Has anyone successfully passed an IRS audit while claiming QBI deductions on just 2-3 residential rentals? I'm in a similar situation and wondering what documentation actually satisfied the IRS. My CPA says we need detailed logs showing exactly what was done each day but that seems excessive for managing a couple properties.

This is a great question that many rental property owners face. I'd strongly recommend being conservative with the QBI deduction if you can't clearly document the 250 hours annually. A few additional points to consider: The IRS has been increasingly scrutinizing rental property QBI deductions, especially for smaller portfolios. With just 2 properties, reaching 250 hours of qualifying activities can be challenging unless your aunt and uncle are very hands-on with property management, maintenance, and tenant interactions. For documentation going forward, I'd suggest starting a contemporaneous log immediately. Include activities like property inspections, tenant communications, maintenance work, showing properties to prospective tenants, and any repair supervision. Don't try to recreate historical logs - that could backfire in an audit. If they can't meet the 250-hour safe harbor, they might still qualify under the general Section 162 "trade or business" test, but this is much more subjective and riskier. The IRS looks at factors like regularity, continuity, and whether the activity is conducted with a profit motive in a businesslike manner. Given their age and the recent change in tax preparers, it might be worth consulting with a tax professional who specializes in rental property taxation to review their specific situation. The potential tax savings need to be weighed against the audit risk and documentation burden.

Anyone know if e-bikes would qualify for any additional tax credits? I've been thinking about adding electric bikes to my regular bike rental fleet since they're super popular now.

Great thread! I just wanted to add a few practical tips from someone who's been doing equipment rentals for a while: First, definitely keep detailed records from day one - not just receipts, but also a log of when the bike is available vs. when you use it personally. The IRS loves documentation if you ever get audited. Second, consider setting up a separate business bank account even if you're not incorporating. It makes tracking expenses SO much easier come tax time, and it shows you're treating this as a legitimate business. Also, don't forget about the startup costs! Things like getting your business license, any permits you might need, marketing materials, etc. These can often be deducted in your first year. One last thing - make sure you understand your state's sales tax requirements for rentals. Some states require you to collect and remit sales tax on rental income, which affects your bookkeeping. Good luck with your venture! The bike rental market is definitely growing.

Don't forget about all the business deductions you can take as a 1099 contractor! Home office, equipment, software subscriptions, internet, cell phone, professional development, health insurance premiums, retirement contributions, etc. These can significantly reduce your taxable income, which might help you get below the threshold for the QBI deduction.

As someone who's been through this transition from W-2 to 1099, I'd strongly recommend getting professional help for your first year. The QBI rules are incredibly complex and the stakes are high at your income level. A few key points to consider: 1. Even if you don't qualify for QBI due to SSTB status and income limits, there are other significant tax planning opportunities 2. Quarterly estimated tax payments are crucial - don't wait until year-end or you'll face penalties 3. Consider maxing out a SEP-IRA or Solo 401(k) to reduce your taxable income (you can contribute up to $69k for 2024) 4. Track everything meticulously - mileage, equipment, subscriptions, training costs The software engineering SSTB determination really depends on your specific work. If you're doing custom development where clients are paying for your expertise, you're likely an SSTB. But if you're creating products or platforms that generate ongoing revenue, portions might qualify. Don't try to navigate this alone - find a CPA who specializes in self-employed tech workers. The money you spend on professional advice will pay for itself many times over.

One option nobody's mentioned - you could look into leasing instead of buying. The dealer can claim the tax credit and pass the savings on to you through reduced lease payments. Income limits don't apply to leases! My income was too high for the credit but I still got the benefit through a lease.

Great question! Yes, you can potentially qualify for the EV tax credit by filing separately if your individual income is under $150K. However, before making this decision, you should run the numbers to see if the $7,500 credit outweighs the tax benefits you'll lose by filing separately. When married filing separately, you typically lose access to several valuable credits and deductions like the Child and Dependent Care Credit, education credits, student loan interest deduction, and the Earned Income Tax Credit. You'll also both need to either take the standard deduction or both itemize - you can't mix approaches. I'd recommend calculating your total tax liability both ways (joint vs. separate) to see which comes out ahead. The $7,500 EV credit is substantial, but depending on your situation, the other lost benefits might outweigh it. A tax professional can help you model both scenarios accurately. Also make sure the Tesla model you're considering meets all the requirements - there are price caps and final assembly requirements that could affect eligibility regardless of your income.

Has anyone had their employer incorrectly include travel expenses for education in their W-2? My company added all my hotel and flight costs for a training program to my taxable income, and I think they're handling it wrong based on what people are saying here.

I'm dealing with a similar situation and wanted to share what I learned after consulting with a tax professional. The distinction between educational assistance benefits (Section 127) and business expense reimbursements is crucial here. For your $4900 course, if it's provided under your employer's qualified educational assistance program, it falls under the $5250 annual exclusion and won't be taxable income. The travel and lodging expenses are handled separately - they don't count toward the $5250 limit at all. If your employer reimburses travel expenses under an accountable plan (you provide receipts, return excess funds, and the expenses have a business connection), those reimbursements are typically not taxable and are treated as business expense reimbursements rather than educational benefits. The key question is whether your training maintains or improves skills for your current job. If yes, the travel expenses can qualify as deductible business expenses when reimbursed properly. If the education is to qualify you for a new career, the travel expenses would likely be taxable. I'd recommend checking with your HR department about how they're classifying these reimbursements on your W-2. Many employers mistakenly include travel reimbursements as taxable income when they should be treated as business expense reimbursements.