As someone who's been through the business expense deduction process, I want to add one important consideration that hasn't been mentioned yet: what happens if your business income fluctuates significantly. Since you mentioned this has been an unusually busy season, make sure you have enough business income to actually use the Section 179 deduction. The deduction can't exceed your business income for the year - so if you claim a $2,475 deduction (90% of $2,750) but only have $2,000 in business profit, you can only deduct $2,000 this year and would need to carry forward the remaining $475 to next year. Also, keep in mind that the IRS looks closely at transportation expenses. Since you're claiming 90% business use, make sure that percentage is rock solid. If you use the bike to go to the grocery store or ride recreationally on weekends, that needs to be factored into your business use calculation. Being slightly conservative with your percentage (maybe claiming 85% instead of 90%) can save you headaches if you're ever audited. The financing aspect that Amara mentioned is crucial - you can only deduct what you've actually paid out by December 31st, not the full purchase price. Plan your down payment accordingly based on your tax situation.

I'm a CPA and want to emphasize something critical that's been touched on but bears repeating: the cash vs. accrual accounting method will significantly impact your deduction timing for financed purchases. If you're using cash basis accounting (which most small businesses do), you can only deduct payments as you actually make them, regardless of when you place the asset in service. This means even with Section 179, you're limited to deducting the business portion of what you've actually paid out by December 31st. However, if you're on accrual basis, you could potentially deduct the full business portion in the year you place it in service, even if financed. Most pet walking/sitting businesses would be cash basis unless you have significant receivables. Also, consider the five-year lookback rule for business assets. If you stop using the bike for business within five years, you may need to "recapture" some of the depreciation or Section 179 deduction as ordinary income. Given that you're already replacing a worn-out bike, factor in realistic expectations about how long this new one will last for business use. The 90% business use figure needs ironclad documentation. I'd suggest using a mileage tracking app for at least the first few months to establish a defensible pattern, even though bikes don't qualify for the standard mileage deduction like cars do.

Has anyone tried using a CPA instead of an EA? What's really the difference? My buddy used a CPA for his back taxes and said it worked out fine.

I just want to echo what others have said about not panicking over those unopened IRS letters. I was in a very similar situation - hadn't filed for 3 years and was terrified to even look at the mail from the IRS. One thing I learned is that the IRS actually prefers to work with people who are trying to get compliant rather than those who continue to avoid the issue. When I finally got help, the penalties weren't as catastrophic as I had imagined in my head. For finding an EA in Minneapolis specifically, you might want to check with the Minnesota Society of Enrolled Agents. They often have local chapters that can provide referrals to members in your area who have experience with non-filer cases. Also, don't be afraid to interview a few EAs before choosing one. Most reputable ones will offer a brief consultation to discuss your situation and their approach. Ask specifically about their experience with 4+ years of unfiled returns and what their typical timeline looks like for getting everything resolved. You're taking the right step by seeking help now. The sooner you start, the more options you'll have for payment plans and penalty abatement.

Has anyone tried using those tax choice designation options on some state tax forms? Like in CA we can choose to donate part of our refund to specific causes. I wish the federal return had something similar! Maybe even just like 10% of your taxes could be allocated to departments of your choice?

I completely get your frustration! $42,300 is a huge amount to pay without knowing exactly where it goes. While we can't get personalized receipts, there are actually some good resources to see the bigger picture. The White House Office of Management and Budget publishes a "Taxpayer Receipt" tool that lets you input your tax amount and see approximately how it breaks down across major categories like defense, healthcare, Social Security, etc. It's not perfect, but it gives you a much better sense of where your dollars are going than the complete black box we usually get. What really opened my eyes was learning that a significant chunk goes to mandatory spending (Social Security, Medicare, interest on debt) that Congress can't easily change, versus discretionary spending where there's more annual debate. Understanding that distinction helped me realize why budget fights often focus on a relatively smaller portion of total spending. I also started following my representatives' voting records on budget bills more closely since that's really our main way to influence these decisions. It's not the same as choosing where our money goes directly, but it's something!

Based on what you've described, it sounds like you might actually be in a pretty good position regarding the Section 179 recapture. Since you purchased the car in 2017 and it's now 2025, you've held it for about 8 years, which is well beyond the typical 5-year recovery period for vehicles under MACRS. The Section 179 recapture generally only applies to the remaining undepreciated basis of the business portion of the asset. If you've already fully depreciated the business portion over the recovery period, there may be little to no recapture required. However, you'll want to carefully review your depreciation schedule to see exactly how much business basis remains. The recapture amount would be based on any remaining undepreciated Section 179 deduction, not the full $8,900 you originally claimed. Also, make sure you're getting the proper documentation for your charitable donation. Even though the car had transmission problems, you can still claim a charitable deduction for its fair market value in that condition. This deduction might help offset any recapture taxes you do owe. I'd recommend double-checking your depreciation records or consulting with a tax professional to calculate the exact recapture amount, as the calculation can be tricky with mixed-use assets.

This thread has been incredibly helpful! I'm dealing with a similar situation where I donated business equipment after taking Section 179 deductions. One thing I wanted to add based on my research is that the timing of when you place assets in service can really impact your recapture calculation. For vehicles specifically, the IRS uses the "half-year convention" which means even if you bought your car in December 2017, it's treated as if you placed it in service in the middle of that tax year for depreciation purposes. This could actually work in your favor for the recapture calculation. Also, since you maintained consistent business use above 50% throughout the entire period, you avoided the "listed property" recapture rules that can be much harsher. If your business use had dropped below 50% at any point, you would have faced recapture of the excess Section 179 deduction above straight-line depreciation. Given that you held the vehicle for 8 years with strong business use, I agree with the others that your recapture should be minimal. The charitable donation deduction will likely offset most or all of any recapture tax liability you do have.

Has anyone used TurboTax for this situation? My brother is trying to file as a dependent (I claimed him) and wondering if it handles this correctly.

This exact situation happened with my nephew last year! The key thing to remember is that being claimed as a dependent doesn't prevent someone from filing their own return - they're still entitled to get back any taxes that were withheld from their paychecks. When your daughter refiles, make sure she selects "Someone else can claim me as a dependent" (the exact wording varies by software). This tells the IRS that while she's filing her own return, she acknowledges that you've already claimed her on yours. Also double-check that her name, SSN, and address match exactly what's on her Social Security card - even small differences can cause rejections. With $55 withheld on $9,500 income, she should definitely get that money back once the return is processed correctly. The dependent status mainly affects her standard deduction amount, but shouldn't prevent her from getting her withholdings refunded.