Thank you for the advice! I've been looking through my Google Maps timeline and I can actually piece together a lot of my driving history which is super helpful. I'm definitely reporting all the income - I'm just trying to figure out the right way to handle the expense side. Do you have any guidance on what percentage of expenses would trigger an audit? I want to be honest but also not raise any red flags.

There's no specific percentage that automatically triggers an audit. The IRS compares your expense ratios to industry averages, so what matters is whether your deductions seem reasonable for your type of work. For example, if you're doing handyman jobs, claiming 30-40% expenses might be reasonable, but claiming 80% would raise eyebrows. Focus on being accurate and honest rather than worrying about audit triggers. Document everything you can reconstruct, keep your tax records for at least 3 years, and you should be fine. Most small business audits happen because of unreported income or extremely disproportionate expense claims, not because someone claimed legitimate expenses without perfect documentation.

I prefer FreeTaxUSA for self-employment income. It's way cheaper than TurboTax and just as thorough for Schedule C filing. It also has good guidance on documentation requirements.

Thank you for this perspective. I'm a bit confused though - are you saying I should calculate it as 30% (portion of home) × 30% (portion of year) = 9%? I think the IRS wants me to allocate based on time for a partially rented primary residence, not a combination of time and space. But now I'm not sure!

Sorry for the confusion! I was thinking of a different scenario where you're renting out a portion of your home. If you're renting out the entire home for 30% of the year, then you would allocate 30% to Schedule E based on time alone. If you were renting out just one room or portion of your home, then you'd need to consider both the percentage of space and the time period. For example, if you rent out 25% of your home for the entire year, you'd allocate 25% to Schedule E.

I used TurboTax last year for a similar situation. It asks you specifically about the rental use period and then guides you through allocating expenses properly. It handled splitting my mortgage interest correctly between Schedule A and E based on the percentage I entered for rental use. It also reminded me about other expenses I could allocate to the rental portion like property taxes, insurance, utilities, maintenance, etc. Made the whole process much easier than trying to figure it out manually.

That's a really good point I hadn't considered! So even though she has to file her own return for the interest income, I can still claim her as a dependent if she meets the other tests? She definitely meets the support test - she just graduated last May and moved back home, and I'm covering most of her expenses while she's job hunting.

Exactly! The 5-month student rule applies to dependent status, and since she was a full-time student for at least 5 months during 2024, she can be your dependent if she meets the other tests. The support test is key - if you're providing more than half her total support for the year, you can claim her. Being a dependent will affect how she files her own return though - she'll need to check the box indicating someone else can claim her as a dependent, which affects her standard deduction for her own filing.

This is a really good point. Last year my son had about $1,800 in dividends from some stocks his grandpa gifted him, and I ran the numbers both ways. It was definitely cheaper for him to file his own return since his tax rate was effectively zero, while adding it to my income pushed some of it into my 22% bracket!

Exactly! The convenience of Form 8814 often comes with a stealth tax increase. I found for my daughter's case, we saved nearly $400 by having her file her own return instead of using Form 8814. The kiddie tax rules still apply either way, but there's usually still a benefit to filing separately. The only hassle is the extra paperwork, but for a few hundred dollars in savings, it's worth the 20 minutes it takes to file a simple return for a kid with just interest or dividend income.

I didn't claim any recovery rebate credit that I know of, and I wasn't on unemployment in 2022. I work full-time and just did a standard tax return with some basic deductions for mortgage interest. The payment came with a notice that has a bunch of codes on it that I don't understand. I'm going to check my online account like someone suggested and see if there's more info there.

If the payment came with a notice that has codes, those codes are the key to understanding what happened. Typically, CP12 notices indicate math error corrections, CP49 might be for overpayment adjustments, and CP21C often relates to changes made to your account. Check your online account at irs.gov as that will likely have more details than what's visible on the physical notice. If you look at the top right of the notice, there should be a notice number (CP followed by some numbers) - that will tell you exactly what type of adjustment this is. Most of these unexpected payments are legitimate adjustments in your favor due to calculation errors or tax law changes.

That's actually a good point. A legitimate IRS check will be from the US Treasury, not the "IRS" directly. It should be drawn on the Treasury account. And if you deposit it, wait at least 30 days to make sure it clears properly before spending the money just to be safe.

Thanks for the heads up! I hadn't even thought about documentation issues. Does TurboTax store all this info year to year or should I be keeping separate records?

TurboTax does track the remaining credit amount from year to year if you use it consistently, but it doesn't store your actual receipts or documentation. You definitely need to keep all that separately. I recommend scanning everything related to your solar purchase and installation and keeping digital copies in multiple places (cloud storage, external drive, etc.). Include the contract, all receipts, the manufacturer's certification statement, and any utility interconnection agreements. The IRS can ask for this stuff years later, and solar companies sometimes go out of business, making it impossible to get duplicates.

Check your Form 5695 on the actual tax return PDF. It should show both the total credit calculated and the amount applied to this year. The amount carrying forward should be the difference. It's on Part I, line 15 (total credit) and line 16 (amount used this year).

Found it! You're right, it's on those lines. Weird that TurboTax doesn't make this clearer in their summary. I see now that I have about $5,100 carrying forward. Thanks for pointing me to the right place!