One thing to consider with Airbnb specifically - if you're renting for short periods and providing substantial services (like breakfast, cleaning during stays, etc.), the IRS might classify this as a "nonrental activity" instead of a passive rental activity. This could actually work in your favor. If you're providing substantial services beyond just the basic rental, you might qualify under different rules and potentially avoid some passive activity limitations. Your daily maintenance might qualify here. I'd recommend keeping a detailed log of all the services you provide and time spent. This documentation could be crucial if you're ever audited.

Has anyone used TurboTax for reporting Airbnb income? I'm in the same situation and wondering if their software handles these passive activity rules correctly or if I need to go to a CPA this year.

Different states have different rules for state income tax on capital gains from home sales. What state are you in? Some states follow federal rules but others have their own rules for exemptions.

The employment-related partial exclusion should definitely work for your situation! Just a heads up though - make sure to keep detailed records of everything related to your job change and the timeline of events. The IRS can be pretty thorough if they decide to review your return later. One thing I'd recommend is getting something in writing from your new employer that confirms the job required you to relocate, even if it's mostly remote. An email from HR or your manager stating that the position necessitated the move to your new location could be valuable documentation. Also, since you mentioned the job is "mostly remote," make sure your offer letter or employment agreement clearly indicates where your official work location or home office is considered to be. With your numbers ($30K gain vs. $229K prorated exclusion), you're well within the safe zone, but having rock-solid documentation will give you peace of mind if any questions come up down the road.

Is anyone else bothered by the fact that the tax system is so complicated that we can't even figure out what our actual income is? Like there are at least 3 different versions of "income" on one form (total income, AGI, taxable income) and they all mean different things. And then there's MAGI which isn't even on the form! How is a regular person supposed to understand this stuff??

I completely feel your frustration! I went through this exact same confusion last year when I was doing my 2019 taxes. The terminology is absolutely mind-boggling for regular people. Just to clarify for the original poster - your AGI (line 11) is what you'll need for most applications like rentals, loans, etc. The $18,200 difference between your AGI and taxable income sounds about right when you factor in the 2020 standard deduction plus any other deductions you qualified for. What helped me was thinking of it this way: AGI is your "real" income after work-related adjustments, taxable income is what the government actually taxes you on after personal deductions, and MAGI is just AGI with some stuff added back for specific programs. It's still unnecessarily complicated, but at least there's some logic to it. The fact that we need entire Reddit threads to explain basic tax concepts shows how broken this system is. Other countries have much simpler tax systems where the government just tells you what you owe!

Quick heads up - I just went through this process with my new law practice. If you're doing a mega backdoor Roth with an S Corp, be VERY careful about the timing of your salary payments. The employer contribution limits for solo 401(k)s are based on your W-2 wages from the S Corp. If you want to max out your contributions for 2025, you need to pay yourself enough salary THIS calendar year to support those contribution limits. I messed this up my first year - paid myself mostly in December and couldn't make the full employer contribution I wanted because my W-2 wages weren't high enough for most of the year.

This is such a timely question! I'm in a similar boat - launching my freelance design business next month as an S Corp and have been wrestling with the same retirement optimization challenges. One thing I've discovered that might help is looking into Charles Schwab's Individual 401(k). While their basic plan doesn't include after-tax contributions, they do offer what they call an "Enhanced Individual 401(k)" that can be customized with additional features including after-tax contributions and in-service distributions for the mega backdoor strategy. The setup fee is around $500 and there's a small annual maintenance fee, but it's significantly less expensive than some of the fully self-administered options while still giving you the flexibility you need. I spoke with one of their retirement specialists last week and they confirmed that SECURE 2.0 provisions are gradually being rolled out, but the core mega backdoor functionality has been available for a while. Also worth noting - make sure you're factoring in the administrative burden of managing all this yourself. Between tracking contribution limits, coordinating rollovers, and staying compliant with testing requirements, it can get complex quickly. Sometimes paying a bit more for a provider that handles the heavy lifting is worth it, especially in your first year when you're focused on building the business.

Has anyone actually received a 1099-R form from their insurance company after surrendering a policy? I cashed out a small policy last year ($12k) and never got any tax forms. Not sure if I need to report it or not since it was probably all basis anyway.

You should definitely get a 1099-R from your insurance company - they're required to issue one if there was any taxable gain from the surrender. The fact that you didn't receive one could mean a few things: 1. The surrender amount was entirely return of basis (premiums paid), so no taxable gain 2. The insurance company made an error and didn't send it 3. It got lost in the mail or sent to an old address I'd strongly recommend calling the insurance company before you file your taxes. Even if there was no taxable gain, you'll want documentation showing the breakdown between basis and gain for your records. The IRS might question a policy surrender that doesn't appear on your return, especially if they have records of the transaction. If it turns out there was a taxable gain and you just didn't receive the form, you'll still need to report the income on your return - not receiving a 1099-R doesn't exempt you from reporting taxable income.