Is there a cutoff on how much profit is tax free? Im in a similar situation but made about $175k on my house that I lived in for 3 years. Will all of that be exempt?

Great question about the primary residence exemption! You're absolutely right that there's a 2-out-of-5-years rule, and you definitely qualify. Since you lived in the house as your primary residence for nearly 5 years (2019-2023), you've more than met the residency requirement. The fact that you're renting instead of buying another home immediately doesn't matter at all for the exemption - there's no requirement to reinvest the proceeds. However, since you made $320k in profit, you'll want to consider the exemption limits: $250k if you're single, or $500k if you're married filing jointly. If you're single, you'd owe capital gains tax on $70k of your profit ($320k - $250k exemption). Don't forget to add any qualifying home improvements you made during ownership to your cost basis, as this could reduce your taxable gain. Things like major renovations, new HVAC systems, or structural improvements can be added to what you originally paid for the house. Also remember that since you owned the home for more than a year, any taxable portion will be subject to long-term capital gains rates (typically 0%, 15%, or 20% depending on your income level), which are generally more favorable than ordinary income tax rates.

I'd strongly recommend going the personal donation route rather than trying to transfer it to your business first. As others have mentioned, the IRS takes a dim view of last-minute asset transfers just to claim business deductions. For your $4,000-5,000 boat, you'll need Form 8283 and a qualified appraisal since it's close to the $5,000 threshold. Don't try to lowball the value to avoid the appraisal requirement - that's a red flag for audits. Get a marine surveyor to give you a proper fair market value assessment. Also, keep detailed records of the boat's condition with photos and any maintenance records you have. The IRS will want to see that your valuation is reasonable given the actual state of the vessel. Since you mentioned it's "falling apart," make sure your appraisal reflects that reality. One last tip - if the charity ends up selling the boat for significantly less than your claimed value (which often happens with boats in poor condition), your deduction will be limited to the actual sale price, not your appraised value.

Just wanted to add something that might help with the documentation side of things - make sure you get a receipt from the charity that includes specific language about the donation. The IRS requires the receipt to state whether you received any goods or services in return for your donation (which should be "no" for a straight boat donation). Also, since you mentioned the boat is in poor condition, document everything thoroughly with dated photos showing the specific issues - hull damage, engine problems, interior wear, etc. This will be crucial if the IRS ever questions your valuation. I learned this the hard way when I donated an old RV and didn't have enough documentation of its condition. One more thing - if you do go the personal donation route and itemize, remember that charitable deductions are subject to AGI limitations. Non-cash donations to public charities are generally limited to 50% of your adjusted gross income, with any excess carrying forward for up to 5 years. Given your boat's value, this probably won't be an issue, but it's worth keeping in mind.

One thing I haven't seen mentioned yet is the timing consideration for your coaching business. Since you're relocating in a few months, you might want to factor in when you'll actually need the tax deduction. If you're having a particularly high-income year, the charitable deduction might be more valuable this tax year. But if you're expecting lower income due to the relocation disruption, you might benefit more from the immediate cash from selling. Also, don't forget about the moving expense implications. If you're moving for business reasons, some of your relocation costs might be deductible, which could affect your overall tax strategy. Given that you fully expensed everything under Section 179 in 2022 (making any sale proceeds ordinary income), I'd lean toward donation unless you desperately need the cash flow right now. The tax benefit will likely be better than paying taxes on whatever you'd get from selling 3-year-old furniture.

This is a great question that many home-based business owners face! Based on the discussion here, it sounds like your Section 179 expensing in 2022 is the key factor that changes everything. Since you fully expensed the furniture already, selling would mean reporting the entire sale amount as ordinary income, which at your 24% tax bracket could eat up a significant portion of what you'd receive. For donation valuation, I'd suggest taking detailed photos of each piece and researching comparable used items on Facebook Marketplace, OfferUp, and similar platforms to establish fair market value. Document everything thoroughly - the IRS likes to see that you made a good faith effort to determine reasonable values. One practical tip: consider a hybrid approach. If any pieces are in particularly good condition and likely to sell quickly for a decent price, maybe sell those. For the items that would be harder to sell or wouldn't fetch much, donation might be the better route. The small conference table and chairs, for example, can be tricky to sell but might have good donation value. Also remember that donation gives you more predictable timing - you know exactly when it happens and can plan the tax benefit accordingly, whereas selling might drag on for months with no guarantee of success.

I think everyone's missing an important point here. If you're doing a W2 job, you CANNOT take the home office deduction anymore after the Tax Cuts and Jobs Act! Only self-employed people can take it now.

Great question about the garage conversion! I want to add a few additional considerations that might be helpful: Since you're meeting clients in this space, make sure you're documenting the business meetings. Keep a log of client visits, business calls, and any other business activities conducted in the garage office. This helps establish the "regular use" requirement beyond just the "exclusive use." Also, consider the timing of when you can start claiming the deduction. You can only deduct expenses from the date the space was "placed in service" for business use - so if you finished the conversion in March but didn't start using it for business until April, your deduction would be prorated. One thing to watch out for: if your side business operates at a loss, the home office deduction can't create or increase that loss. The deduction is limited to the income from the business activity conducted in the home office. Finally, since you mentioned this is an attached garage, make sure there's proper separation from your main house if you're claiming it as a separate structure. The IRS looks at whether the office space is an integral part of your home or a separate structure, which can affect how certain expenses are calculated. Keep excellent records of everything - the conversion costs, ongoing maintenance, and business use documentation. Good luck with your tax planning!

Can you request a waiver for the penalty if you had a good reason for underpaying? I had a medical emergency last year that drained my savings, so I couldn't make my Q4 payment on time.

The $265 penalty on $27K owed actually makes sense when you understand the calculation. The penalty isn't based on your total tax owed, but on the quarterly underpayments throughout the year. Here's what likely happened: If most of your consulting income came later in the year (Q3 or Q4), you only had penalties on the quarters where you were actually short. The IRS uses Form 2210 to calculate this - they look at each quarter separately and only penalize the periods where you didn't pay enough. The penalty rate for 2023 was around 7-8% annually, but it's only applied to the specific quarterly shortfalls. So if you were only short in Q4, you'd only pay penalties on that quarter's underpayment, not the full year. For 2024 going forward, consider making estimated payments equal to 100% of your 2023 total tax liability (110% if your AGI was over $150K). This "safe harbor" rule protects you from penalties even if you end up owing more. Much easier than trying to estimate variable consulting income!