Has anyone actually had the IRS question or audit them specifically about capital losses? I'm carrying forward about $22k in losses from some terrible crypto investments and wondering how careful I need to be with documentation.

Just wanted to add some perspective as someone who's been through this exact situation. I had about $15k in capital losses from some poor investment choices early in my career when I was making very little money. Like you, I wished I could save them for when my income was higher. The reality is that even though you have to take the $3,000 deduction each year, it's still beneficial in low income years. That $3,000 deduction might only save you a few hundred dollars now, but it's guaranteed tax savings versus hoping your future income will be higher. Plus, there's always the risk that tax laws could change in the future. One thing that helped me was tracking exactly how much I was saving each year from the capital loss deduction. Even in my lowest earning years, that $3,000 deduction was putting real money back in my pocket that I could invest or save. Over the 5 years it took to use up my losses, the total benefit was substantial. Keep good records of your carryforward amounts each year - it makes tax filing much easier and you'll want that documentation if the IRS ever has questions.

Just an FYI - make sure you're keeping detailed records of how much you use the trailer for business vs personal use. The IRS has been cracking down on this lately. I keep a logbook in my trailer and note every use, the purpose, and mileage. Has saved me a couple times when questions came up. Also, take plenty of photos of the trailer being used for business purposes throughout the year. Documentation is your best friend if you ever get audited!

Great question about the trailer depreciation! I'm also a small business owner and dealt with similar equipment purchases. One thing I'd add to the excellent advice already given - make sure to consider the timing of when you place the trailer "in service" for your business. The IRS requires that you actually start using the asset for business purposes before you can claim any depreciation. So if you bought it in December 2024 but didn't start using it for landscaping jobs until January 2025, you'd need to wait until your 2025 tax return to start claiming the depreciation. Also, since you mentioned this is your first major equipment purchase, you might want to look into whether you qualify for the small business exemption from certain record-keeping requirements. If your business gross receipts are under $27 million (which sounds likely for a landscaping operation), you have some flexibility in how you account for these purchases. The 60% bonus depreciation for 2024 that Aisha mentioned is spot-on, but don't forget you can also elect out of bonus depreciation if regular MACRS gives you better tax planning benefits spread over multiple years.

Has anyone had trouble with tax software calculating the carryforward correctly? I use TurboTax and I'm not sure it's tracking my charitable carryovers from previous years.

One thing that hasn't been mentioned yet is that you need to keep really good records of your carryforward amounts. The IRS doesn't track this for you - it's entirely on you to calculate and document the carryover each year. I recommend creating a simple table showing: (1) your original excess contribution from 2022, (2) how much you've used in each subsequent year, and (3) how much remains available. This becomes especially important if you have carryovers from multiple years overlapping. Also, make sure you understand the order of deduction - you always deduct current year contributions first, then apply carryovers from the oldest year forward. So if you have carryovers from both 2022 and 2023, you'd use the 2022 carryover before touching the 2023 carryover.

Just went through this exact thing with my mom's estate. Make sure you carefully check if there are any deductions listed on the K-1 too (like in box 13). Those can offset some of the income and reduce what you owe. My K-1 had both income AND deductions for estate administration costs.

This is really helpful information everyone! I'm dealing with a similar situation but mine involves a trust K-1 from my grandfather's estate. The trust has been ongoing for a few years now, and I've been getting K-1s annually. What's confusing me is that this year's K-1 shows some different types of income than previous years - there's rental income in box 2 and some capital gains in box 9a that weren't there before. I'm assuming this means the trust sold some property or investments during 2023? My question is: do I treat these different income types the same way as the interest income mentioned above, where they all go on my 2023 return even though I'm just receiving the K-1 now? And do rental income and capital gains from a trust get reported differently than regular investment income on my personal return? Thanks for all the detailed explanations - this thread has been more helpful than anything I found on the IRS website!

You might want to look into retirement contributions. As self-employed, you could potentially open a SEP IRA or Solo 401(k) and make contributions that would reduce your taxable income. I'm careful about recommending tax strategies, but this one helped me reduce my tax burden significantly while also saving for retirement. Just make sure you understand the contribution limits based on your income.

The $1,100 difference you're seeing is likely primarily due to your oldest child aging out of the full Child Tax Credit. When they turned 17 in September 2023, they no longer qualified for the $2,000 Child Tax Credit but may still qualify for the $500 Credit for Other Dependents - that's a $1,500 reduction right there. A few things to double-check as a self-employed parent: • Make sure you're claiming the deduction for half of your self-employment tax (the employer portion) • Verify you're taking the QBI deduction (Section 199A) if eligible - up to 20% of qualified business income • Consider if you made any retirement contributions (SEP-IRA, Solo 401k) that could reduce taxable income • Check if your 17-year-old had any education expenses that might qualify for education credits The age cutoff is unfortunately a cliff rather than a gradual phase-out, which creates these jarring year-over-year differences for parents. At least you'll be prepared for similar impacts when your younger child reaches 17!