Just want to add another important point - make sure you're tracking your mileage properly! Since you're driving between different apartment properties for cleaning, you can deduct business mileage at the current IRS rate (67 cents per mile for 2024). Keep a simple log in your car or use a mileage tracking app. Write down the date, starting location, ending location, business purpose, and total miles. This can add up to significant deductions over the year - if you're driving 50 miles per week for cleaning jobs, that's about $1,700 in deductions annually. Also, don't forget you can deduct things like liability insurance if you get it for your cleaning business, and even a portion of your cell phone bill if you use it to communicate with clients. The key is documentation - keep everything organized from day one!

Great question! As someone who's been in a similar situation, I'd strongly recommend getting professional help to make sure you're doing everything correctly. With $6,500/month in income, you're definitely in self-employment territory and will need to handle quarterly estimated taxes. A few key things to add to the excellent advice already given: 1) Consider getting an EIN (Employer Identification Number) from the IRS - it's free and makes you look more professional when dealing with clients who need to send you 1099s 2) Look into business liability insurance if you haven't already - it's usually pretty affordable for cleaning services and protects you if something gets damaged 3) Keep a dedicated calendar or log of all your cleaning appointments - this helps with mileage tracking and proves the business purpose of your expenses 4) Consider whether you want to charge sales tax (varies by state) - some states require it for cleaning services The quarterly payments might seem overwhelming, but they're actually a blessing in disguise. Paying as you go prevents that massive tax shock in April that catches a lot of new self-employed people off guard. You've got a solid income stream here, so getting the tax side organized properly will give you peace of mind to focus on growing your business!

Random question - if I'm buying equipment for a new business but haven't officially formed the LLC yet, can I still take the Section 179 deduction?

Great question about multiple businesses and Section 179! You're absolutely on the right track thinking about maximizing your deductions. One important consideration I don't see mentioned yet is the taxable income limitation. Section 179 deductions can't exceed your total taxable income from all active businesses combined. Since you're making $675k from your contracting business, you should have plenty of taxable income to support the deductions for both the truck and startup equipment. However, make sure your new startup is genuinely operational before year-end. The IRS looks for legitimate business activity - not just equipment purchases. Having a business plan, marketing materials, or even preliminary client discussions can help demonstrate business intent. Also, consider the timing strategically. If you're close to the Section 179 phase-out threshold (starts at $4.05M in equipment purchases), you might want to spread purchases across tax years. But with your income level, this probably isn't a concern. The key is proper documentation for both businesses and ensuring the equipment is actually placed in service before December 31st.

This "placed in service" stuff gets even more complicated if you lived in the property yourself before converting it to a rental. That was my situation and it created a whole different set of rules about basis calculation and depreciation start dates.

The conversion from personal residence to rental property adds another layer of complexity! When you convert your former home to rental property, the "placed in service" date is generally when you make it available for rent, not when you moved out. Here's what I learned from my own conversion: Your basis for depreciation becomes the LOWER of either the property's fair market value on the conversion date OR your adjusted basis (what you paid plus improvements minus any depreciation if it was ever rental before). This is different from a property you buy specifically for rental. For timing, if you moved out in February but are still doing renovations, your placed in service date would be when renovations are complete and you start actively marketing it for rent. The period between moving out and placing in service is considered a "conversion period" where expenses like mortgage interest and property taxes are treated differently - they're not rental expenses yet, but they're also not personal residence expenses anymore since you don't live there. Make sure to get a professional appraisal or at least a comparative market analysis (CMA) from a realtor showing the property's fair market value on your conversion date - you'll need this to establish your depreciable basis correctly!

I never even got a letter last year. Found out I needed to verify when I called about my delayed refund after waiting 6 weeks. The system is a mess.

Not sure if this is helpful, but I called the Taxpayer Advocate Service when I had issues with identity verification. They couldn't do the verification themselves, but they gave me direct instructions on what to do and it sped things up a lot.

Anybody know if FreeTaxUSA's 2023 software has improved their cryptocurrency reporting section? Last year it was pretty basic compared to other options and I ended up with a mess trying to report all my trades.

This is really helpful timing! I've been procrastinating on tax planning because I wasn't sure how to estimate everything with the changes in my situation this year. Having the 2023 software available early takes away that excuse. Quick question for anyone who's used FreeTaxUSA for planning before - how accurate have you found their withholding calculator? I'm trying to figure out if I need to adjust my W-4 for the last quarter of the year or if I'm on track. My income jumped significantly when I got promoted in July, so I'm worried I might be under-withholding now. Also wondering if their estimated tax payment calculator is reliable for next year's quarterly payments. Last year I just guessed and ended up owing a penalty, so definitely want to get this right!