Has anyone else noticed that the QBI thing is kinda confusing on purpose? like the gov doesn't want small business owners to get the full deduction? i did my taxes with three different software programs last year and got three different QBI numbers. ended up paying an accountant who found even more deductions the software missed.

This is exactly why I keep detailed records of everything throughout the year now! After getting burned by incorrect QBI calculations my first year with 1099 income, I learned to track not just my business expenses but also to save screenshots of how different tax software calculates things. For what it's worth, I've found that the IRS Publication 535 (Business Expenses) and Publication 334 (Tax Guide for Small Business) are really helpful for understanding the QBI deduction rules straight from the source. Sometimes the tax software explanations are oversimplified and miss important details like the self-employment tax adjustment. Also, if you're planning to have 1099 income again next year, consider making quarterly estimated tax payments. It's another complicated thing to figure out, but it beats getting hit with a huge tax bill and underpayment penalties at the end of the year!

I went through something very similar when my mother passed two years ago. She had 6 years of unfiled returns, and I was completely overwhelmed as the executor. Here's what I learned that might help: First, definitely get those IRS transcripts - they're your lifeline. But also check with your state's revenue department if your dad lived in a state with income tax. Some states maintain their own records that can fill in gaps. One thing that saved me time and stress was creating a simple spreadsheet for each tax year with columns for different income sources (W-2, 1099-MISC, 1099-NEC, etc.). As you go through the transcripts, you can categorize everything clearly. This made the actual filing much more manageable. Also, don't forget about potential deductions he might have been eligible for - standard deduction, any medical expenses if he was older, etc. Sometimes even with unfiled years, the person might actually be due refunds rather than owing money. The whole process took me about 3 months start to finish, but most of that was waiting for transcripts and correspondence with the IRS. The actual filing once I had everything organized was much faster than I expected.

I'm dealing with a similar situation right now with my grandmother's estate. One thing I'd add to all the great advice here is to check if your dad had any retirement accounts (401k, IRA, etc.) that might have had required minimum distributions (RMDs) that weren't taken. If he was over 73, there could be additional tax implications from missed RMDs that go beyond just unfiled income tax returns. Also, when you're gathering documents, don't overlook potential income from sources like Social Security (which might not be fully taxable depending on other income), veteran benefits, or even small amounts from old savings accounts that generated interest. The transcripts will show most of this, but sometimes there are state-specific items that only show up on state records. One last tip - if you find that some years show he actually overpaid taxes or was due refunds, you can still claim those refunds as the executor, but only if you file within 3 years of the original due date. So for older years, any potential refunds might be lost, but it's still worth checking since it could help offset any taxes owed from other years.

The IRS community wisdom on this is pretty consistent - when a refund pays off a payment plan, you'll get what's left over but it takes time. Last year my brother had this exact scenario. He had about $3,200 in his refund, owed $1,800 on a payment plan, and was expecting $1,400 back. It took almost exactly 3 weeks after the offset for the remaining refund to process. The IRS systems handle these in batches, so patience is unfortunately the name of the game here.

Just went through this exact situation in January! My 2024 refund wiped out my remaining 2022 balance, and I was left wondering where my extra money went. The key thing I learned is that the IRS processes offsets and remaining refunds as completely separate transactions. Your payment plan is automatically terminated once the offset happens - no more monthly payments needed. I checked my transcript obsessively for about 10 days before the 846 code finally appeared. The remaining refund showed up about 5 business days after that code posted. Pro tip: don't panic if you don't see movement for 2-3 weeks - their system really does work through these methodically, just not on our timeline!

Small business accountant here - here's a quick clarification that might help: COGS must always be reported separately from other business expenses, even when tiny. The tax consequences can be very different. If you report low/no COGS with significant sales, it's not automatically a red flag IF your business model logically explains the high profit margins. Many legitimate businesses have minimal COGS (digital products, certain services with product components, etc.

I'm in a very similar situation with my small online business! After reading through all these responses, I'm definitely going to start tracking my COGS properly even though the amounts are small. One thing I learned from experience - even if you think your costs are "too small to matter," the IRS really does expect to see COGS reported correctly on Schedule C. I made the mistake of lumping everything into regular business expenses my first year and got a notice asking for clarification. For anyone dealing with minimal documentation like yard sale purchases, I've found that keeping a simple log on my phone works great. I just note the date, general description ("misc household items from garage sale"), and total amount spent. It doesn't have to be perfect, but having something is way better than nothing if questions come up later. Thanks everyone for sharing your experiences - this thread has been super helpful for understanding how to handle this properly!

Bit late to the discussion but wanted to add that we have a similar partnership structure for our rentals. We confirmed with our CPA that tools under the de minimis safe harbor threshold ($2,500 per invoice for most taxpayers) can be expensed immediately rather than capitalized, even for partnerships.

Great discussion here! I want to emphasize something that might get overlooked - the distinction between repairs and improvements is crucial for Form 8825 reporting. When your partners are doing work themselves, you need to carefully categorize what they're doing. Replacing sheetrock in vacant units and fixing plumbing issues are typically repairs (deductible immediately), but if they're substantially improving the properties beyond their original condition, those costs might need to be capitalized as improvements and depreciated. Also, regarding the Airbnb units versus long-term rentals - make sure you're consistent in treating both as rental real estate activities on Form 8825. The IRS generally considers short-term rentals like Airbnb as rental real estate rather than ordinary business income, especially when the average rental period is 7 days or less and the owner doesn't provide substantial services. Keep detailed records of what work is being performed and the materials used for each property. This will be essential if you ever face an audit or need to justify the repair vs. improvement classification.