I know this is different from the main QBID discussion, but has anyone had success with the 20% pass-through deduction for rental income when the properties are held in a trust? My family has 5 rental properties in our family trust and I'm trying to figure out if the same rules apply.

The confusion around QBID for rental income is totally understandable - I went through the same thing when I first learned about the 250-hour requirement. What really helped me was realizing that the safe harbor is just ONE path to qualification, not the only path. Here's what I've learned from my own experience with 4 rental properties: even though I don't hit 250 hours, I was still able to claim QBID by demonstrating that my rental activities constitute a legitimate trade or business. The key is showing regular, continuous activity with a profit motive. Some activities that count toward "business-like" operations that many landlords forget to document: - Time spent analyzing local rental markets and adjusting rents - Researching and vetting potential tenants - Regular property inspections (even if brief) - Coordinating with contractors and getting repair quotes - Managing property finances and reviewing performance - Planning capital improvements or property upgrades I started keeping a simple log of these activities, and while I'm nowhere near 250 hours, having documentation of consistent business involvement gave me confidence to claim the deduction. The IRS has been pretty reasonable in recognizing that most small landlords operate legitimate businesses even without massive time commitments. My advice: start documenting everything now, even small tasks. It adds up and paints a picture of genuine business activity.

I'm in almost the exact same situation and it's driving me absolutely crazy! Filed in late January, got accepted immediately, and have been stuck with that dreaded 570 code for about 3 weeks now. Processing date of 4/2/24 and expecting around $6,400 with EIC and CTC. The complete lack of communication from the IRS is honestly the most frustrating part. I've been checking my transcript every Friday morning like clockwork, hoping to see literally ANY change - maybe a 971 code, a 571, anything that would give me a clue about what's happening. But nope, just that same 570 code sitting there taunting me week after week. Reading through everyone's experiences here has been both comforting and terrifying. Comforting because it's clear this isn't just happening to me - there's obviously some kind of systematic review going on this year, especially for returns with EIC and CTC. But terrifying because some people are waiting 6-8 weeks with no resolution! The timeline that @Chloe Harris shared earlier gives me some hope that things will eventually move, even if it takes way longer than expected. I'm trying to be patient and wait until my processing date passes before attempting to call, but honestly those services like Claimyr and taxr.ai that people mentioned are looking more tempting each day. We really shouldn't have to pay extra just to get basic information about what's happening with our own money, but at this point I'm so desperate for answers that I might cave. Stay strong everyone - hopefully we'll all start seeing some movement soon! 🤞

I'm dealing with the exact same frustrating situation! Filed in early February and have been stuck with a 570 code for about 3 weeks now, processing date of 4/12/24. Also expecting a large refund with EIC and CTC (around $6,200). This thread has been incredibly helpful - I was starting to panic thinking something was seriously wrong with my return, but seeing so many others going through the identical experience is oddly reassuring. It's clear the IRS is doing some kind of systematic review this year, especially for returns claiming these credits. The complete lack of communication is absolutely maddening though. I've been doing the Friday morning transcript check like everyone else, but it's just that same 570 code staring back at me every week. No 971, no letters, nothing. From all the timelines people have shared, it seems like 4-8 weeks is becoming the new normal, which is just insane. I'm trying to hold out until my processing date passes before calling, but honestly those services like taxr.ai and Claimyr that people mentioned are looking more tempting each day when the anxiety gets overwhelming. Stay strong everyone - we'll get through this bureaucratic nightmare eventually! At least we know we're not alone in this mess. 🤞

I want to add my voice to this incredibly helpful discussion! As a newcomer to this community, I'm amazed at how much practical guidance is available here that I couldn't find anywhere else. I'm currently caring for my adult daughter who has cerebral palsy and receive Medicaid waiver payments through our state's HCBS program. Like so many others here, I've been reporting these payments as self-employment income on Schedule C for the past four years, paying SE tax on approximately $19,500 annually. Reading through everyone's experiences with IRS Notice 2014-7 has been eye-opening. I had no idea these payments could be excluded from income! My tax software (FreeTaxUSA) has never flagged this as an option, and my previous tax preparer never mentioned it either. I'm definitely going to pursue excluding these payments going forward and filing amended returns for prior years. Based on what others have shared, it sounds like I could potentially recover around $3,000-4,000 in overpaid self-employment taxes. My biggest question is about the transition year - if I've been filing Schedule C for years and suddenly stop, should I include any kind of explanation with my return about why there's no longer any self-employment income being reported? I want to avoid triggering any red flags with such a dramatic change in my tax situation. Also, has anyone dealt with this situation if you previously claimed business expenses related to caregiving on Schedule C? I've been deducting things like medical supplies and equipment - wondering how that gets handled once these payments are excluded rather than treated as business income. Thank you all for creating such a supportive and informative community. This discussion has potentially saved me thousands of dollars!

This discussion has been incredibly enlightening! I'm new to this community and facing the exact same situation - I've been caring for my elderly father with Alzheimer's and receiving Medicaid waiver payments that I've been incorrectly reporting on Schedule C for the past three years. Reading through everyone's experiences with IRS Notice 2014-7 gives me hope that I can finally get this sorted out correctly. I've been paying self-employment tax on about $21,000 annually, so the potential savings from amended returns could be substantial. What I find most frustrating is how hidden this information seems to be. I've used TurboTax for years and it has never suggested this option, despite clearly entering Medicaid waiver payments. It's only through community discussions like this that caregivers seem to discover Notice 2014-7 exists. I'm planning to exclude the payments going forward and file amended returns for 2021-2023. Based on the experiences shared here, I feel confident about the process now. I'll make sure to keep thorough documentation of our state's HCBS waiver program and include a clear explanation statement with my returns. Thank you to everyone who has shared their real-world experiences. This kind of peer knowledge is invaluable for navigating these complex tax situations that seem to affect so many family caregivers. It's amazing how much we can help each other by sharing what we've learned!

This thread has been absolutely incredible for someone like me who's been paralyzed by decision-making about my craft business structure! I make handmade greeting cards and have been putting off everything because I couldn't figure out the tax implications. The unanimous advice to start as self-employed really takes the pressure off. I was overthinking the LLC question when I haven't even made my first sale yet! The breakdown of actual numbers (@Abigail Patel's $918 SE tax on $6k profit example) makes this feel so much more manageable than the vague anxiety I had about "owing taxes." A few takeaways that really clicked for me: - Start simple with self-employed status - Separate business bank account is non-negotiable - Save 25-30% of profits for taxes (going with 30% for safety) - Mobile payment fees are fully deductible - Focus on good record-keeping from day one The pricing strategy discussion was eye-opening too. I was planning to just absorb those processing fees, but building them into my pricing from the start makes so much more sense. One question I still have - for those doing both online sales (Etsy) and craft fairs, how do you handle inventory tracking across both channels? I'm worried about accidentally overselling items that I have listed online but bring to shows, or vice versa. Thank you everyone for sharing real experiences instead of just theory - this is exactly what us newbies need to hear!

As someone who just went through this exact same decision with my small woodworking side business, I can definitely relate to the tax anxiety! After reading through all these responses, I think the consensus is spot on - start as self-employed for a business your size. I was making similar revenue ($7k last year) and the simplicity of Schedule C made tax season way less stressful than I expected. One thing I wish I'd known earlier: those mobile card reader fees aren't just deductible - they're significant! I tracked mine last year and it was over $200 in processing fees that I was able to write off. Every little bit helps when you're starting out. The separate business bank account advice is golden too. I resisted it at first thinking it was overkill for a "hobby business," but it made tracking expenses and income so much cleaner. When tax time came, I just printed my business bank statements and had 90% of what I needed right there. Also echoing what others said about the 25-30% savings rule - I went with 30% and ended up with a nice buffer that I used to invest in better tools for this year. Much better than scrambling to find tax money in April! Your craft business sounds exciting - that first craft fair is going to be such a rush! Focus on making great products and building your customer base. The tax stuff really isn't as scary as it seems once you get organized.

8 I'm wondering about the lifetime gift exemption - does anybody know if that's going to change in the next few years? I heard it might go down significantly after 2026...

As someone who's been through similar tax situations, I'd recommend documenting everything clearly from the start. Keep records showing the gift amount, date, and recipient - even a simple written note stating "Gift to [friend's name] for Christmas 2025" can be helpful. One thing to consider: if your friend is in serious financial trouble, make sure this gift won't affect any government benefits he might be receiving. Some assistance programs have asset limits that could be impacted by receiving a large gift, even though it's not taxable income to him. Also, since you mentioned having both W-2 and business income, this might be a good time to review your overall tax strategy. The gift itself won't be deductible, but there might be other legitimate business deductions you're missing that could help offset the financial impact of helping your friend out.