Just wanted to add one important thing about home office deductions that hasn't been mentioned yet. If you're taking depreciation on home improvements for the business portion of your home, you need to be aware of the impact when you sell your house! The IRS will expect you to "recapture" that depreciation, meaning you'll pay taxes on it when you sell. It's called depreciation recapture and it's taxed at 25%.

Has anyone used TurboTax to handle home office depreciation for improvements? I'm in a similar situation with my graphic design business and I'm wondering if the software walks you through it correctly or if I should just hire a CPA this year.

Something to consider: the EITC has different income thresholds based on filing status and number of qualifying children. For 2025, with one qualifying child, EITC begins to phase out around $46,500 for single/head of household. If your sister's income is right at one of these thresholds, small changes in AGI can have a big impact on the credit amount. This might explain why you're seeing significant changes in the EITC calculation when making adjustments. Most tax software will let you try different scenarios to see what gives the best outcome. Just make sure whatever you submit is truthful - the difference between optimizing your return and misrepresenting information is a critical line you don't want to cross.

As someone who's dealt with EITC calculations for family members, I can confirm what others have said - you're absolutely allowed to choose not to claim deductions you're eligible for. The IRS doesn't require you to take every possible deduction. However, I'd strongly recommend double-checking which specific deductions are actually affecting your sister's EITC. True itemized deductions (medical expenses over 7.5% of AGI, charitable donations, etc.) shouldn't impact EITC at all since they don't change her Adjusted Gross Income. If you're seeing the EITC decrease when adding these deductions in TurboTax, there might be something else going on - perhaps some expenses are being categorized differently than you think, or there could be an interaction with other credits or calculations. Before making any decisions about skipping deductions, I'd suggest running through the calculations manually or getting a second opinion to make sure you understand exactly what's causing the EITC to change. You want to make sure you're making an informed choice rather than missing out on legitimate tax benefits due to a software quirk or misunderstanding.

One more thing - if you're doing delivery driving, don't forget about quarterly estimated tax payments for 2025! Since you have self-employment income, you should be making quarterly payments to avoid penalties. I learned this the hard way my first year.

Just wanted to add that you should also consider keeping a business diary or log to document your profit motive and business activities. This can be really helpful if you ever face an audit, especially with the hobby loss rules everyone's mentioned. For your real estate work, document things like: time spent researching properties, networking events, continuing education, marketing efforts, client meetings, etc. For delivery driving, track peak hours worked, strategies to maximize earnings, vehicle maintenance schedules, etc. The IRS looks at factors like whether you operate in a businesslike manner, your expertise in the area, time and effort spent, expectation of asset appreciation, and your success in other activities. A simple log showing you're actively trying to improve profitability and treat these as real businesses (not hobbies) can go a long way. Also, since this is your first year with Schedule C, consider having a tax professional review your return before filing. The peace of mind might be worth the cost, especially given your concerns about audit risk.

Watch out for state estimated taxes too!!! Everyone's talking about federal, but depending on your state, you might need to make a state estimated payment as well. I forgot this last year when I started my side business in November and got hit with a state underpayment penalty even though I was fine on the federal side.

Just wanted to add another perspective as someone who went through this exact situation two years ago with a graduate research assistantship that started in November. One thing that really helped me was documenting everything about the timing and nature of my income for when I filed my taxes. I kept records showing that the fellowship was unavailable to me until December (had the offer letter with start date), my previous quarters' minimal income from part-time work, and calculated what my "annualized income" would have been if I tried to project the December amount across the whole year (which would have been wildly inaccurate). When I filed my return, I used Form 2210 and was able to show the IRS that requiring estimated payments based on projected annual income from a single month would have been unreasonable. The annualized income installment method completely eliminated any underpayment penalty. The key is being able to demonstrate that your income pattern was genuinely unpredictable and that making estimated payments earlier in the year based on your actual income at that time wouldn't have captured this December windfall. Keep good records and you should be fine!

Has anyone had success requesting an abatement for these late filing penalties? I paid mine through EFTPS using the advice here, but I had a legitimate reason for filing late (partnership docs came from my partner super late) and I've been perfect with my filings for the past 10 years.

I just went through this exact same process last month for my LLC's late filing penalty! You're definitely on the right track with selecting "Balance due on return or notice" - that's the correct option for penalty payments. The warning message about the tax period being out of the usual range is completely normal when you're paying an older penalty. Don't let it scare you - just click "Continue" and proceed with the payment. The system shows this warning for any tax year that's not the current or immediately previous year. A few tips from my experience: - Make sure you're logged into EFTPS with your LLC's EIN, not your personal SSN - In the reference field, enter something like "Form 1065 Late Filing Penalty 2019" to make it crystal clear what the payment is for - Print or save the confirmation page - you'll want that reference number - The payment typically processes within 1-2 business days The $2,600 amount sounds about right for a multi-year late filing penalty. Once you submit the payment, you can check your account transcript online in about a week to confirm it was applied correctly to your penalty balance.