This is great advice. Is there anything specific I should look out for that would indicate a CPA might not be familiar enough with Form 3115? Any red flags during the interview process?

The biggest red flag is if they downplay the complexity of Form 3115 or give vague answers about the process. If they say something like "oh it's just another form we'll fill out with your tax return" - run! A knowledgeable CPA will mention the duplicate filing requirement (one copy with your return, one to the Covington processing center), discuss potential audit risk factors specific to method changes, and explain how they'd calculate your Section 481(a) adjustment. Also be wary if they can't explain why you need to change from cash to accrual based on your specific business situation. There are revenue thresholds and other factors that trigger this requirement, and they should be able to cite the specific code sections that apply to your case.

Those price differences make sense actually. The $800 quote is a major red flag - they likely don't understand the work involved. Form 3115 preparation typically costs between $2,500-$4,000 for a small business with straightforward inventory issues. If your situation involves complex inventory valuation or multiple accounting method changes, it could go higher. Remember you're not just paying for filling out a form - you're paying for the analysis to determine the Section 481(a) adjustment, preparation of required statements and attachments, and the expertise to make sure everything is done correctly to minimize audit risk. This is specialized work that can save you thousands in the long run.

Thanks for the info, that's really helpful. I guess I need to be suspicious of the lowball quote then. Makes sense that something this complex would be on the higher end of tax preparation services. Appreciate the perspective!

Can you explain what Section 179 is and how it's different? I think I might have done this based on my tax preparer's recommendation but never really understood it. Is this going to cause problems when I sell my car?

Section 179 lets you deduct the full business portion of a vehicle in the year you place it in service, instead of depreciating it over several years. It's an upfront deduction instead of spreading it out. When you sell the vehicle, any Section 179 deduction you took is subject to depreciation recapture, which means you'll pay ordinary income tax (not capital gains) on that portion of your gain. It doesn't necessarily cause problems, but you need to account for it correctly. The amount you deducted under Section 179 essentially reduces your basis in the vehicle for the business percentage. Many people forget they took this deduction years ago and don't properly calculate their gain when selling.

Yes, it's Form 4797 for the business portion. You report the business percentage of the sale on that form, and the gain attributable to depreciation gets recaptured as ordinary income. But remember, you don't report anything for the personal portion unless it's a gain over the original basis (which is rare for vehicles since they usually decline in value).

Does that UBTI issue affect me if I'm just holding these in my regular Robinhood account? Not in an IRA or anything. Still learning all this stuff.

No, UBTI is only an issue in tax-advantaged accounts like IRAs or 401ks. In a regular taxable Robinhood account, you just have to deal with the complexity of the K-1 reporting, but there's no extra UBTI tax. The main disadvantage in a regular account is just the administrative hassle and possibly having to file multiple state tax returns if the MLP operates across different states. Plus, the tax treatment of MLP distributions is different from regular dividends - they're often partly tax-deferred as "return of capital" which lowers your cost basis instead of being immediately taxable.

Is there a minimum amount before you need to file in those states? I can't imagine filing in 12 states for a small investment would be worth it.

Does Cash App Taxes handle 1099-MISC forms? I did some freelance design work and got one of those, plus I have some investment stuff to report.

Yes, Cash App Taxes handles 1099-MISC forms without any issues. I've used it for freelance income alongside investment reporting for years now. The interface for entering 1099 information is actually pretty straightforward, and they support multiple 1099s if you had several clients. They also walk you through any deductible expenses related to your freelance work, which can significantly reduce your taxable income from those gigs.

Whats substituted cost basis mean? I have investments but im confused by all the tax language on my forms.

Thanks for the tip about Walmart! I'll check there. Do you remember approximately how much they cost? And were they the official red ones that the IRS accepts?

I think they were around $8-10 for a small packet of forms. Yes, they were the official IRS-approved forms with the red ink. They came with instructions too, which was helpful since I was filling these out for the first time. The other option that worked great for me was filing electronically through the SSA website. If you go to the Business Services Online section on ssa.gov, you can register as a household employer and submit the W2/W3 information directly without needing the paper forms at all.

How much does Homepay charge? I've been doing my nanny taxes myself but it's such a pain every year.