I'm confused about something - if we're paying our state taxes anyway, why does it matter whether we can deduct them or not? Like we still have to pay them either way right? Sorry if this is a dumb question, I'm new to this tax stuff.

This is such an important topic that doesn't get enough attention! I've been dealing with this exact situation in Massachusetts where our state income tax plus property taxes put us way over the $10k SALT cap. One thing I'd add to the discussion is that even if the SALT cap expires as scheduled, there's no guarantee it won't come back in some form. The revenue loss from unlimited SALT deductions is significant - around $80 billion annually according to some estimates. Given federal budget pressures, I wouldn't be surprised if we see some kind of compromise, maybe a higher cap like $25k instead of unlimited deductions. For planning purposes, I'm assuming the best case scenario (full expiration) but also preparing for the possibility that some limitation remains. It's worth running projections for both scenarios, especially if you're making decisions about major purchases or timing of deductible expenses.

Has anyone used TurboTax to figure this out? I'm in literally the same situation (26, lived with parents most of 2024, made under the threshold) and the software keeps giving me conflicting answers about my status when I try different paths.

I went through this exact situation two years ago! The key thing that helped me was creating a detailed support calculation spreadsheet. I tracked everything - rent value for the months I lived with my parents, groceries they bought, utilities, even car insurance they paid. What surprised me was that the "fair rental value" of living at home was way higher than I expected - like $800/month in my area. When I added up ALL the support (not just cash), my parents had definitely provided more than half my total support for the year, even though I was working. The good news is you have options here. Even if you qualify as a Qualifying Relative, your parents can choose not to claim you if that works better for your family's overall tax situation. But as others mentioned, you'd still need to check the box saying you CAN be claimed. I ended up having my parents claim me because their tax savings were bigger than what I would have gotten filing independently, and they shared some of that savings with me. My advice: sit down with your parents, calculate the actual numbers for both scenarios, and make the decision that benefits your family most overall.

Has anyone else had their stimulus checks garnished for child support? I'm worried that if I file now to get the past stimulus money, it might all go to my back child support instead of to me. Really need this money for rent.

I was in a very similar situation - divorced and hadn't filed since 2018 due to complications with my ex's business documentation. Here's what I learned after finally getting caught up: You can absolutely still claim the stimulus payments! The key deadlines people mention are for the original automatic payments, but there's no deadline for claiming them as Recovery Rebate Credits when you file your returns. You have 3 years from the original filing deadline to file and get refunds. A few important things I wish I'd known earlier: - File your returns in chronological order (2018, 2019, 2020, 2021, etc.) - The stimulus payments are claimed on specific years: 2020 return for first two payments, 2021 return for the third - If you're due refunds (which you likely are with the stimulus credits), there are no late filing penalties - Keep detailed records of everything since you'll be mailing paper returns The whole process took me about 6 months to complete, but I ended up getting back over $4,000 in stimulus money plus additional refunds I wasn't expecting. Don't let the overwhelm stop you - start with gathering your documents for 2018 and work forward. You've got this!

I think everyone is missing that this is actually a Schedule C issue, not really an LLC issue. Since a single-member LLC is a disregarded entity, you're filing a Schedule C with your personal return. The real question is: can you deduct these business expenses on Schedule C when they're indirectly increasing your W-2 income rather than generating Schedule C income? The answer is complicated. You'd need to prove you have a legitimate business (not a hobby) with a clear profit motive. The fact that you intend to eventually serve these clients directly might help establish that. But I think there's a more immediate problem: the expenses you're incurring need to be ordinary and necessary for YOUR business. If your business doesn't have income yet, the IRS might question how these expenses are necessary for a non-existent business rather than just supporting your employment.

I've been following this discussion and want to add something important that hasn't been mentioned yet - the timing of when you claim these losses matters a lot for audit risk. If your LLC shows losses for multiple consecutive years with no income, that's going to raise red flags with the IRS's automated systems. They have algorithms that flag returns with unusual patterns, and a Schedule C showing only expenses year after year is definitely unusual. Beyond the hobby loss rules everyone's discussing, you also need to consider the "material participation" requirements if your LLC activities are considered passive. Since you're not actively running a separate business but rather supporting your W-2 role, the IRS might classify this as a passive activity, which has its own set of rules for deducting losses against other income. I'd strongly recommend implementing the suggestion about having your LLC bill your employer directly for marketing services. Even if it's just covering part of your current expenses, having some legitimate business income from day one will make your tax position much stronger and reduce audit risk significantly. Also, make sure you're keeping detailed records of how each marketing expense connects to specific business activities and potential future income. The IRS will want to see that these are genuine business expenses, not personal expenses disguised as business deductions.

This thread has been incredibly helpful! I'm actually in a very similar situation - inherited a whole life policy that my uncle had been paying into for about 20 years before he passed. I was planning to just surrender it and report the full amount as taxable income, but after reading through all these comments, I realize I need to get the complete premium payment history first. The tips about using Claimyr to get through to the right department at the insurance company seem really valuable. I've been dreading dealing with customer service, but it sounds like getting to their "policy services" or "tax basis research" team makes all the difference. One question though - since I inherited this policy rather than received it as a gift while my uncle was alive, does that change how the basis is calculated? From what I understand, inherited policies get a "stepped-up basis" to fair market value at death, but I want to make sure I'm not missing anything before I surrender.

This is such a helpful discussion! I'm dealing with something similar but with a twist - my mom gifted me her whole life policy about 3 years ago, but she had actually let it lapse for about 6 months in 2019 before reinstating it. I'm wondering if that lapse affects how I calculate the tax basis when I surrender? I've been paying the premiums since she gifted it to me, and I have records of what I've paid, but I'm not sure if that 6-month gap where no premiums were paid changes anything about carrying forward her basis. The policy definitely lost some cash value during the lapse period before being reinstated. Has anyone dealt with a previously lapsed policy before? I'm worried the IRS might treat this differently than a continuous policy when it comes to the gifted basis rules.