One thing nobody's mentioned - watch out for when you sell the house! If you've been claiming depreciation on the business portion of your home (which you should with the regular method), you'll have to recapture that depreciation when you sell. Also, the business portion won't be eligible for the capital gains exclusion ($500k for married filing jointly). That's something to consider when deciding between the regular and simplified methods. The simplified method doesn't claim depreciation, so you avoid these complications when selling.

Great question! I actually went through this exact scenario when I bought my home in 2023. Your understanding is correct - you'll split the mortgage interest proportionally between business and personal use. Since your spouse will use 15% of the home exclusively for business, that 15% of the mortgage interest becomes a business deduction on Schedule C. The remaining 85% can potentially be claimed as an itemized deduction on Schedule A, but remember it's subject to the $750k mortgage debt limit. One important consideration for California: our high property values mean you might hit that $750k cap quickly. With a $1.2M mortgage, only the interest on the first $750k of debt qualifies for the personal mortgage interest deduction. So you'd calculate 15% of total mortgage interest for the business deduction, then take 85% of the interest on just the first $750k for Schedule A (assuming you itemize). Also, don't forget about California's more restrictive mortgage interest deduction limits for state taxes - we cap it at interest on $1M of acquisition debt for state purposes, which is different from the federal $750k limit. Make sure you have solid documentation showing the exclusive business use of that 15% of your home. The IRS scrutinizes home office deductions closely, especially on higher-value properties.

Has anyone here used TaxAct for partnership returns? Their software is cheaper than the bigger names but I'm not sure if it handles all the schedules properly.

Just wanted to share my experience since I was in a similar situation last year with a small LLC partnership. You're absolutely right that the IRS website can be confusing! The key thing that helped me was realizing that Form 1065 is basically a "package deal" - all those schedules (B-1, B-2, and the K-1s) are considered part of the main return and go to the same address. Think of it like sending a book with multiple chapters rather than separate documents. One tip that saved me stress: if you're getting close to the deadline, definitely consider e-filing instead of mailing. The confirmation is instant, and you don't have to worry about postal delays or whether the IRS actually received your package. Most basic tax software can handle a simple 50/50 partnership return like yours. Also, make sure you keep copies of everything for your records, especially those K-1s since you'll both need them for your personal tax returns. Good luck with the filing!

Dont forget that u still have to pay regular income tax on any IRA withdrawl even if u avoid the 10% penaltly! this hit me hard last yr when i did this for my kids college. my tax bill was WAY bigger than i expected!!

Great advice from everyone here! Just want to emphasize one more important point - make sure you understand the timing requirements. The IRA withdrawal needs to be made in the same tax year that you pay the qualified education expenses, OR in the year immediately before or after. So if you're paying tuition for the spring 2025 semester, you could make the withdrawal in 2024, 2025, or 2026. This timing flexibility can be really helpful for tax planning, especially if you want to spread the income tax impact across multiple years like Fatima mentioned. Also keep detailed records of all qualified expenses and your withdrawal - the IRS may ask for documentation if they review your return.

Somewhat related question - I have a property that I've been trying to rent out, but haven't found tenants yet. It's been vacant all year while listed for rent. Should I still be filling out Schedule E for this year even though I've had zero rental days and zero income?

Your CPA is absolutely correct to include Schedule E even with zero rental days! This is actually a common misconception that trips up many rental property owners. The key point is that Schedule E is required when you hold a property for rental purposes, not just when you have actual rental income. Since your property was previously a rental and you owned it during part of 2024 (even though it was vacant and under contract), it maintained its rental property status for tax purposes. Here's what you can still report on Schedule E even with $0 rental income: - Property taxes paid during the ownership period - Mortgage interest (if any) - Insurance premiums - Maintenance and repairs - Property management fees - Depreciation for the months you owned it - Other ordinary and necessary expenses related to holding the property This creates a proper paper trail showing the property's transition from rental to sold status, and ensures you're capturing all legitimate deductions during your ownership period. It also sets up the proper classification for when the sale gets reported (likely on Form 4797 as business property rather than Schedule D as personal property). Don't ask your CPA to remove it - she's following the correct tax treatment for your situation!

I went through something very similar last year! My tax preparer filed my 2021 return but completely missed my 2020 return that I specifically asked her to handle. I was panicking when I discovered it months later. The good news is you have plenty of time - you can file your 2022 return until April 2025 if you're owed a refund. No penalties at all in that case. I ended up filing mine myself using TurboTax and got my refund within a few weeks. My advice: Don't wait for your current preparer to respond. Go get your documents TODAY if possible. I made the mistake of waiting and it just delayed everything. Also, definitely ask for a refund of whatever you paid for the 2022 filing since she never did the work. This is totally her fault and completely unprofessional. You're not the first person this has happened to, and unfortunately you probably won't be the last. The important thing is just getting it filed now so you can get your refund and move on with a better tax preparer next year!

I'm really sorry this happened to you! As a tax professional myself, this kind of oversight is completely unacceptable. You absolutely can still file your 2022 return - you have until April 15, 2025 if you're owed a refund, and there are no penalties for filing late when the IRS owes you money. Here's what I'd recommend doing immediately: 1. Go to her office in person and collect ALL your 2022 documents - don't wait for a callback 2. If she's avoiding you, send a certified letter demanding your documents and a partial refund for services not rendered 3. File your 2022 return ASAP using reputable tax software or find a new CPA 4. Consider reporting her to your state board if she's licensed - this is a serious breach of professional duty The fact that she charged you for both returns but only filed one is essentially theft of services. Document everything - your payment records, communications, etc. You have every right to demand accountability here. Don't stress about the IRS side of things though - this is completely fixable and you're well within the timeframe to get your 2022 refund!