One mistake I see a lot - make sure your properties actually qualify as short-term rentals for tax purposes. Its not just about being on Airbnb. The average stay needs to be less than 7 days, and you need to be providing substantial services (similar to hotels). Also remember that material participation for each property is determined separately unless you make a grouping election. If your spending 600 hours combined across all properties, but only 150 on one of them, that specific property might not qualify as active without proper grouping.

Great question about the 7-day average and substantial services! The IRS looks at several factors to determine if you're providing "substantial services" similar to a hotel: - Daily housekeeping or frequent cleaning (you've got this covered) - Providing linens, towels, and toiletries (check) - Concierge-type services like local recommendations, booking activities - Maintenance and repair services - Guest communication and problem resolution Based on what you mentioned (linens, toiletries, coffee, cleaning between guests), you're likely meeting the substantial services test. The key is that these services are provided for the convenience of the occupant, not just basic property maintenance. For the material participation piece that Laura mentioned - you're absolutely right about the grouping election. With 600-700 total hours across multiple properties, Ethan should definitely consider making an election to group his rental activities together. This allows him to meet the material participation test for the entire grouped activity rather than each property individually. The election needs to be made by filing a statement with your tax return, and once made, it's generally binding for future years unless there's a material change in circumstances.

Has anybody else had issues with the irs e-file system this year? My return keeps getting rejected but doesn't explain why.

This is a really common situation that catches a lot of people off guard! The main culprit is definitely the Earned Income Tax Credit (EITC) like others mentioned. At $27k with 4 dependents, you were probably getting the maximum EITC of around $6,000-7,000, but at $54k you're likely getting little to none of it. Here's what probably happened: Last year your total tax liability was probably very low (maybe $2,000-3,000) but you got huge refundable credits that gave you that $14,750 refund. This year, even though you're paying more in actual taxes, those big credits are mostly gone. The silver lining is that you're definitely better off financially overall - you're keeping way more money throughout the year in your paychecks. That $14k refund was essentially the government giving you your own money back that they over-collected, plus credits for being lower income. For next year, I'd suggest using the IRS withholding calculator and maybe having a bit extra withheld if you want a bigger refund. Also look into maximizing any retirement contributions (401k, IRA) since those can lower your taxable income and potentially help you qualify for more credits.

Just to add something important - if you decide to claim the deduction without filing the 1099, make sure you're still reporting it correctly on your Schedule C. You'd include it in the appropriate expense category (probably "Contract labor" on line 11) regardless of whether you issued a 1099. The potential penalties for not filing the required 1099 are separate from your ability to deduct the expense. Current penalties are $280 per form for failure to file, but can increase if the IRS determines there was intentional disregard of filing requirements. Obviously not ideal, but sometimes better to pay a penalty than lose a legitimate business deduction worth thousands!

You're absolutely right to be concerned, but you can still claim this deduction with proper documentation. The IRS doesn't automatically disallow legitimate business expenses just because you failed to file a 1099 - these are two separate issues. Here's what you need to do: 1. **Document everything thoroughly**: Keep the canceled check, contract, photos of completed work, any text messages or emails about the project, and write a detailed memo explaining the circumstances (including his refusal to provide W9 info). 2. **Report the expense correctly**: Include it on Schedule C line 11 (Contract labor) when you file your return. The expense is deductible regardless of 1099 filing status. 3. **Be prepared for potential penalties**: You may face a $280 penalty for each missing 1099, but this is often less than the tax savings from claiming the legitimate deduction. 4. **Consider backup withholding**: For future reference, if a contractor refuses to provide their TIN, you're supposed to withhold 24% of payments and send it to the IRS. Obviously too late for this situation, but good to know going forward. The key is that you genuinely attempted to get the required information and have solid proof this was a legitimate business expense. Keep excellent records and consider consulting a tax professional if you're audited, but don't let fear of the 1099 issue cost you a valid deduction.

Has anyone here actually filed Form 6781 in TurboTax? I'm having a hard time figuring out where to enter my section 1256 contracts from my K-1. The software seems confused by it.

I went through something very similar last year with my K-1 and section 1256 contracts. The key thing to understand is that these are two completely separate tax reporting requirements, even though they might feel connected to your overall trading activity. Your personal $600 loss from SVIX trading gets reported on Schedule D as a regular capital loss. The $245 section 1256 contracts loss from your K-1 gets reported on Form 6781 and receives that special 60/40 treatment (60% long-term, 40% short-term) regardless of holding period. The reason your bank account only shows $600 down is because the K-1 loss represents your allocated share of the partnership's trading activity in these specialized contracts. You didn't directly lose that $245 from your account - it's a pass-through loss from the partnership that you're entitled to claim on your taxes. Your tax preparer is absolutely correct. Both losses are legitimate and should be reported separately. The total $845 loss is your proper tax loss for the year, even though your personal account impact was only $600.

Has anyone here actually gotten in trouble for NOT reporting foreign accounts? I have about $30k in my home country that I've never mentioned on US taxes because I didn't know I had to. Been a green card holder for 4 years now... am I in big trouble?

I went through something very similar when I moved from Australia to the US. Had about $18k in savings that I needed to transfer. The key thing I learned is that the transfer itself isn't taxable, but you need to be careful about reporting requirements. Since you mentioned you're a green card holder, you're considered a US resident for tax purposes, which means you have worldwide income reporting obligations. The $20k you saved in Thailand won't be taxed when you transfer it (it's already your money), but any interest it earned while you've been a US resident needs to be reported on your tax return. Also, definitely check if your Thai account balance ever exceeded $10k while you've been a US resident - if so, you'll need to file an FBAR. The deadline is April 15th but there's an automatic extension to October 15th. One more tip: consider the transfer method carefully. I used a service like Remitly instead of a bank wire and saved hundreds in fees and got a much better exchange rate. Just make sure whatever service you use provides proper documentation for the transfer in case the IRS ever asks about the source of the funds.