If ur making more than 10 loans a year u might be considered a dealer which has completely different tax implications. My accountant told me to keep it under 10 active loans at any time to avoid this classification. Otherwise the IRS might consider the loans inventory and interest as ordinary income not investment income!

As a newcomer to hard money lending taxation, I'd strongly recommend documenting everything from day one. Keep detailed records of all loan agreements, payment schedules, property appraisals, and any expenses related to your lending activities (legal fees, property inspections, etc.). One thing that caught my attention from this thread is the complexity around business vs. investment classification. From what I'm reading, it seems like the IRS looks at factors like regularity, time commitment, and whether you're actively seeking borrowers. If you're just passively lending to a few contacts, that's different from actively marketing lending services. Also consider setting up a separate bank account for your lending activities regardless of how you classify it - this makes record-keeping much cleaner and demonstrates to the IRS that you're treating this seriously. Having clean books will be invaluable whether you end up filing Schedule B or Schedule C.

Welcome to the e-filing anxiety club! 😅 As a first-time filer myself a few years back, I totally get that nervous feeling. The good news is that once it's accepted, you're pretty much in the clear - rejection usually happens within the first 24-48 hours due to obvious errors like wrong SSN or duplicate filing. Since you're past that window and it got accepted, you should be golden! The processing time for refunds is typically 21 days from acceptance date, but can be faster depending on your situation.

Just wanted to add that if you're using tax software like TurboTax or H&R Block, they usually send you an email confirmation once the IRS accepts your return. If you haven't gotten that email yet, check your spam folder! I almost missed mine last year because it ended up there. Also, don't stress too much - the IRS is dealing with millions of returns right now so delays are totally normal. You did everything right by e-filing! 👍

Just to add to what others have said - as a self-employed barber, make sure you're also tracking and deducting other common expenses beyond just equipment! Things like: - Booth rental if you pay one - Hair products and supplies - Laundry/cleaning of work clothes - Business cards or any advertising - Continuing education or license renewals - Portion of cell phone used for business - Mileage if you travel between locations These all go on Schedule C as well and can really reduce your tax bill. I've been a stylist for 10 years and these deductions make a huge difference!

I had a very similar situation when I transitioned from W-2 employee to independent contractor mid-year! The key insight that helped me was understanding that TurboTax was trying to allocate my Section 179 deductions across multiple "business activities" when really I only had one active business. Since all your equipment purchases happened after you moved to Michigan and started your own barbering business, you should allocate 100% of that $1,800 to your self-employment activity (Schedule C + Form 4562). The Form 2106 should show $0 for Section 179 deductions since that's for unreimbursed employee expenses, which doesn't apply to your current situation. In TurboTax, go to the business expenses section and make sure you're categorizing all your equipment (clippers, scissors, chair, supplies) under your self-employment income, not as unreimbursed employee expenses. This should resolve both error messages you're seeing. Also, keep detailed records of when you purchased each item and how it's used 100% for business - the IRS loves good documentation for Section 179 deductions, especially for equipment that could potentially have personal use.

Has anyone used TurboTax for this situation? Do they ask the right questions to figure out if you qualify for HOH even if your kid isnt a dependent?

I'm so sorry for your loss, Kaitlyn. Going through tax complications while dealing with grief is really tough. Based on what you've described, it sounds like Head of Household would be your best option and could save you quite a bit compared to filing as Single. The key thing to understand is that your daughter can still be your "qualifying person" for HOH purposes even though she's not your dependent due to her income. As long as she's your child, lived with you for more than half the year, and you paid more than half the household costs (which it sounds like you did), you should qualify for HOH status. Just make sure to keep good records of your household expenses in case you need to prove you covered more than 50% of the costs. The HOH filing status typically provides better tax rates and a higher standard deduction than filing as Single, so it's definitely worth pursuing if you qualify. You might also want to look into education credits for your daughter's college expenses - even though you can't claim her as a dependent, you might still be eligible for the American Opportunity Tax Credit if you paid her tuition and she meets the other requirements.

Quick question - what about internet and phone bills? Are those treated the same way as property taxes and insurance (partial based on sq footage) or can I deduct more of those since they're more directly used for business purposes?

One thing I learned the hard way - make sure you're using the space "exclusively" for business if you want to claim the home office deduction. The IRS is really strict about this. If you sometimes use that room to watch TV, store personal stuff, or let guests sleep there, you can't claim it as a business expense. I got audited a few years back because I claimed my spare bedroom as an office, but I also had a pullout couch in there for guests. The auditor disallowed the entire deduction because it wasn't exclusively business use. Now I have a dedicated office space that's only used for work - no exceptions. Also, keep detailed records of your square footage measurements and take photos showing the business use. If you get audited, they'll want proof that the space is truly dedicated to business activities only.