Honestly the most straightforward way to handle this is to file your own taxes separately from your dad. You can tell him you want to learn financial independence without sharing the details. Use something like FreeTaxUSA which handles self-employment pretty well and is actually free (unlike some "free" services that charge for Schedule C). Just make sure to set aside about 25-30% of what you make for taxes since you'll owe both income tax and self-employment tax (15.3%) on your profits. First-time side hustlers often get shocked by that self-employment tax.

Just wanted to add that you should also consider what happens if your income grows beyond what you initially expect. I started selling handmade jewelry thinking I'd make maybe $1,000 a year, but ended up making $8,000 because demand was higher than expected. When you cross certain income thresholds, you might need to make quarterly estimated tax payments to avoid penalties. The IRS expects you to pay taxes as you earn, not just once a year. If you owe more than $1,000 in taxes when you file, they can hit you with underpayment penalties. Also, keep really good records from day one - screenshots of all payments, receipts for any business expenses, mileage if you drive anywhere for the business, etc. It's so much easier to track this stuff as you go rather than trying to reconstruct everything at tax time. A simple spreadsheet or even a notes app on your phone works fine when you're starting small.

Another thing to consider is the de minimis safe harbor election which lets u deduct items that cost less than $2,500 per invoice/item instead of depreciating them. So like if ur buying several fixtures and each one is under that amount, u might be able to deduct them immediately even if technically they're "improvements." You make this election every year with ur tax return.

Great question about rental property improvements during vacancy! I went through something similar last year. The key thing to remember is that as long as you're holding the property with the intent to generate rental income, you can start depreciating improvements even during vacant periods. Your timeline looks reasonable - 4 months of improvements followed by finding new tenants shows clear rental intent. However, if your mother-in-law moves in rent-free, that changes everything for 2025. The IRS considers rent-free family use as personal use, not rental use. This means you'd need to stop claiming rental deductions (including depreciation) for the time she's living there. The improvements you made in 2024 during the legitimate vacancy period would still be valid for depreciation, but you'd have to suspend that depreciation during any personal use periods. My advice: keep detailed records of your improvement timeline and costs, and if you do decide to let family live there rent-free, make sure to properly adjust your tax treatment for that period. You might want to consider charging at least fair market rent to keep it as a legitimate rental property for tax purposes.

One more thing to consider - if you're filing the W7 because you're not eligible for a SSN, make absolutely sure that's correct. I spent months going through the W7 process only to find out later I was actually eligible for a SSN, which would have been much easier to get and use long-term. Worth double-checking with Social Security before going down the ITIN path!

Great advice in this thread! I went through the W7 process two years ago and can confirm that order absolutely matters. Here's what worked for me: 1. W7 form on top (as mentioned) 2. Supporting identity documents attached to the W7 3. Tax return (1040) underneath everything 4. Any schedules or additional forms at the bottom One thing I didn't see mentioned - if you're married filing jointly and both spouses need ITINs, you'll need separate W7 forms for each person, but you can submit them together with one tax return. Just make sure each W7 has its own set of supporting documents. Also, pro tip: write "ITIN APPLICATION" in large letters on the outside of your envelope. It helps ensure your package gets routed to the right department at the IRS processing center. My accountant recommended this and I think it helped my application move through faster. Good luck with your application! The wait is frustrating but once you get your ITIN, future tax filings become much smoother.

Just wondering - are you using a tax software for this complicated situation or hiring a CPA? I've got similar mixed income and I'm not sure if something like TurboTax can handle it correctly.

I'm in a very similar situation - $125K W2 and about $15K in 1099 consulting income. One thing I learned the hard way is to track EVERYTHING for business expenses from day one. I missed out on so many deductions my first year because I wasn't organized. For your situation, definitely keep receipts for any equipment, software subscriptions, internet percentage, phone bills, mileage to any client meetings, and even things like professional books or courses related to your consulting. The home office deduction can be significant too if you have a dedicated space. Also, consider opening a separate business checking account for your gig income and expenses. It makes tracking so much easier come tax time and looks more professional if you ever get audited. I use a simple spreadsheet to track monthly income and expenses by category - takes maybe 10 minutes a month but saves hours during tax season. The extra income is definitely worth it even with the tax hit. Just stay organized and make those quarterly payments!

This is such a great question and I'm glad you're thinking ahead about the tax implications! As someone who's been through a similar transition, I'd suggest being really careful about the timing and documentation. One thing that hasn't been mentioned yet is that you might want to consider starting with a smaller equipment purchase to test the waters - maybe just a few key pieces that would clearly be for business use only. This way you can establish a pattern of legitimate business expenses without a huge upfront investment that might raise red flags. Also, since you mentioned you already have two other side businesses, make sure you're tracking everything separately. The IRS likes to see clear business boundaries, especially when you're claiming home-based business expenses across multiple ventures. Have you considered reaching out to a CPA who specializes in fitness professionals? They might be able to help you structure the equipment purchases in a way that maximizes your deductions while minimizing audit risk. The peace of mind might be worth the consultation fee!

Great question, Emma! I went through something similar when I started my online nutrition coaching business. One thing I'd add to the excellent advice already given is to consider the "ordinary and necessary" test the IRS uses for business expenses. Since you're planning to launch in 2025, I'd recommend waiting until you're actually operating the business before making major equipment purchases. However, you could start documenting your business plan and market research now - those preparatory costs can often be deducted as startup expenses. If you do decide to buy equipment before officially launching, make sure it's equipment that would ONLY be used for business purposes. A basic barbell set that you'd use personally anyway? That's going to be harder to justify. But specialized equipment like resistance bands with your business logo, or a professional-grade camera setup for creating workout videos? Much stronger business case. Also, consider that the IRS expects businesses to make a profit in 3 out of 5 years to avoid the "hobby loss" classification others mentioned. Make sure you have a solid business plan showing how you'll generate income, not just how you'll spend money on equipment!