I used Sprintax last year and it worked pretty well for my situation. It does ask about your 1098-T and walks you through what parts are taxable. The interface is a bit clunky but it gets the job done. Make sure you have all your documents ready before you start though, because it can time out if you take too long between sections.

This is excellent advice. I got a letter from the IRS questioning my scholarship income reporting last year, and having my 1098-T and a detailed breakdown from my university's bursar office made responding to their inquiry so much easier. Document everything!

Thanks for bringing this up - I hadn't considered this angle. Do you know if there's some kind of threshold before someone needs to officially register as a business? My friend is really just testing the waters with occasional food sales.

There's no specific threshold for when someone needs to register as a business - that varies by state and local regulations for food service. However, for tax reporting purposes, any income earned (even from a hobby) needs to be reported regardless of business registration status. The $600 threshold is just about when payment apps are required to send 1099-K forms. Your friend should be reporting the income even below that amount, but many people don't realize this. They might want to look into a Sole Proprietorship at minimum since it's the simplest business structure and would allow them to deduct legitimate business expenses against that income.

I actually had this exact issue come up during a business audit last year. The IRS didn't care at all that some of our business meals were from non-traditional vendors (food trucks, pop-ups, farmers market vendors). What they focused on was whether we had proper documentation of the business purpose, who attended, and proof of payment.

Does using the Advocate Service cost anything extra? And how long did it take them to resolve your case? I'm dealing with my mom's estate and we're already 2 years into this nightmare.

The Taxpayer Advocate Service is completely free - it's a division within the IRS specifically designed to help taxpayers when normal channels aren't working. In my grandfather's case, they assigned an advocate within about 2 weeks of receiving Form 911. The entire process took about 3 months from start to finish, but they did place a hold on all collection activities during that time, which stopped the interest from continuing to accrue. This was a huge relief as we were dealing with similar issues of unfiled returns discovered after death. The advocate actually helped us get refunds that were technically past the 3-year window by using their special authority to consider the circumstances of why we couldn't file earlier.

The Financial Disability exception doesn't automatically apply to death though. It's more for situations where someone was incapacitated before death. The IRS has specific guidelines on this - just being deceased doesn't trigger the exception unless there was a period of disability before death.

This is a great suggestion, thank you! Do you know if these volunteers can handle questions about investment income too? And do I need to make an appointment or can I just walk in?

Most VITA volunteers are trained to handle basic investment income like interest, dividends, and simple capital gains. They might not be able to help with very complex investment situations though. You'll definitely want to make an appointment - these services get booked up quickly during tax season. Call your local library or check their website to see when they offer tax help and how to schedule. Some places also require you to bring specific documents, so ask about that when you call.

This is solid advice. I did DoorDash last year and the biggest thing was tracking mileage - you can deduct $0.67 per mile for 2023 which adds up quick! Make sure you have some kind of mileage log if you get audited.

So what happens if you don't do the improvements within the 180 days? Do you lose the entire 1031 benefit or just the portion related to the improvements?

If the improvements aren't completed within the 180-day exchange period, only the actual completed improvements can be counted as part of the exchange. Any unused funds held by the QI for incomplete improvements would be considered "boot" and returned to you - and you'd owe taxes on that portion. You wouldn't lose the entire 1031 benefit, just the tax deferral on the portion that wasn't properly used within the timeframe. For example, if you earmarked $50,000 for improvements but only completed $30,000 worth within the 180 days, you'd owe taxes on the $20,000 difference. That's why it's crucial to be realistic about what improvements can actually be completed in that timeframe.

I did a reverse exchange last year. It's definitely more complex and expensive than a standard exchange, but doable. You'll need an Exchange Accommodation Titleholder (EAT) to take title to the new property while you sell your relinquished property. Expect to pay about twice as much in fees compared to a standard exchange. Make sure you have very secure financing lined up because you'll essentially be carrying both properties until your original one sells. The same 180-day rule applies - you must sell your original property within 180 days of acquiring the new one. I cut it close (sold on day 168) and the stress nearly killed me!