Has anyone here actually run the numbers on this? I did a cost segregation on my rental last year and while the depreciation deduction was nice, the cost of the study itself was around $4,500. Plus I had to pay my CPA extra to handle the more complex tax situation. Just wondering if it actually pencils out for smaller properties or if there's a certain property value where this makes more sense.

One thing to keep in mind that I learned the hard way - even if you qualify for the short-term rental loophole and can deduct losses against your RMDs, you need to be prepared for the administrative burden. I'm in year 2 of this strategy and the record-keeping requirements are intense. You'll need to track every hour spent on the property (I use a detailed spreadsheet), maintain receipts for all expenses, document all guest communications, and keep detailed records of maintenance activities. The IRS scrutinizes short-term rental businesses heavily, especially when significant losses are claimed against retirement income. Also, don't forget about state tax implications. Some states have different rules for rental income and depreciation, which could affect your overall tax savings. I had to file returns in two states last year because my rental property was in a different state than my residence. The strategy can definitely work, but make sure you're prepared for the extra complexity it adds to your tax situation. It's not just a set-it-and-forget-it investment when you're trying to qualify for active participation.

Can someone explain what happens if you just put $0 for this question? I've honestly never reported any use tax in my life and I buy stuff online constantly. Never had an issue with my returns. Is the IRS really going to come after me for not tracking every random purchase I make on the internet??

I totally get the confusion! I went through the same thing last year. Here's what I learned: that question is basically asking about "use tax" - which is what you owe on purchases where the seller didn't collect sales tax from you. Don't stress too much about tracking every single purchase perfectly. Most states know this is unrealistic for regular people. Here's what I'd suggest: 1. Check if your state offers a "safe harbor" amount - this is usually a flat fee based on your income that you can pay instead of calculating exact amounts 2. Focus on any big purchases you made from smaller online retailers (especially out-of-state ones) 3. Major retailers like Amazon usually collect sales tax everywhere now, so those probably aren't an issue For this year's filing, if you can't track everything perfectly, most people either use the safe harbor amount or make a reasonable estimate. The key is being honest and making a good faith effort. You're definitely not alone in finding this confusing - it's one of those tax questions that trips up tons of people!

I'm in a very similar situation and have been researching this extensively. At your income level, you're unfortunately past the point where any rental loss deductions are allowed against ordinary income. The $100K-$150K phase-out range means you get zero deduction at $670K. However, don't overlook some potential current-year tax savings while those losses carry forward: 1. **Expense categorization review** - Make sure repairs aren't being capitalized as improvements. Things like fixing existing systems, painting, minor plumbing repairs can be fully deductible repairs rather than depreciable improvements. 2. **Section 199A deduction** - If you have any rental income (even from other properties), the QBI deduction might apply to offset some of your high W2 income. 3. **Professional development expenses** - Since you work in property management, any courses, certifications, or professional development related to real estate might be deductible as employee business expenses if you itemize (though this is limited post-TCJA). The silver lining is that with your income level, those suspended losses will likely be worth more to you in future years when you can use them. At your current tax bracket, a $30K loss could save you around $11K+ in taxes when you eventually sell or have rental profits to offset. Keep meticulous records of everything - the IRS loves to challenge rental loss carryforwards if documentation is poor.

I've been dealing with a similar high-income rental loss situation and wanted to share a few additional strategies that might help while you're carrying forward those losses: **Timing considerations:** Since you mentioned RSUs vesting over multiple years, consider whether there might be future years with lower income where you could potentially utilize some losses. If you have any control over RSU vesting timing or other income recognition, strategic planning could help. **Entity structure review:** While it won't solve your immediate problem, consider whether holding future rental properties in different entity structures (like a Delaware Statutory Trust for 1031 exchanges) might provide more flexibility down the road. **State tax implications:** Don't forget to check your state's rules - some states have different passive loss limitations or may allow deductions that the federal return doesn't. **Advanced strategies for next year:** Look into conservation easements or opportunity zone investments if you're looking for legitimate tax strategies to offset that high W2 income, though these come with their own complexity and risk factors. The $30K in suspended losses is actually a substantial asset that will benefit you greatly when you can use them. At your tax bracket, that's potentially $11,000+ in future tax savings when you sell or generate rental profits. Keep detailed records and consider this part of your overall tax planning strategy rather than a current-year loss.

Does anyone know if there's a minimum business size where you don't have to worry about the inventory stuff? I heard somewhere that very small businesses can just use cash method and expense inventory when purchased...

This is exactly the kind of inventory confusion that trips up so many small business owners! I went through the same thing when I first started my retail business. One thing that really helped me understand it was thinking about it this way: that $135,000 of ending inventory isn't an expense yet - it's still an asset sitting on your shelves that you'll sell next year. So you can't deduct it as a business expense this year because you haven't actually "used it up" to generate revenue yet. The COGS calculation essentially says "okay, you bought $675,000 worth of stuff, but $135,000 of it is still unsold, so you only actually 'consumed' $540,000 worth of inventory to generate this year's sales." I'd also recommend keeping really good records of your physical inventory counts at year-end. The IRS can get picky about this stuff during audits, and having solid documentation of what you actually had on hand makes everything much smoother. Good luck with tax season!

19 The benefits your employer is offering (vacation, sick days, holidays) are actually a red flag for proper 1099 classification. True independent contractors don't typically receive these employee-style benefits because they're supposed to be running their own business and setting their own schedules. Beyond the tax implications others have mentioned, consider this: if the IRS later determines you were misclassified, you could be liable for penalties and interest on unpaid taxes. Your employer would also face significant penalties for avoiding payroll taxes. My advice? Run the numbers both ways, but also document everything about your work arrangement - hours, location, equipment used, who controls your work methods, etc. This will help determine if you're legally supposed to be W-2 or 1099 regardless of what your employer offers. The classification should be based on the actual working relationship, not what sounds financially better.

This is a really complex situation that goes beyond just the tax math. While everyone's focused on the financial calculations, I want to emphasize what others have touched on - the legal classification issue is huge here. The fact that your employer is offering you "benefits" like vacation and sick days while calling you a 1099 contractor is a major red flag. The IRS looks at three main factors: behavioral control (do they control how you do your work?), financial control (do you have opportunity for profit/loss?), and relationship type (permanent vs project-based work, benefits, etc.). If you're doing the same job at the same location with the same schedule, just switching your tax classification doesn't make you a legitimate contractor. This could expose both you and your employer to penalties down the road. Before making any decision, I'd strongly recommend consulting with a tax professional who can review your specific work arrangement. They can help you understand not just the tax implications, but whether this classification change would even be legally defensible if questioned later. The short-term financial benefits might not be worth the long-term compliance risks.