That's so interesting about the round numbers! I've been using 50% for my home internet for years. Should I go back and amend previous returns or just change it going forward?

I wouldn't worry about amending previous returns for this - the potential benefit isn't worth the hassle and potential scrutiny of an amendment. Just adjust your approach going forward. Create a simple tracking method now and use a more specific percentage based on that data for this year's taxes. Remember that amendments can sometimes trigger additional review, and unless you're talking about very large dollar amounts, making this change prospectively is the most practical approach. The main point is to have better documentation going forward and avoid those perfectly round percentages that can look like arbitrary estimates.

That's probably overkill for someone just starting out. A basic business internet connection is like $70-100/month minimum. If their business is just getting going, spending an extra $1000+ a year just for cleaner accounting doesn't make financial sense.

You're right about the cost consideration. I guess I was thinking longer-term when the business is more established. For starting out, a reasonable percentage of the existing connection makes more sense financially. My accountant's advice was more applicable once my business was generating significant income. At that point, the simplicity and audit protection of having a dedicated business line outweighed the extra cost.

Does the IRS payment system even accept payments as low as one cent? I'm wondering if there's a minimum amount you can pay through their online system.

Yes, the IRS Direct Pay system will accept payments of any amount, even just one cent. There's no minimum payment requirement. When you enter the payment amount, you can put in $0.01 and it will process it normally. The system might seem like it would have a minimum, but it's designed to handle any tax liability amount, no matter how small. Just make sure you select the correct tax year and form when making the payment so it gets applied correctly to your account.

Really? They added penalties for such a small amount? That seems excessive and almost malicious on the IRS's part. Did you try calling to get the penalties removed?

Did they give any timeline for potential changes? I'm wondering if I should delay some research initiatives to 2025 if there's a chance the rules might revert back to allowing immediate expensing.

They were very careful not to predict any specific timeline for legislative changes, noting that previous attempts to modify section 174 had stalled despite apparent bipartisan support. Their advice was to make business decisions based on current law rather than speculation about future changes. The speaker specifically cautioned against delaying legitimate business activities solely for tax purposes, pointing out that even if the law changes, there's no guarantee it would be retroactive or when exactly it would take effect. They emphasized that the business needs should drive research timing, with tax considerations being secondary.

The IRS has been gradually increasing enforcement in this area as the rules have been in effect for a few tax cycles now. Initially there was some leniency due to the significant change, but they're becoming more attentive to proper section 174 compliance.

But wouldn't that mean some December donations would get pushed to the next tax year? Seems like you'd lose out on deductions for a whole year that way.

That's a good point about potentially delaying your deduction. My situation is usually the opposite - most of my donations happen early in the year, so I'm not usually crossing tax years. For December donations, you might want to confirm with the charity when they'll process it. Some larger organizations will process December donations before year-end specifically for tax purposes, even if the money doesn't reach the final program until January.

You should ONLY claim your personal contribution amount, not the employer match! The matching amount is a donation from your employer, not from you. If you claim the matched amount, you could definitely get flagged in an audit.

Thanks for clarifying that! I've been doing it correctly then - only claiming my personal contribution and not the employer match. That makes sense since the company probably gets the tax deduction for their portion.

Thanks for mentioning this! I double checked and my income is definitely well below that threshold (I wish I made that much lol). I'm making about $52,000 a year, so phaseout isn't the issue. Sounds like it's just the expiration of that temporary increase like others mentioned. Really hoping they bring back the higher amount!

That's not how taxes work. If you got different results, one of them calculated something wrong. The tax laws are the same regardless of which software you use. You might have entered something differently between the two programs. Different software doesn't give you access to different credits - you either qualify or you don't.