Something nobody has mentioned yet - if your income is below certain thresholds, you might qualify for QBI even without meeting the safe harbor! For 2025 filing, the phase-out begins at $182,100 for single filers or $364,200 for married filing jointly. Below those thresholds, the IRS tends to be less stringent about the exact nature of the "trade or business" requirement for rental properties. My CPA advised that with good documentation and business-like treatment of the property (separate accounts, proper record-keeping), a single rental property has a strong case for QBI qualification if you're under those income limits.

Based on your situation, you have a decent chance of qualifying for the QBI deduction, especially since your rental income appears to be well below the income thresholds mentioned by Giovanni. Here are a few key points for your specific case: 1. **Documentation is crucial**: Start requesting detailed activity logs from your property management company. Even if they don't currently track hours, most can provide estimates for time spent on tenant placement, maintenance coordination, inspections, etc. 2. **Business treatment matters**: Since you're using a professional management company and treating this as a business operation, you're already on the right track. Make sure you have separate bank accounts and maintain good records. 3. **Don't overlook your own time**: While the management company handles day-to-day operations, any time you spend reviewing their reports, making decisions about repairs, researching the rental market, or meeting with your accountant about the property can count toward qualifying activities. 4. **Consider the facts and circumstances test**: Even if you can't document 250 hours, your situation (professional management, business bank accounts, profit motive) suggests you're operating a trade or business rather than just holding an investment property. Given that you're earning $2,350/month in rent, the QBI deduction could save you several hundred to over a thousand dollars depending on your tax bracket. Definitely worth pursuing with proper documentation!

I'm dealing with the exact same situation right now! Filed through TurboTax about 2 weeks ago, WMR tool shows it was deposited Tuesday but my Chase account is still empty. Called my bank and they confirmed nothing was received on their end. It's so frustrating when the IRS system says one thing but reality is completely different. I'm going to wait until early next week like others suggested before calling the IRS directly. Really hoping it just shows up randomly like some people mentioned. Keep us updated on what happens with yours!

This is such a common issue during tax season! I went through the exact same thing last year with TaxSlayer. The "Where's My Refund" tool said my deposit was sent on a Wednesday, but it didn't actually hit my account until the following Tuesday - 6 days later. I called my bank multiple times and they kept saying they hadn't received anything, which made me panic. Turns out the IRS marks refunds as "sent" when they're just approved for processing, not when they're actually transmitted to your bank. The ACH system can take several more business days after that. Since you're only at Thursday and it showed as deposited Monday, I'd definitely give it until early next week before getting too worried. The timing sounds totally normal based on my experience. Hang in there!

Another option worth considering is to live in the property for 2 out of 5 years before selling. That way you can exclude a big chunk of gains ($250k single/$500k married) through the primary residence exclusion. You'll still owe the depreciation recapture, but potentially no capital gains taxes. This strategy works better for smaller properties that you don't mind living in for a while.

You guys are overlooking something important - when you pass away, your heirs get a stepped-up basis to fair market value, and all that deferred depreciation recapture disappears! If you're planning to keep properties for your lifetime, this is the ultimate tax strategy. My parents did this with several rental properties and avoided hundreds of thousands in recapture and capital gains taxes.

The key thing everyone's missing here is that the IRS doesn't actually prohibit deducting luxury vehicles - they just limit HOW MUCH you can deduct through depreciation caps. I've seen this work successfully for clients in industries where image matters (luxury real estate, high-end consulting, wealth management). The Ferrari becomes part of your professional brand and client experience. But here's what you absolutely MUST do: 1. Keep a detailed mileage log for EVERY trip (business apps like MileIQ make this easier) 2. Document the business purpose for each trip 3. Keep receipts for all vehicle expenses 4. Consider having it titled under your business entity 5. Be prepared to justify the business necessity if audited The luxury auto limits mean you're looking at roughly $19K max deduction in year one regardless of the car's actual cost. So from a pure tax perspective, you're not getting the full benefit anyway. Bottom line: It's legal if done correctly, but make sure the business benefit justifies the audit risk and limited deduction amount.

As someone who's been through multiple IRS audits, I want to add a practical perspective here. Yes, you CAN deduct a Ferrari for legitimate business use, but let me tell you what actually happens when you do. First, that return is getting flagged. Period. High-value vehicle deductions on business returns get extra attention, especially if your other business expenses seem modest in comparison. Second, be prepared to prove EVERYTHING. I had a client who bought a Porsche for his financial advisory practice (legitimately used for client meetings). During audit, the IRS wanted: - Complete mileage logs for 2 full years - Proof of business meetings for every logged trip - Client testimonials about how the vehicle enhanced business relationships - Evidence that he had a separate personal vehicle - Documentation showing the business necessity vs. alternatives The audit took 18 months and cost more in professional fees than the tax savings. He kept the deduction, but barely broke even after legal costs. My advice? If you're going to do this, treat it like you're already being audited from day one. Document everything obsessively, and make sure the business benefit genuinely justifies both the limited tax savings and the inevitable scrutiny. Sometimes the best tax strategy is the one that doesn't paint a target on your back.

Quick question about all this - I'm just a dog walker who files Schedule C. My tax software is showing an option for "paying myself" - should I just ignore that completely and stick to owner draws?

This situation is unfortunately more common than it should be. I've seen several cases where tax preparers set up sole proprietors with payroll systems, often because they're using generic business software that assumes corporate structures. The $275 fee is definitely a red flag - proper business tax preparation requires understanding entity structures, and competent preparers charge appropriately for that expertise. Your instincts are absolutely correct here. Beyond the immediate tax issues others have mentioned, there's also a compliance nightmare brewing. If your client is running payroll, they're likely supposed to be filing quarterly 941 forms, making federal tax deposits, potentially dealing with state payroll requirements, etc. All of this creates unnecessary administrative burden and potential penalties for a structure that shouldn't exist. I'd strongly recommend your client consult with a qualified tax professional (CPA or EA) to clean this up. They'll need to decide whether to amend previous returns or just correct going forward, depending on the amounts involved and audit risk tolerance. The sooner this gets fixed, the better - especially before any IRS correspondence arrives. Your recommendation about either taking proper draws or electing S-Corp status is spot-on. The client needs to pick a lane and do it correctly.