Question for anyone who's done this - does grouping require amending previous returns? I'm in a similar situation with a property LLC and operating business, and filed separately for the last two years.

This is exactly the kind of situation where activity grouping can be a game-changer! Since you have common ownership of both LLCs and clear operational interdependence (PropCo exists primarily to serve OpCo), you should have a strong case for grouping. The key thing to remember is that once you group these activities and you materially participate in the restaurant business, the entire grouped activity becomes non-passive. This means those $78,000 in historic rehabilitation credits would no longer be trapped as passive credits - you could use them against your restaurant income or even your wife's non-passive income. Make sure to document the business reasons for grouping (shared management, operational interdependence, common ownership) in your election statement. Given the substantial credits at stake, it might also be worth getting a second opinion from a tax professional who specializes in passive activity rules before making the election, just to ensure you're maximizing the benefit and meeting all requirements.

Guys I think everyones overthinking this. The $600 threshold is for BUSINESS payments. Unless your gf is running a business and you're paying her as a client, you're fine. Just mark everything as personal payments in cashapp. And keep basic records showing these are shared expenses just in case.

Based on my experience dealing with this exact situation, you should be fine as long as you're marking these as personal payments in CashApp. The $600 threshold is specifically for business transactions, not personal reimbursements between household members. I'd recommend keeping simple documentation though - maybe a shared spreadsheet showing what each payment was for (rent, utilities, groceries, etc.) and the amounts. This way if any questions ever come up, you have clear proof these are legitimate expense splits, not income. The direct bank transfer idea isn't necessary unless you prefer it for other reasons. Alternating who pays which bills could work too, but honestly seems like more hassle than just continuing what you're doing and marking payments correctly. The most important thing is that transaction categorization when you send the money.

Have you considered just partitioning your space? I had a similar issue and my accountant recommended physically dividing the room. I put up a small divider wall and now I have my "business only" area that meets the exclusive use test (about 60% of the room) and my personal area with a separate computer for non-business stuff. IRS Publication 587 doesn't actually require the space to be a separate room - just an "identifiable space." My accountant said this approach is compliant as long as you're very clear about which section is exclusively for business and can demonstrate that with photos and measurements.

I appreciate everyone's insights here! As someone who's dealt with this exact situation, I want to emphasize what several others have mentioned - the IRS really is strict about the "exclusive use" requirement. From what you've described, using your computer for personal activities like gaming, checking personal emails, and paying household bills would unfortunately disqualify the space from meeting the exclusive use test, even though the room itself is set up as a dedicated office. However, you still have some good options: 1. **Equipment deductions**: You can absolutely deduct the business percentage of your computer, internet, and other equipment costs. If you use your computer 80% for business, deduct 80% of those expenses. 2. **Physical partition**: As Benjamin mentioned, you could divide the room so part of it is exclusively for business. This requires clear physical separation and careful documentation. 3. **Separate personal activities**: Move all personal computer use to a different location in your home, keeping the office space truly exclusive. The audit stories shared here are sobering - the IRS does ask direct questions about how you use the space, and honesty is crucial. Don't let the strict rules discourage you from legitimate business deductions though. You just need to structure things correctly to stay compliant.

Your friend definitely needs to take responsibility here instead of blaming the broker. The 5500-EZ is a plan administrator duty, which for solo 401(k)s means the business owner (your friend) is responsible. Here's what your friend should do immediately: 1. Stop wasting time being angry at the broker 2. Determine exactly which years he missed filing (any year his plan assets exceeded $250k on Dec 31) 3. Use the IRS Delinquent Filer Voluntary Compliance Program (DFVCP) to self-report and get reduced penalties 4. File all missing 5500-EZ forms ASAP The voluntary compliance program can reduce penalties from $250/day (max $150k per form) down to as little as $750 per late form for solo plans. But this only works if he acts before the IRS discovers the missing filings. This is a pretty common mistake for people who don't realize the filing requirement kicks in automatically when assets hit the threshold. Better to fix it now than wait for IRS notices!

Your friend is completely off base blaming his broker. As a solo 401(k) owner, he IS the plan administrator and is 100% responsible for filing the 5500-EZ when his account balance exceeds $250k at year-end. This is basic retirement plan compliance - brokers manage investments, not tax filings. The fact that he's been avoiding this responsibility for multiple years makes it even worse. He needs to immediately use the IRS Delinquent Filer Voluntary Compliance Program to self-report before they catch him. The penalties can be astronomical - up to $250 per day per missed form, capped at $150k each. Tell your friend to stop playing the blame game and start taking action. Every day he delays makes this more expensive. The voluntary compliance program can reduce penalties to as little as $750 per late form, but only if he acts before the IRS finds the missing filings first.

Just to clarify something that might help others - there's actually been some changes to the Child Tax Credit over the years that can cause confusion. For 2024 tax year (filing in 2025), the credit is $2,000 per qualifying child under 17, with up to $1,700 being refundable through the Additional Child Tax Credit. The key point everyone's made is correct - no minimum income required for the Child Tax Credit itself. But if you have very low or no income, you'll mainly benefit from the refundable portion (up to $1,700 per child). The non-refundable portion can only offset actual tax liability. Make sure your children have valid Social Security Numbers (not ITINs) to qualify for the full credit. Also, with your income under $10,000, you should definitely file a return even if not required to - that's the only way to get the refundable portion back as a refund.

I want to add something that might help clarify the confusion you're experiencing. The Child Tax Credit has NO minimum income requirement - you can have $0 in income and still qualify. What you might be thinking of is the Earned Income Tax Credit (EITC), which does require earned income. However, here's the important part for your situation with under $10,000 income: while you can qualify for the Child Tax Credit, the benefit you actually receive depends on whether it's refundable or non-refundable. For 2024 (filing in 2025), up to $1,700 per child is refundable through the Additional Child Tax Credit - meaning you can get this as a refund even with no tax liability. The key requirements for your kids (ages 4 and 7) are that they: - Have valid Social Security Numbers (not ITINs) - Lived with you for more than half the year - Are under 17 at the end of the tax year - You provided more than half their support You should definitely file a return to claim this credit, even if your income is below the filing threshold. With two qualifying children, you could potentially get up to $3,400 back as a refund ($1,700 × 2) regardless of your low income level.