Don't overthink this. I've been a tax preparer for years and see this situation all the time. Just enter both 1098 forms separately into H&R Block, and the software will combine them correctly on Schedule A. Make sure you enter the full amount shown in Box 1 (mortgage interest) from both forms. Don't try to manually add them together first - enter them as separate entries. H&R Block might give you a warning about possible duplicate entries, but you can ignore that if you're certain these are two different lenders for different time periods of the same year. The warning is just there to prevent people from accidentally entering the same 1098 twice. Also, double-check that the property address is exactly the same on both forms. If there are slight differences in how the address is formatted, the software might think they're different properties.

Quick tip that helped me - make sure you check if either of your lenders paid you any refunds that might be listed in Box 4 of the 1098 forms. If you refinanced, sometimes the old lender will refund part of your escrow account. If Box 4 has an amount, H&R Block will ask you if you claimed this as an itemized deduction in a prior year. If you did itemize last year, you might need to report this refund as income on this year's return. Also, don't forget about property taxes! If you were paying property taxes through both lenders' escrow accounts, make sure you capture all property taxes paid (Box 10 on both 1098 forms) for your Schedule A deduction.

Something else to consider - with only $1,350 in revenue, you might actually be operating at a loss once you account for all your startup expenses and inventory purchases. Claiming a business loss can actually offset some of your personal income tax liability. This is totally legitimate if it's an actual loss. Just be sure to document everything carefully in case of audit.

I'm a former bookkeeper and I'd recommend using QuickBooks Self-Employed or something similar to track everything properly from day one. It'll sync with your bank accounts, help categorize expenses, track mileage if you're driving for business, and makes tax time WAY easier whether you file yourself or eventually hire a CPA. Starting with good bookkeeping habits now will save you so much headache later.

I'm a rideshare driver and I write off all my car repairs, maintenance, gas, etc. You just need to track your business miles vs personal miles and deduct that percentage of your expenses. Or use the standard mileage rate which is easier but sometimes gives you a smaller deduction.

Has anyone considered whether insurance proceeds should be reported as income? If you got a settlement for the total loss but then repaired it anyway, that settlement might be taxable if it exceeded your basis in the vehicle.

For what it's worth, when I got a CP2000 last year, I just sent in a simple letter requesting a 30-day extension. I made sure to include my taxpayer ID, the tax year, and the control number from the CP2000 notice. I sent it certified mail about 10 days before the deadline. Never heard back, but I sent in my full response about 3 weeks later and everything was fine. The IRS is reasonable about extensions on CP2000 notices because they'd rather get a complete, correct response than force people to rush and send in incomplete information. Just make sure you ask BEFORE the deadline passes!

Ugh, I got a CP2000 last month about some crypto trades. Super annoying because their numbers were totally wrong! Make sure you carefully check every detail they've included in the notice. In my case, they were counting my transfers between wallets as income and hadn't accounted for my cost basis at all. Looked like I owed $12,000 in taxes when I actually had losses that year!

One thing nobody's mentioned yet - if you're on the fence between standard mileage and actual expenses, track BOTH for the first few months of business use. Keep a detailed mileage log AND save all your receipts. Then run the numbers both ways to see which gives you the better deduction. Remember the standard mileage rate for 2023 is 65.5 cents per mile for business use, up from 58.5 cents in 2022. That's a pretty significant increase that might tip the scales toward using the standard deduction method.

I used Section 179 for a vehicle in 2019 and had to deal with recapture in 2021 when my business use dropped to 40%. It was a NIGHTMARE to figure out. Had to recalculate everything and ended up owing a bunch of extra tax. My advice: unless you're VERY sure your business use will stay above 50%, the standard mileage rate is way simpler. Less beneficial sometimes but waaaay less headache if your situation changes.