Does your tax software have a specific place to add notes like this? I use TurboTax and I'm not sure where I would include this kind of explanation.

In TurboTax, when you're entering your Schedule C information, there's a section for "Description of Business." You can include your note there, but the better place is in the "Additional Information" section that appears after you enter all your income and expenses. You'll find a text box where you can add notes or explanations for the IRS. If you can't find it, another option is to create a simple one-page statement titled "Explanation of Duplicate Income Reporting" that lists your 1099-K and 1099-MISC forms and explains they represent the same income. You can attach this as a PDF if filing electronically or as a physical page if mailing your return.

I used H&R Block last year for a similar situation. When you're entering your Schedule C info, there's a section called "General Information" where you can add notes in the description field. I put something like "Note: Income reported on 1099-K from Stripe and also on 1099-MISC from clients. Total actual income is $XXXX." Never heard anything from the IRS about it. Just make sure you keep copies of all your 1099 forms in case they do have questions later.

Do those suspended losses get adjusted for inflation over time? Seems unfair if you have to wait years to claim them and they're worth less by then.

No, unfortunately suspended passive losses don't get adjusted for inflation. They remain at their original dollar value regardless of how many years you carry them forward. It's definitely not ideal from a time-value-of-money perspective, which is why many investors try to create strategies to use them sooner rather than later.

I've had clients qualify as real estate professionals, but it's a high bar to clear. You need to spend 750+ hours per year in real estate activities (that's about 15 hours a week minimum) AND more time on real estate than any other professional activity. With your W2 jobs, that's nearly impossible unless one of you transitions to part-time employment or leaves your job entirely to focus on real estate. The IRS scrutinizes these claims carefully, so you need meticulous documentation of time spent.

How did you handle insurance and liability issues with renting out heavy equipment? I'd be terrified someone would hurt themselves and I'd get sued into oblivion.

I purchased a specific commercial equipment insurance policy that covers rental use. It was about $1,800 annually but well worth the protection. I also created a simple LLC to own the equipment and had renters sign a detailed liability waiver that my attorney drafted. Most equipment sharing platforms also offer some basic insurance coverage as part of their service, though I wouldn't rely solely on that for heavy machinery. The key is being properly insured and having clear documentation of the equipment's condition before and after each rental.

Your accountant is partially correct but missing some nuance. Land itself is never depreciable, and certain permanent improvements to land (like grading or clearing) must be capitalized to the land basis. However, the equipment used to make those improvements is separate from the improvements themselves. If the equipment is used in a business or income-producing activity, it can typically be depreciated regardless of what you're using it for. The key distinction is between the equipment (depreciable asset) and the permanent land improvements (capitalized to land basis).

That's really helpful to know! Do you happen to know if VITA volunteers can help with Schedule C for self-employment? That's the main complication in my return this year.

Most VITA sites can handle simple Schedule C filings, especially if your business doesn't have employees, inventory, or losses. However, there are limitations - if your business expenses exceed $35,000 or you have more complex situations like home office deductions or depreciation, some sites might not be able to help. I'd recommend calling your local VITA site directly to ask about their specific capabilities regarding self-employment income. Some sites have specialized volunteers who can handle more complex returns, while others stick to simpler cases. You can find the nearest location by using the VITA Locator Tool on the IRS website or calling 800-906-9887.

Is there any quality control at these places? I thought tax preparers had to pass some kind of test or certification. It's scary to think someone with minimal training is handling something as important as taxes.

14 Is income averaging still available? I thought that was eliminated years ago except for very specific situations like fishing income and farmers?

22 You're right that general income averaging was eliminated years ago. There is a special provision for lump-sum distributions from qualified retirement plans called the "10-year tax option" but it only applies in very limited circumstances - typically for people born before 1936, so it wouldn't apply to most beneficiaries today. For inherited retirement accounts, the current rules generally require beneficiaries to withdraw the entire balance within 10 years (with exceptions for certain eligible designated beneficiaries). So while you can't technically average the income across multiple tax years, you might be able to strategically withdraw amounts each year to minimize the tax impact if you haven't taken the full distribution yet.

17 Would it help to increase withholding on the regular W-2 job to offset the tax hit from the distribution? I'm about to get an inherited IRA and trying to avoid owing a ton next year.