The Kill-A-Watt meter approach mentioned by @GalacticGladiator is brilliant and probably the most cost-effective solution! I'm definitely going to try this. One thing I'm still wondering about though - for those tracking business vs personal miles, what's the best way to handle trips that are mixed purpose? Like if I drive to a client meeting but also stop at the grocery store on the way back, how do you allocate that? Do you just count the miles to/from the client and ignore the grocery store detour, or is there a more precise way to handle it? Also, @Mateo Rodriguez, your point about being locked into actual expenses vs standard mileage is really important. I hadn't realized that choice in the first year was permanent. Given that my EV is relatively new and expensive, I'm thinking actual expenses might be better initially, but I should probably run the numbers with my accountant to be sure.

This has been such a helpful discussion! I'm dealing with the same situation and the Kill-A-Watt meter solution seems perfect for my needs. Just ordered one on Amazon. One additional consideration I haven't seen mentioned - make sure to check if your state offers any EV tax incentives that might affect your deduction calculations. Some states have rebates or tax credits for EV purchases or charging equipment that could impact how you handle the business expense portion. Also, for anyone using apps to track mileage, I've found that setting up automatic triggers (like when you arrive at certain business locations) makes it much easier to maintain consistent records without having to remember to log every trip manually. The point about being locked into actual expenses vs standard mileage in the first year is crucial - definitely something to discuss with your tax preparer before making that decision!

As someone who used to audit small businesses for a major accounting firm, I'd strongly recommend against trying to justify your kitchen remodel as a business expense. The IRS specifically looks for this kind of thing with home-based businesses, especially S-Corps. If you're audited, they'll almost certainly classify it as a distribution or compensation to you, possibly with penalties. The cleanest approach is to have your accountant reclassify the expenses as either: 1) Shareholder distributions (if you have enough basis) 2) A loan to you from the company (with proper documentation) 3) Additional compensation (which means payroll taxes) Whatever you do, don't try to create a business justification after the fact. That rarely works and often makes the situation worse.

I'm dealing with a similar situation right now with my home-based consulting business. Made the mistake of putting some personal home improvements on the business card and now trying to sort it out before tax season. From what I've learned talking to my CPA, the key thing with S-Corps is that the IRS is really strict about separating business and personal expenses. Even if you use part of your home for business, a full kitchen remodel is going to be hard to justify as a business expense unless you can prove it's primarily used for business purposes (like if you regularly host client meetings there). Your accountant is probably going to recommend either treating it as a distribution to you as the owner, or setting up a formal loan agreement where you pay the business back over time. The loan route might be better if you don't have enough basis in the S-Corp to take an $11k distribution without tax consequences. Whatever you do, make sure you get proper documentation in place. The IRS tends to scrutinize home-based S-Corps more closely, so having everything properly categorized and documented is crucial.

Just a practical perspective - I tried something similar in my 3-member LLC a few years back. We took out a business line of credit and distributed some to partners when we were having a down year. We didn't get audited, but our accountant had to do some complex basis adjustments. The distributions reduced our basis, and when the business became profitable again, we had to restore that basis before taking tax-free distributions. Also worth noting - if your business stays unprofitable for too long while you're taking distributions, you might run into the "hobby loss" rules where the IRS decides your business isn't really a business if it never makes money!

I appreciate everyone sharing their experiences and insights here. As someone who's dealt with similar partnership tax issues, I wanted to add a few practical considerations that might help. The strategy you're describing reminds me of what tax professionals call "basis shifting" - trying to manipulate the timing of income and distributions to minimize taxes. While not inherently illegal, it's definitely in the gray area that attracts IRS scrutiny. One thing I learned the hard way is that partnership taxation is incredibly complex, and seemingly small details can have major consequences. For example, if your LLC has debt, that debt increases your basis (which is good for taking distributions), but only if you're personally liable for it. Non-recourse debt has different rules. Also consider the long-term implications. Even if this strategy works in the short term, you'll eventually need to repay the loan with after-tax dollars. Plus, if your business becomes profitable again, you might face higher taxes later when your basis is depleted from the distributions. My advice? Document everything thoroughly if you decide to proceed, and make sure you have legitimate business reasons for both the loan and the expenses. The IRS is much more forgiving of strategies that serve actual business purposes beyond tax minimization. Have you considered alternatives like adjusting your profit-sharing percentages or exploring guaranteed payments to partners? Sometimes simpler approaches are less risky.

Has anyone dealt with the Child Tax Credit in this situation? I heard it was increased for 2025... will both parents get the full amount if they each claim one kid?

This is a really helpful thread! Just wanted to add one more thing that might be useful - make sure your son and his girlfriend both keep good records of which expenses they're paying for each child. Things like medical bills, daycare costs, school supplies, etc. If they're each claiming one child, the IRS could potentially ask for proof that they're actually providing more than half the support for their respective claimed child. Also, they should probably sit down together and formally decide who claims which child going forward, rather than just assuming. Having it in writing (even just a simple agreement between them) can help avoid confusion later and shows they're being intentional about following the rules rather than just randomly splitting the kids.

Has anyone used TurboTax for reporting income without a 1099? I'm in a similar situation and wondering if it's straightforward through their interface or if there are specific sections I should look for.

Just wanted to add my experience as someone who went through this exact situation last year. I had about $800 in Venmo payments from tutoring services, all through my personal account and marked as friends & family to avoid fees. No 1099-K from Venmo obviously. I reported it all as self-employment income on Schedule C and kept screenshots of all my Venmo transactions as documentation. The IRS accepted my return without any issues. The key thing I learned is that having that electronic trail from Venmo is actually better documentation than cash payments would be - you have dates, amounts, and even the person's name who paid you. One tip: make sure you also track any related expenses (gas for travel, supplies, etc.) since those can be deducted against the income. Even small amounts add up and can reduce your tax liability. Better to be completely above board from the start!