Has anybody used TurboTax Self-Employed to handle amortization of business acquisitions like this? I'm wondering if I need to pay for a CPA or if the software can handle it properly.

I went through something very similar when I purchased a small accounting practice last year. One thing I learned that might help you - make sure you're crystal clear about whether any part of your $27k included a non-compete agreement with the previous owner. Even if it wasn't explicitly called out in your contract, if there was any understanding that the seller wouldn't compete with you for a certain period, that portion needs to be amortized differently. Also, don't forget to consider if any of the customer contracts you acquired have specific terms or remaining durations. Sometimes part of the purchase price can be allocated to these existing contracts, which might have different tax treatment than pure goodwill. Your tax professional will definitely help sort this out, but having these details ready will make that meeting much more productive. Good luck with the expanded business!

Based on everything discussed here, it sounds like you definitely need to file since you received marketplace insurance subsidies - that's a hard requirement regardless of income level. The good news is that since your actual income was lower than what you estimated when you got the subsidies, you'll likely get additional credits back when you reconcile with Form 8962. Here's what I'd recommend: gather all your tax documents (1099s for investment income, 1095-A from the marketplace, any other income statements), then use one of the tools mentioned above to get a clear picture of your filing requirements for both federal and state. The marketplace subsidy alone means you're filing anyway, so you might as well make sure you're capturing everything correctly - including those investment gains/dividends and checking your state's specific thresholds. Don't stress too much about it - your situation is more common than you think, especially with people leaving traditional employment. Just make sure you have all your paperwork in order before you start filing.

Just wanted to add one more thing that might be relevant - if you had any retirement account distributions during the year (401k, IRA withdrawals, etc.), those are also taxable income that would count toward your filing threshold. Since you mentioned living off savings, I wanted to make sure you didn't overlook any retirement account withdrawals you might have made. Also, even though you're required to file because of the marketplace subsidies, the silver lining is that with such low income, you'll likely qualify for the maximum premium tax credits when you reconcile on Form 8962. So you might actually get a nice refund even though you didn't have much income - the government essentially covering more of your health insurance costs than they initially estimated. Good luck with everything! Sounds like you've got a solid plan now with all the great advice in this thread.

Thank you everyone for the detailed explanations! This makes so much more sense now. I was getting confused because the Form 8615 instructions focus on the age/student/income tests, but I didn't realize the dependency eligibility was the overriding factor. Just to confirm my understanding: Since my unemployment benefits are more than half my support, I cannot be claimed as a dependent by anyone. Because I cannot be claimed as a dependent, Form 8615 doesn't apply to me at all, regardless of my age, student status, or type of income. My new preparer was right, and I apologize for doubting them! I guess my previous preparer was either being overly cautious or misunderstood the rules. This has been a huge learning experience - tax rules are way more nuanced than I thought. Thanks again for helping me sort this out before I filed!

Great question and thanks for sharing your situation! This is actually a really common confusion point that trips up both taxpayers and even some preparers. Your new preparer is absolutely correct. The key insight here is understanding what Form 8615 is actually designed to do - it's meant to prevent wealthy families from shifting investment income to their children's lower tax brackets. But this "kiddie tax" only applies if you CAN be claimed as a dependent. Since your unemployment benefits make up more than half of your support, you fail the support test for being claimed as a dependent. This means you're filing as a truly independent taxpayer, so the kiddie tax rules don't apply to you at all. The Form 8615 instructions can be misleading because they list all those age/student/income tests first, but they're only relevant IF you meet the basic dependency eligibility requirements. Think of dependency status as the "gateway" - if you can't pass through that gate, none of the other tests matter. Your previous preparer was likely being overly cautious or may have misunderstood how the dependency rules interact with Form 8615. It happens more often than you'd think! Good on you for questioning it when something didn't feel right.

I'm facing this exact situation right now with my leased Tesla Model 3 that has about $8,000 in positive equity. Reading through all these responses has been incredibly helpful, but I'm still nervous about potentially making the wrong decision. What strikes me most is how consistent the advice seems to be across multiple tax professionals - that since we never held title to the leased vehicle, there's no taxable sale and therefore no capital gain to report. The explanation that the positive equity is essentially a discount/rebate on the new vehicle purchase makes the most sense to me. I'm leaning toward following the same approach everyone here has described (not reporting it as income), but I think I'll also document everything thoroughly just in case. I'll keep copies of the lease agreement, trade-in paperwork, and purchase contract for the new vehicle to clearly show the transaction flow. Has anyone here ever had their tax return questioned by the IRS regarding this type of situation, even years later? I'm just trying to gauge if this is something that might come up in a future audit.

I appreciate everyone sharing their experiences with this situation. As someone who works in tax compliance, I wanted to add a few practical considerations that might help others facing similar lease trade-in scenarios. First, the consensus here is correct - most tax professionals treat positive equity from lease trade-ins as non-taxable events since you never held title to the vehicle. However, I'd recommend a couple of additional steps for anyone in this situation: 1. **Get it in writing**: If you consult a tax professional about your specific situation, ask for their advice in writing (email is fine). This creates a record that you sought professional guidance and relied on it in good faith. 2. **Consider the amounts involved**: While the tax treatment should be the same regardless of the equity amount, larger amounts (like the $8,000 mentioned by AstroAdventurer) might warrant extra documentation or a second opinion from a tax professional. 3. **Keep transaction records organized**: In addition to the lease agreement and trade-in paperwork, keep the settlement statement from your new vehicle purchase showing exactly how the equity was applied. This makes it crystal clear that you never received cash proceeds. The risk of IRS scrutiny on this issue seems very low given how common these transactions have become with current used car values, but having proper documentation gives you confidence in your position.

Has anyone else noticed that the W2 Box 12 code for deferred compensation seems to vary? My previous employer used code Y but my current one is using code D. Does the code matter for reporting purposes?

This is a great breakdown of a complex topic! One thing I'd add is that you should also verify that your employer is correctly handling the Social Security wage base limit. For 2025, once your cumulative FICA wages hit the Social Security wage base ($176,100), you stop paying Social Security tax but continue paying Medicare tax. With deferred compensation, this can get tricky because the vesting and earnings might push you over the limit in ways that aren't immediately obvious from your regular salary. I've seen cases where employees ended up overpaying Social Security tax because their payroll department didn't properly coordinate the deferred comp reporting with their regular wages. Also, make sure your employer isn't double-counting any amounts. Sometimes when corrections are made to prior year reporting, there can be overlap that results in the same earnings being subject to FICA multiple times. If you're getting conflicting information from your plan administrator, consider requesting a meeting with both HR and payroll to walk through a specific example year. Having everyone in the same room often helps identify where the confusion is coming from.