I've been following this discussion and wanted to share my experience since I had almost the exact same situation. I paid $13,200 in state taxes in 2023 but could only deduct $10,000 due to the SALT cap, then received a $1,650 state refund this year. Initially, my tax software (FreeTaxUSA) automatically marked the entire refund as taxable income, but after reading through IRS Publication 525 and some other guidance, I realized this was incorrect. Since I didn't receive any federal tax benefit for the $3,200 I paid above the SALT cap, and my refund ($1,650) was less than that excess amount, the refund should be completely non-taxable. The key document that helped me was IRS Notice 2019-12, which specifically addresses how the SALT limitation affects the taxability of state tax refunds. It clarifies that you only include the refund as income to the extent you received a tax benefit from the original deduction. I ended up amending my return to remove the state refund from taxable income, and it was processed without any issues. Definitely worth having another conversation with your tax preparer about this - many of them aren't fully up to speed on how the SALT cap interacts with state refund taxability.

I've been dealing with this exact same confusion and wanted to add another perspective that might help. After going through all the responses here, I decided to dig into the actual IRS guidance myself since my tax preparer was also insisting my entire state refund was taxable. What I found really helpful was looking at IRS Revenue Ruling 2019-11, which provides specific examples of how the SALT cap affects state refund taxability. The ruling makes it clear that if you paid more in state taxes than you could deduct due to the $10,000 SALT limitation, then your state refund is only taxable to the extent it exceeds the amount you couldn't deduct. In your case, you paid $12,500 but could only deduct $10,000, so you got no federal tax benefit from $2,500 of your state tax payments. Since your refund ($1,800) is less than this amount, it should be completely non-taxable on your 2024 return. The worksheet your tax preparer is using is probably the standard Publication 525 worksheet, which doesn't account for the SALT limitation properly. There's actually a modified calculation you need to do when you've hit the SALT cap. I ended up having to educate my own tax preparer on this issue by bringing him the specific IRS guidance. It's frustrating that we have to do this, but the SALT cap is relatively new and many preparers haven't fully caught up on all the nuances yet.

One thing nobody's mentioned - if you use actual expenses instead of standard mileage for Schedule C, you have to track your business use percentage. That means calculating what percentage of your total annual mileage was for business. Example: If you drove 12,000 total miles and 8,500 were for business, that's about 71% business use. You'd multiply all your car expenses (gas, insurance, repairs, etc.) by 71% to find your deduction. The first year you use a car for business is crucial because it locks you into either standard mileage or actual expenses for the life of that vehicle. If you choose actual expenses the first year, you can't switch to standard mileage later!

Don't forget that you need to have good documentation regardless of which method you choose for Schedule C. The IRS specifically looks for: 1) Mileage logs with dates and purpose 2) Odometer readings (beginning/end of year) 3) Total miles driven for the year (personal + business) 4) Receipts if using actual expenses I got audited on my Schedule C a few years back and they specifically went after my mileage deduction. I had a decent log but was missing some details. They disallowed about 40% of my claimed miles because I couldn't prove business purpose for every trip.

Just went through this exact situation with my duplex last year! The $24,500 roof replacement is definitely a capital improvement that needs to be depreciated over 27.5 years, not deducted as a repair expense. I know it's frustrating when you're looking at that big expense hitting your cash flow but not getting the immediate tax benefit. One thing that helped me was understanding that even though you can't deduct it all at once, that $891 annual depreciation deduction ($24,500 ÷ 27.5 years) will be there every year, and it reduces your taxable rental income consistently. Plus, if this creates a rental loss and your modified AGI is under $100K, you might be able to deduct up to $25K of that loss against your other income. The silver lining is that this depreciation will lower your property's tax basis, so if you ever sell, you'll have some tax benefits to recapture. Just make sure to keep all your receipts and document the "placed in service" date properly for your tax records. Good luck with your first year as a landlord - these big expenses are tough but you're building equity!

This is a great discussion! As someone who's been managing rental properties for a few years, I can confirm that the $24,500 roof replacement is definitely a capital improvement requiring depreciation over 27.5 years. The IRS is pretty clear that replacing an entire roof adds value and extends the property's useful life. One thing I'd add that hasn't been mentioned yet - make sure you're also considering the "mid-month convention" for depreciation. Since you placed this improvement in service last month, you can only claim a partial year of depreciation for this tax year. The software should handle this automatically, but it's worth understanding. Also, don't forget that if you do any related work like replacing gutters, downspouts, or fixing fascia boards as part of this project, some of those components might be separable as repairs if they weren't part of the structural roof replacement. Having a detailed, itemized invoice from your contractor is key for maximizing your deductions within the rules. The annual $891 depreciation deduction will be a nice consistent benefit, and as others mentioned, it'll help offset your rental income year after year. Welcome to landlording - these big maintenance items are part of the territory but you're building long-term wealth!

This is such a helpful thread! I had a similar issue last year where my Box 5 was showing about $6,000 less than my salary. I was convinced payroll made an error until I realized I had completely forgotten about my commuter benefits ($1,500/year) and flexible spending account for medical expenses ($2,500/year) that are both exempt from Medicare tax. What really helped me was creating a simple spreadsheet listing all my pre-tax deductions and researching which ones are exempt from Medicare vs just income tax. It's amazing how many different rules apply - I had no idea that parking benefits could be treated differently than health insurance premiums! For anyone still confused, I'd recommend requesting a detailed breakdown from your HR department showing exactly which deductions are excluded from each box on your W-2. Most payroll systems can generate this report, and it makes everything crystal clear.

This thread has been incredibly helpful! I work in payroll and see these questions all the time. One thing I'd add is that the $10,000 difference Nathan is seeing is actually pretty typical for someone with their salary level who has family health coverage and participates in multiple benefit programs. What many people don't realize is that the Medicare tax exemptions for certain pre-tax deductions were specifically designed to encourage participation in health savings accounts, dependent care assistance, and employer-sponsored health plans. The tax code treats these as "qualified benefits" that deserve special treatment. If you want to verify your employer is calculating everything correctly, compare your final December paystub to your W-2. The year-to-date Medicare wages on your paystub should match Box 5 exactly. If they don't match, THEN you might have a payroll error worth investigating. One last tip - if you switch jobs mid-year, make sure both employers are handling your pre-tax deductions consistently. I've seen cases where someone's total Medicare wages across two W-2s was incorrect because the employers used different interpretations of the same benefit rules.

For golf influencers, I'd recommend establishing clear documentation standards from the start. Create a simple spreadsheet tracking each equipment purchase with columns for: purchase date, item description, cost, content where it was featured, and revenue attribution. The IRS looks favorably on taxpayers who can demonstrate a clear business purpose and profit motive. If your client is genuinely making income from this content and treating it as a business (not just a hobby), equipment purchases are much more defensible. One thing to watch out for: make sure they're not double-dipping by deducting equipment they later sell or give away. If they do equipment reviews and then sell the clubs, that sale price should be reported as income, and the original purchase becomes cost of goods sold rather than a business expense. Also consider depreciation for expensive items like club sets - depending on how long they plan to use them for content creation, it might be better to depreciate over several years rather than expense everything in year one.

One additional consideration I haven't seen mentioned yet - if your client does equipment reviews and receives free golf clubs/equipment from manufacturers for testing, they need to report the fair market value of those items as income. This actually strengthens the business expense argument for equipment they purchase themselves, since it demonstrates the review/testing activity is clearly income-generating. I'd also suggest having them maintain a content calendar that shows planned equipment purchases tied to upcoming video concepts. This proactive approach demonstrates business planning rather than just deducting personal golf expenses after the fact. For audit protection, consider having them sign a brief memo each time they purchase equipment outlining the intended business use. Something like "Purchased TaylorMade driver set for upcoming 'Best Drivers Under $500' video series, planned filming dates X-Y." Takes 30 seconds but creates contemporaneous documentation of business intent.