing that to what standard mileage would give you. If the gap is as wide as I suspect, the math strongly favors taking the hit now. Also consider consulting with a tax professional who specializes in small business returns - they can run the numbers for your specific situation and help you avoid any pitfalls with the amendment process.

Something nobody mentioned yet - have you considered asking your dad to file an amended return if he didn't claim these deductions in previous years? There's a 3-year window to file amended returns, so if he didn't take the deduction in recent years when you were making payments, he could potentially get some money back.

As a teacher myself dealing with similar loan situations, I wanted to add something important that might help with your long-term planning. While you're right to keep the Parent Plus loans in your dad's name to preserve forgiveness options, make sure you're also maximizing your own federal loan benefits. Since your income-based payments are currently $0, you're still getting credit toward Public Service Loan Forgiveness (PSLF) if you're working for a qualifying employer. Those $0 payments count as qualifying payments! Make sure you're submitting your annual employment certification forms to track your progress. Also, depending on your teaching situation, you might qualify for Teacher Loan Forgiveness after 5 years of service, which could forgive up to $17,500 of your federal loans. This is separate from PSLF and could be worth pursuing even if your current payments are $0. Just wanted to make sure you're aware of all your options since the Parent Plus situation is already locked in terms of tax benefits!

Has anyone had experience with how long it actually takes for the IRS to process Form 8822? The instructions say 4-6 weeks, but when I did this last year it seemed to take forever and I still had mail going to my old address months later.

I went through this exact same situation when I moved from Texas to California last year. The key thing to remember is that the "most recent location" they're referring to in the instructions just means where you currently live now, not where you previously filed. Since you're now in Arizona, you'll use the Arizona mailing address for Form 8822. Like Molly mentioned, it goes to Kansas City, MO 64999-0023. The IRS has regionalized processing centers, so all Arizona residents send their address change forms to the same place regardless of where they previously lived or filed. One thing I learned the hard way - make sure you also update your address with any estimated tax payments if you make them quarterly. The IRS doesn't always connect these systems immediately, so you might get notices sent to your old address even after Form 8822 is processed. Also, since you mentioned e-filing for years, don't forget to update your address in whatever tax software you use for next year's filing. It'll save you from having to remember to manually enter your new address when tax season comes around.

Dylan, I feel for you on this situation - it's a common misconception that many folks have about IRA rollovers. Just wanted to add a couple of points that might help minimize the damage: 1. Make sure you designate your LARGEST withdrawal as the one qualifying for the 60-day rollover treatment. This will minimize the taxable income from the distributions that don't qualify. 2. If you're still within the 60-day window for any of the distributions, complete that rollover ASAP. The clock started ticking from the date you received each distribution. 3. Consider whether you might qualify for any penalty exceptions on the taxable distributions. While the first-time homebuyer exception won't work for you, there might be other hardship exceptions depending on your specific circumstances. 4. When you file your taxes, you'll want to work with a tax professional who can help you properly report this on Form 8606 (for any after-tax basis you might have) and Form 5329 (to calculate any penalties and claim exceptions). The silver lining is that this is primarily a tax issue, not a permanent financial disaster. You'll owe taxes and potentially penalties, but you still have your house and the withdrawn funds served their purpose. Expensive lesson, but you're not alone in making this mistake!

Dylan, this is such a frustrating situation but you're definitely not alone in making this mistake. The IRS rollover rules are genuinely confusing, and even some financial professionals don't fully understand them. One thing I wanted to add that might be helpful - since you mentioned you're preparing to sell your current home, be mindful of how the timing of these distributions and your home sale might interact tax-wise. If you're going to have a significant capital gain from the home sale, you could end up in a higher tax bracket for the year, which would make the tax hit from these distributions even more painful. Also, I'd strongly recommend getting all the documentation together now - dates of each distribution, amounts, which IRA custodians they came from, etc. You'll need this for Form 8606 and Form 5329 when you file your taxes. The IRS can be pretty particular about the paperwork on retirement account distributions. The good news is that while this is an expensive lesson, you're not the first person to learn it the hard way. At least you caught the issue before making any additional moves that could have made things worse. Sometimes the best financial education comes from our mistakes, unfortunately!

Thanks for all the helpful responses everyone! I really appreciate the clarification on how SEP IRA catch-up contributions work. Based on what I'm reading here, it sounds like I can make my regular SEP contribution (the 25% of net self-employment income) plus add a $1,000 catch-up contribution as a traditional IRA contribution to the same account. I'm definitely going to look into the solo 401k option for 2024 that Harmony mentioned - the higher catch-up limit of $7,500 sounds much better than the $1,000 IRA limit. And good point about double-checking the tax software calculations, Rudy. I'll make sure my software isn't trying to add catch-up directly to the SEP calculation. One follow-up question though - when I make that $1,000 catch-up contribution as a traditional IRA contribution, do I need to do anything special to designate it as such, or does the account custodian handle that automatically?

This is such a helpful thread! I'm in a similar situation - turned 52 last year and have been contributing to a SEP IRA for my freelance work. I had no idea about the traditional IRA catch-up workaround that Melissa mentioned. One thing I want to add for anyone reading this - make sure you understand the income limits for traditional IRA deductibility if you also have a day job with a 401k. I learned the hard way that having workplace retirement plan coverage can phase out your ability to deduct traditional IRA contributions depending on your income level. The SEP contribution isn't affected by this, but that $1,000 catch-up might not be deductible if your total income is too high and you're covered by another plan. Also, definitely agree with everyone saying to double-check your tax software calculations. I caught mine trying to add the catch-up directly to my SEP calculation too. Had to manually separate them on the forms.