I'm going through the exact same situation right now! My therapist prescribed my emotional support dog for my PTSD, and I've been tracking all expenses carefully. What I've learned from researching this extensively is that the IRS hasn't changed the fundamental rules for 2024, but they are definitely scrutinizing these deductions more closely. The most important thing is having proper documentation - your doctor's letter needs to specifically state that the ESA is prescribed for treating a diagnosed mental health condition, not just general companionship. I keep a spreadsheet separating necessary medical expenses (basic food, vet visits, medications) from regular pet expenses (toys, fancy treats, decorative items). One tip that helped me: I called my doctor's office and asked them to revise my ESA letter to be more specific about the medical necessity. The original letter was too vague, but the updated version clearly connects my diagnosed condition to why I need the animal for treatment. This documentation will be crucial if you ever face questions from the IRS.

I appreciate everyone sharing their experiences! As someone who's been dealing with ESA deductions for a few years now, I wanted to add that it's also worth keeping documentation about when you acquired your emotional support animal. The IRS may want to see that the timing aligns with your diagnosed condition and treatment plan. I learned this the hard way when I had to explain why I got my ESA two years after my initial diagnosis. Fortunately, I had session notes from my therapist showing that we discussed getting an emotional support animal as part of my ongoing treatment, which helped establish the medical timeline. Also, don't forget that if you move for medical reasons related to your condition (and your ESA), some of those moving expenses might also be deductible as medical expenses. It's a lesser-known rule that could apply if you relocate to be closer to specialized care or a more suitable living environment for managing your condition.

This is a complex situation that's worth getting right given the property value involved. One thing I'd add to the excellent advice already given - make sure you're properly documenting everything for the suspended passive losses. The IRS requires you to track these losses year by year, and with depreciation creating substantial annual losses on a $1.6M property, you'll likely be accumulating significant suspended losses. Also consider the long-term strategy here. While you can't use these losses against your dividend income now, they'll become fully deductible when you eventually sell the property. Given that you inherited it with a stepped-up basis, you might want to think about whether this property fits your overall investment strategy or if there are better alternatives. One last thought - if you're planning any major improvements to the property, make sure you understand the difference between repairs (immediately deductible) and improvements (must be depreciated over time). With depreciation already exceeding your rental income, maximizing immediate deductions through proper repair classifications could be beneficial.

I've been dealing with a similar inherited rental property situation for the past two years, so I completely understand your confusion about the passive loss rules. What everyone has explained about the passive activity limitations is spot-on - you won't be able to use those rental losses against your dividends and capital gains with your income level. One thing I wish someone had told me earlier: consider doing a cost segregation study on that $1.6M property. With such a high basis, you might be able to accelerate some of the depreciation by separating out components like flooring, fixtures, and landscaping that depreciate over 5-7 years instead of the standard 27.5 years for residential rental property. This could create even larger losses in the early years that get suspended, which means bigger deductions when you eventually sell. Also, since this is inherited property, make sure you're not missing any potential deductions for estate-related expenses or property preparation costs that might be immediately deductible rather than added to basis. The combination of high depreciation and proper expense classification can really maximize those suspended losses for future use.

Been using Credit Karma for direct deposit for 2 years now. In my experience, they usually post refunds around 3-4am EST on your DDD, but I've gotten lucky a few times and seen it hit around 11pm the night before. The app notifications are clutch - saved me from obsessively checking my balance every hour lol. Hope yours comes through early! 🤞

Credit Karma usually drops refunds between 2-5am EST on your DDD, but I've seen it hit as early as 9pm the night before! Make sure you have the app notifications turned on so you don't have to keep refreshing. Been using them for my refunds for the past few years and they're pretty reliable. Fingers crossed yours hits tonight! 🤞

Something important that hasn't been mentioned yet - make sure your operating agreement for the real estate LLC has appropriate language about special allocations if you're planning to distribute the actual cash differently than how the tax impacts are allocated. The IRS can challenge improper allocations. Also, document the fair market value of the rent carefully. If the IRS determines you're paying above-market rent to shift income from the food truck business to the real estate LLC, they could recharacterize some of the payments.

Quick tip from someone who got audited on exactly this issue: Keep METICULOUS records of your material participation in the food truck business. The IRS specifically targeted my return because of this self-rental situation, and I had to prove my material participation in the business. The auditor wanted to see my calendar, time logs, emails, texts, and other evidence showing I actually materially participated. If you can't prove the material participation, they'll treat all the rental income as passive!

Has anyone here used QuickBooks for managing their S Corp? I'm trying to figure out if the Self-Employed version is enough or if I need to upgrade to the more expensive versions.

Great question about S Corp setup! I went through this same decision process last year. One thing I'd add to the excellent advice already given is to really think about your projected income level. The S Corp election becomes more beneficial as your profits increase, but there's definitely a threshold below which the additional complexity isn't worth it. Also, don't forget about state considerations - some states don't recognize S Corp elections or have additional fees/taxes that can impact your savings. Make sure to factor in your specific state's requirements when running the numbers. The reasonable compensation requirement is real and the IRS does audit this, so be conservative in your approach. I've found it helpful to research salary data for similar consulting roles in my area to justify my compensation level. Better to err on the side of paying slightly more in salary than to face an audit later.