Do you know if tankless water heaters qualify for any energy credits in 2025? I just installed one in my rental and the contractor mentioned something about tax benefits but wasn't specific.

Yes, tankless water heaters often qualify for energy efficiency tax credits! For 2025, energy-efficient home improvements can qualify for the Residential Clean Energy Credit, which is 30% of the cost with no upper limit. Tankless water heaters typically need to meet certain Energy Star requirements to qualify. Make sure you get a Manufacturer's Certification Statement from your contractor or the manufacturer that specifically states the water heater meets the efficiency requirements. Keep this with your tax records along with your receipt. This credit is reported on Form 5695 when you file your taxes.

Good point! I had the same experience with my duplex renovation. My property taxes increased by about $1,200/year after the reassessment. One suggestion: check if your county has any programs that phase in assessment increases over multiple years. Our county has a 3-year phase-in program I was able to apply for, which gave me time to gradually increase rents to cover the higher taxes.

I've heard good things about Xero but never tried it. Is it difficult to migrate from QuickBooks? I've got about 3 years of data I wouldn't want to lose during a switch.

The migration process is pretty straightforward. Xero has built-in tools specifically designed to import from QuickBooks. I moved about 5 years of data over without losing anything significant. The only minor hiccup was with some custom categories I had created, but even those transferred with just a little manual adjustment. What I found most helpful was hiring a bookkeeper familiar with both systems to oversee the transition. They made sure all my historical data mapped correctly and set up my new chart of accounts in a way that made sense for my business reporting needs. The whole process took about a weekend, plus a little cleanup over the following month as we spotted a few minor discrepancies.

How did you find an industry-specific bookkeeper? I've been looking for someone who understands the event planning business but haven't had much luck.

Does choosing "Child" vs "Other Relative" actually matter in the software if you're the dependent (not the person claiming the dependent)? I thought that distinction only mattered on the parents' return.

Yes, it actually does matter even on your return as the dependent. TurboTax uses this information to determine your eligibility for certain credits and deductions that might still be available to you despite being claimed as a dependent. For example, education credits have different rules depending on whether you're a qualifying child vs. qualifying relative. The relationship also affects certain phase-out calculations for credits you might still be eligible for. TurboTax is making calculations based on tax law that treats these categories differently, so providing accurate information ensures you get the right result.

Yes! This happened to me too. I think it happens if you go back and change something in your profile like your address or filing status. I've learned to always double-check that box before submitting.

Oh wow I hadn't even thought about mileage! I've definitely been driving all over meeting with potential clients and checking out wholesale suppliers. Is there a good app you recommend for tracking business miles? And do I need to separate startup miles vs regular business miles or are they treated the same for tax purposes?

I use MileIQ now and it's pretty good at automatically tracking trips. For tax purposes, there's no difference in the deduction rate between startup miles vs regular business miles - they both qualify for the same standard mileage rate. The only difference is how you categorize them on your tax forms. Just make sure you log the purpose of each trip and keep that record with your tax documents. The IRS can get picky about mileage deductions if you ever get audited. You'll want your startup miles listed with your other startup expenses, while regular business miles go with your regular business expenses.

Organization costs are specifically for the legal formation of your business entity (like incorporation fees, legal fees for creating your LLC, etc.) while startup costs are the actual business expenses before you open (like market research, advertising, employee training, etc.). They're treated similarly for tax purposes though - both allow up to $5k in first-year deductions with amounts over that amortized over 15 years. The main difference is just which line they go on in your tax forms.

Would the donation value be based on what we originally paid to produce the CDs or what they'd sell for now (which is next to nothing)? Not sure how to determine fair market value for outdated music inventory.

The donation value would be based on the current fair market value, not what you originally paid to produce them. Since they're selling poorly now, the fair market value would likely be quite low. You'd need to find comparable sales of similar items to establish this value - perhaps what similar CDs sell for on eBay or at used music stores. If the items truly have minimal market value, the deduction might not be significant. However, the main benefit might simply be removing them from your inventory tracking requirements going forward since you'd no longer own them.

Did your accountant recommend any specific IRS forms or attachments for documenting the write-down? I've heard mixed things about whether Form 3115 is needed for changing inventory valuation.