When I built my processing barn last year, my biggest mistake was not getting everything in writing from subcontractors about what specific components were being installed. Made it really hard at tax time to separate out the specialized electrical and plumbing systems from general construction costs. Get detailed invoices!!!

One thing I'd add to all this great advice - make sure you document the business use percentage thoroughly from day one. Even though you're planning 100% business use for poultry processing, the IRS likes to see detailed records showing exactly how the space is used throughout the year. I keep a simple log showing processing days, maintenance activities, equipment storage, etc. It's saved me headaches during tax prep because my accountant has clear documentation that the barn is exclusively for business operations. Takes just a few minutes each month but gives you solid backup if anyone ever questions the deduction. Also consider timing - if your income varies significantly year to year, you might want to plan the construction completion and Section 179 election for a high-income year to maximize the tax benefit.

Something else to consider - Vanguard offers a feature called "Cost Basis Tracking" which shows your exact contributions over time. You can access it from the "My Accounts" section, then go to "Account details" and look for "Cost basis". This might give you a clearer picture than just doing the subtraction on your dashboard.

Great thread everyone! Just wanted to add that when you do make the withdrawal from Vanguard, make sure to specify that you want it coded as a "return of contributions" rather than a regular distribution. When you initiate the withdrawal online or over the phone, there should be an option to designate the withdrawal type. This helps ensure Vanguard reports it correctly on your 1099-R form, which will make your tax filing much smoother. Also, keep detailed records of the withdrawal amount and date - I create a simple spreadsheet tracking my contribution basis before and after any withdrawals. It's saved me time during tax season and gives me confidence that I'm staying within the penalty-free limits.

Has anyone run into issues with cost basis reporting on UTMA accounts? My son's 1099-B has some transactions marked as "basis not reported to IRS" and I'm not sure if I should be calculating the basis myself or if TurboTax handles this differently when using Form 8814.

I went through this exact same situation last year with my two kids' UTMA accounts. You're absolutely correct to be concerned about double taxation - it's a common pitfall that TurboTax doesn't automatically prevent. Here's what you need to do: Delete the UTMA 1099-Bs from your main tax return since you'll be reporting that income through Form 8814. When you complete Form 8814, TurboTax will ask you to enter the investment income information separately, and that's where you'll input the details from those UTMA 1099-Bs. One important thing to verify first - make sure your kids are still eligible for Form 8814. They need to be under 18 (or under 24 if full-time students), and their investment income must be under $11,000. If they had any capital gains over $2,200, be aware that portion will be taxed at your higher tax rate due to the kiddie tax rules. I'd also recommend double-checking the cost basis information on those 1099-Bs. UTMA accounts sometimes have transactions where the basis isn't reported to the IRS, and you'll need to have that information ready when completing Form 8814. The good news is that using Form 8814 often results in lower overall taxes compared to filing separate returns for the kids, especially if your children's investment income is modest. Just make sure you don't accidentally report the same income twice!

Just to clarify one thing that others haven't mentioned - the Earned Income Credit (EIC) also has the residency requirement. So whoever qualifies for the CTC would likely also be the only one who could claim the EIC for that child (assuming they meet the income requirements). The bigger issue here is that MFS filers cannot claim the EIC at all! That's a restriction many people don't realize. If you're MFS, you're completely ineligible for the Earned Income Credit regardless of whether you have qualifying children. This is why some separated couples should explore whether one might qualify for Head of Household status instead, which would allow EIC claims if eligible.

Something nobody's mentioned yet - if you're planning to get divorced and will have a formal agreement, you could address this for future years. A divorce decree or separation agreement can specify which parent gets to claim the child for tax purposes, regardless of the residency test. But for your current situation, it's like everyone is saying - only one of you can claim the child as a qualifying child, and usually that's the custodial parent (who the child lived with more). Also, look into the child and dependent care credit if either of you paid for childcare while working or looking for work. That's separate and has its own rules.

Don't forget about the home office deduction if you're working from home! Since you're using that laptop and equipment in a home office, you might qualify for the simplified home office deduction of $5 per square foot (up to 300 sq ft) if you have a dedicated space used exclusively for business. Between equipment deductions and home office, you can offset a good chunk of that small income and potentially create a loss to offset your W2 income.

Great question about Section 179! I went through something similar with my freelance photography business. Here's what I learned: First, you absolutely can deduct business equipment on Schedule C even if your income is low, but documentation is key. For Section 179, you need >50% business use to qualify for immediate deduction. If you don't meet that threshold, regular depreciation over 5 years (for computers/phones) is still available. The fact that you only made $375 from one gig but invested $4000+ in equipment isn't automatically a problem - many legitimate businesses have startup costs that exceed initial income. What matters is showing genuine profit motive and business necessity. A few practical tips: - Keep detailed logs of business vs personal use percentages - Document why you needed this specific equipment for your work - Save all purchase receipts and business communications - Consider combining all your similar freelance activities (Fiverr, Upwork, etc.) on one Schedule C if they're related services The business loss you create can offset your W2 income, which is completely legal. Just be prepared to justify the business purpose if ever questioned. Many successful businesses operate at a loss initially while building up their client base and investing in necessary equipment.