Is cost segregation worth it for smaller properties? My commercial building was only about $700k with $150k in renovations. I've heard mixed things about whether the expense of the study is justified at this price point.

It really depends on the type of property and renovations. As a general rule, I've found cost segregation becomes financially worthwhile for properties above $500k in value, especially those with significant interior components or specialized systems. For your specific situation with a $700k property and $150k renovations, I'd say it's right on the borderline. If your renovations included significant amounts of new interior components (lighting systems, specialized electrical, custom cabinetry, etc.), it would likely be worth it. The study might cost $4,000-7,000, but could potentially reclassify $200k+ of your basis into 5, 7, or 15-year property instead of 39-year, which accelerates your tax savings dramatically.

What kind of categorization do you recommend? Like how detailed should it be? I usually just have my contractor give me invoices that say "Kitchen renovation" or "Bathroom remodel" but I'm guessing that's not enough?

That actually makes a lot more sense now! So if I'm understanding correctly, the $7393 on Form 8606 isn't my actual basis, but rather the portion of my $8000 contribution that's being treated as non-taxable in this specific conversion? And I'm not losing the other portion of my basis?

Exactly! You've got it right. The $8000 is your full non-deductible contribution (your true basis), but because of the pro-rata rule, only 93% of your conversion is considered tax-free this year. You're not losing any basis. Form 8606 is just showing how much of your conversion is tax-free versus taxable for this specific tax year. The form is calculating that approximately $7393 of your distribution is from basis (tax-free) and about $607 is from earnings (taxable).

The IRA contribution limits for 2024 are indeed $7,000 base + $1,000 catch-up for those 50+, totaling $8,000. This is up from 2023's $6,500 + $1,000 catch-up.

Yes, I made the $8k contribution for 2024! I'm over 50 so I was able to do the full $7k plus the $1k catch-up. I wanted to max it out as I'm trying to catch up on retirement savings.

Do you think it will ever change? Seems like every administration promises tax simplification and it just gets more complicated.

I'm not optimistic about major simplification happening anytime soon. There are too many special interests benefiting from various parts of the tax code. Every tax break has a constituency fighting to keep it, and politicians use the tax code to deliver benefits to their supporters. Plus, the tax preparation industry actively lobbies against simplification - companies like Intuit (TurboTax) have a financial interest in keeping taxes complicated so people need their services. Other countries have shown it's possible to make taxes simpler, but it would require political will that seems lacking in our current environment.

Since the 2017 tax law changes, the standard deduction got much higher ($13,850 for single filers in 2023). Unless you have a mortgage with significant interest, pay high state/local taxes, have major medical expenses, or give a lot to charity, standard deduction is usually better for most people making around $75k. I've done both, and honestly, for my situation ($83k income), the standard deduction has been the better option the last few years. Save yourself the headache of tracking everything unless you know you're close to exceeding the standard deduction threshold.

Do you have a link to these budget projections? I'd like to see the actual numbers.

You can find the official budget projections on the Congressional Budget Office website (cbo.gov) or the White House Office of Management and Budget site (whitehouse.gov/omb). They publish detailed breakdowns of revenue sources and projections. The most recent Economic and Budget Outlook report shows that individual income taxes make up roughly 46% of federal revenue. The data clearly shows that taxpayers earning under $150,000 contribute about 35-40% of total income tax revenue. Removing this would require either massive spending cuts or alternative revenue sources that would likely create different types of tax burdens for the same people who would supposedly benefit.

I've used both and honestly TurboTax's "what-if" simulator is pretty helpful for playing around with different scenarios including policy changes. You can model how your taxes would change under different proposals. A bit more expensive but worth it if you're trying to plan ahead.

This sounds promising! How long did the process take when you used the Taxpayer Advocate Service? And did you need to provide a lot of financial documentation?

The whole process took about 2 months from my initial contact to getting a revised payment plan. They do require quite a bit of documentation - I had to provide bank statements, pay stubs, a detailed list of monthly expenses, and proof of my housing costs and medical expenses. They assigned me a specific advocate who worked directly with me throughout the process. The most helpful part was having someone who could explain the various relief options in plain English and who actually seemed to care about finding a solution that worked for my specific situation. Much better than trying to navigate the general IRS channels where you rarely speak to the same person twice.

This! I switched from doing a Schedule C to forming an S-Corp after my 1099 income hit about $80k, and it saved me a ton on self-employment taxes. You still pay yourself a reasonable salary that gets employment taxes, but can take the rest as distributions that aren't subject to SE tax. Might be worth looking into if your 1099 income is substantial.