That's an interesting approach. Which specific home expenses did you stop allocating to your office space? I'm wondering if I could take a similar middle ground where I still claim some home office expenses but not all of them.

I stopped allocating a percentage of my mortgage interest and property taxes to the home office, since I already claim those on Schedule A itemized deductions. I also reduced the percentage of utilities I allocate to business use to better reflect actual usage. I still deduct direct expenses related to my music business - instruments, equipment maintenance, software subscriptions, recording supplies, and a reasonable percentage of my internet costs since that's essential for sharing files with clients. This approach has kept my Schedule C showing a small profit most years while still giving me legitimate deductions for actual business expenses.

This is what I do too! The simplified method is so much easier. I make about $7k from my side business and the simplified deduction of $750 (I use a 150 sq ft bedroom as my office) keeps my business profitable on paper while still giving me a decent deduction. Way less hassle and much lower audit risk.

Oh that's a really good point I hadn't considered. I should definitely check with my parents to make sure we're on the same page about who's claiming what. We talked about me filing independently but didn't specifically discuss the education credits. Thanks for the heads up!

Try FreeTaxUSA! I switched from TurboTax last year and it handled my 1098-T and education credits perfectly. Federal filing is free and state is only like $15. They don't do that annoying upsell thing that TurboTax does for basic tax situations.

Thank you so much for sharing your experience. Do I need to do anything special with the letter? Like attach it in a certain way or reference anything specific? I've never had to write to the IRS before and I want to make sure I do it right.

Just write a simple one-page letter titled "Statement of Reasonable Cause" explaining that you inadvertently missed filing the return due to life circumstances (be specific but brief about the job change and move). Include your names, Social Security numbers, tax year, and sign it. Attach it to the front of your return if filing by mail. If filing electronically, mail the letter separately to the same IRS processing center where you would have mailed your return, and reference your names, SSNs, and tax year 2022 in the letter.

I second FreeTaxUSA for prior year returns. TurboTax wanted $140 for my 2021 return when I filed it late, but FreeTaxUSA was like $15. Same forms, way less money.

Are you sure about that? I'm in Minnesota too and my tax preparer told me the opposite last year. She said I should only claim the rent I actually paid out of pocket on my M1PR form. Now I'm confused!

I double-checked with the Minnesota Department of Revenue directly to make sure. The confusion comes from how the M1PR form is structured. When it asks about "rent paid," it means the TOTAL rent for the unit, including both your portion and the Section 8 portion. But then there's a separate question about public assistance received that helped pay for housing. That's where you need to report the Section 8 amount. They use this to calculate your "effective rent paid" which is what they base your rebate on. So yes, you report the full rent, but also report the assistance so they can subtract it.

I used TurboTax last year and it was actually pretty bad with this specific situation. It kept asking me confusing questions about my housing assistance and didn't clearly explain what counted as "welfare" for the form. I ended up having to call their support line for help. H&R Block's software was a bit better in my experience because it specifically asked about housing assistance separate from other welfare benefits. But honestly even their support people seemed confused when I asked for clarification.

Thanks for sharing your experience! That makes me feel better about the situation. Do you remember how long it took for them to send you the letter after you filed your original return?

I think it took about 14 months after I filed my original return. The IRS has been super backlogged the last few years, so it takes them longer to match up 1099s with tax returns. If you're worried, filing an amended return is definitely the safest option. But in my case, the adjustment they made was accurate and the process was pretty painless overall.

That's risky advice. Even if there's a chance the employer didn't file the 1099, it's not worth gambling on. Better to be honest and file the amendment.