Something that helped me understand this better was thinking about it like this: the simplified method on line 30 is basically the IRS saying "we know home offices have certain standard costs, so here's a flat rate that covers all the typical stuff." When you take that $5 per square foot deduction, you're essentially telling the IRS "I'm using your standard allowance for all my home office space costs" - which includes utilities, a portion of mortgage/rent, insurance, repairs, etc. That's why you can't then turn around and also claim those same types of expenses in Part 2. But here's what I found really important to track separately: any business expense that you'd have regardless of WHERE your office is located. Computer equipment, business software, office furniture, professional memberships, business insurance - these aren't "home office space" costs, they're just regular business expenses that happen to be used in your home office. The confusion often comes from thinking the simplified method means you can't deduct anything else business-related, but that's not true. It just means you can't double-dip on the costs of maintaining the physical space itself.

I went through this exact confusion when I first started my home-based consulting business! What really helped me was creating a simple mental checklist: **If I choose the simplified method (line 30), I CANNOT also claim:** - Any portion of mortgage interest for the office space - Property taxes allocated to the office - Utilities (electric, gas, water) for the office area - Home insurance allocated to the office - Repairs and maintenance for the office space **But I CAN still claim in Part 2:** - Office supplies and materials - Business equipment and software - Professional licenses and subscriptions - Business meals and travel - Marketing and advertising costs - Professional services (legal, accounting, etc.) The way I remember it: the simplified method covers the "housing" of my business, but not the actual business operations. It took me a couple years to get comfortable with this distinction, but once it clicked, filing became so much easier! One last tip: I always run the calculation both ways in a spreadsheet before deciding. Sometimes the math surprises you, especially if you have high utility costs or a larger office space.

I completed an OIC myself last year. Settled $48k for about $8k. Here's what helped me the most: 1. I used the Pre-Qualifier tool on the IRS website first to see if I even qualified 2. I called the Taxpayer Advocate Service (they're free!) for advice 3. I read the entire Form 656 instruction booklet twice before filling anything out 4. I included every possible piece of documentation upfront - bank statements, pay stubs, bills, etc. 5. I was 100% honest about everything - they will find out if you're not The hardest part was calculating an accurate offer amount. Don't lowball them - they have internal guidelines about what they'll accept based on your financial situation. And be patient! My process took 11 months from submission to acceptance.

Hannah, based on your situation, you're definitely a good candidate for an OIC. With $950/week income and that high car payment, plus no assets, you should qualify under "Doubt as to Collectibility." I'd strongly recommend starting with the IRS Pre-Qualifier tool that Isaac mentioned - it's free and gives you a good sense of whether it's worth pursuing. Given your financial constraints, doing it yourself is absolutely feasible if you're methodical about it. A few practical tips from someone who's been through this: 1. Download Form 656 and the instruction booklet NOW and read through it completely before starting. It's dense but explains exactly what the IRS is looking for. 2. For your car payment calculation - the IRS has transportation allowance standards by region. Your $800/month payment might exceed their allowable amount, so factor that into your offer calculation. 3. Start gathering ALL your financial documents now: bank statements (last 3-6 months), pay stubs, bills, loan statements, etc. The IRS wants complete financial transparency. 4. Consider the 20% down payment requirement - you'll need to pay 20% of your offer amount upfront with your application. The fact that you've already filed your missing returns shows good faith, which helps your case. Take your time with the paperwork - rushing it and getting rejected will set you back months.

When I filed my late 941s, I included a letter explaining the situation and requesting an installment plan at the same time. Got approved in about 6 weeks. Saved me from having to follow up separately after they processed everything. Just make sure you're super specific about how much you can pay monthly and WHY that's all you can afford right now. I included a simple cash flow statement showing my business income and expenses to justify my proposed payment amount.

Eva, I went through almost the exact same situation with my landscaping business last year. Here's what I learned that might help you: First, yes you can absolutely be proactive - don't wait for them to send you a bill. I submitted my installment agreement request (Form 9465) about 2 weeks after filing my late 941s, and it was approved before I even received any penalty notices. A few key things that helped me: - Calculate realistic monthly payments based on your actual cash flow, not just what would pay it off fastest - Include a brief explanation of why you fell behind (cash flow issues, learning curve as new business, etc.) - Make sure you have enough set aside for your current quarterly deposits - they WILL cancel your plan if you miss ongoing payments The IRS was actually more understanding than I expected. My plan got approved for 36 months at $850/month, which was manageable for my business. The key is being honest about your financials and showing you're committed to staying current going forward. One last tip: if you qualify, consider applying online through the IRS website - it's much faster than mailing forms. Good luck, and don't stress too much. This is more common than you think!

My family did something similar last year and we learned that whoever pays the expenses is generally who gets the tax benefits. So if your parents still pay the property taxes and mortgage, they can claim those deductions. But the ownership for other purposes is split between life tenant (parents) and remainderman (you). The tricky part comes with calculating the actual value of each interest. The IRS has specific tables for this based on your parents' ages. Its super weird because technically you own a "future interest" that has a specific calculable value right now.

This is a really common estate planning setup, and you're smart to get clarity on the tax implications now! From what you've described, your parents retain most of the tax benefits while they're alive since they have the life estate. Generally speaking, your parents would continue to pay and deduct the property taxes and mortgage interest since they're the ones living there and making those payments. The life estate gives them the right to exclusive use of the property, which typically comes with the responsibility (and tax benefits) of maintaining it. You technically own the "remainder interest" right now, but it won't become active ownership until after your parents pass away. The good news is that when that time comes, you should receive a stepped-up basis to the fair market value, which can save significantly on capital gains taxes if you ever sell. One thing to double-check - make sure your parents filed any required gift tax forms when they created this arrangement, since transferring the remainder interest to you could be considered a gift depending on the property's value and your parents' ages. The IRS has specific actuarial tables to calculate this. Worth having a tax professional review the documents to make sure everything was handled correctly from the start!

Has anyone dealt with filing a tax return for a 4-year-old? Like what tax software even allows this? I'm trying to help my sister with her kid's acting income and we're confused about the logistics.

Just wanted to add my experience as someone who went through this exact situation! My 5-year-old son earned about $35k from a recurring role on a kids' show last year, and I was initially panicked about the tax implications. The good news is that you can absolutely still claim her as a dependent - the income threshold that disqualifies dependents only applies to "qualifying relatives" (like adult children or other family members), not "qualifying children" under 19. Since she's your 4-year-old daughter living with you, she meets the qualifying child test regardless of her income. A few practical tips from our experience: 1. Keep detailed records of ALL her work-related expenses - acting classes, headshots, travel to sets, etc. Many of these can be deducted on her return. 2. The "kiddie tax" rules might apply to any unearned income she has (like interest from her earnings), but her acting income is earned income and taxed normally. 3. Make sure to set aside money for estimated taxes if she'll have similar earnings next year - child actors often don't have enough withheld. Also, definitely look into your state's Coogan Law requirements if applicable. We had to set up a blocked trust account for 15% of his earnings here in California. It's actually a good thing long-term since it ensures she'll have money saved for when she's older!