Thanks for that suggestion! I looked into the Substantial Presence Test, but it seems that au pairs on J-1 visas are explicitly classified as "exempt individuals" for the first 2 years, meaning they don't count days toward the substantial presence test. She's definitely considered a non-resident alien for tax purposes. Really appreciate everyone's help though - I think I'm going to try one of the specialized services mentioned since the 1040NR seems to have some tricky differences from the standard forms.

Is that really necessary for au pairs? They're only here temporarily.

Yes, it applies to anyone who's required to file US taxes regardless of their visa status or how long they've been here. If they meet the $10,000 threshold in foreign accounts at any point in the year, they need to file the FBAR. Many au pairs keep savings accounts in their home countries while working in the US, and if those accounts plus any other foreign financial accounts total more than $10,000 at any point, they need to file. The penalties for not filing can be severe - starting at $10,000 for non-willful violations.

That doesn't sound right. I've been reading that rental property can qualify for QBI as long as I meet the 250 hour test, even if I have another job. Could someone clarify this? Now I'm confused about whether I'm eligible at all.

There's some confusion here. There are actually two separate tests: one for being a "real estate professional" (which affects whether rental losses can offset other income) and one for the "safe harbor" for rental income to qualify for QBI. For QBI purposes, the IRS created a safe harbor where if you can document 250+ hours of "rental services" per year on a property (or group of properties), that rental activity can qualify as a "trade or business" eligible for QBI. This is true even if you don't meet the stricter real estate professional test. The 250 hours can include management, maintenance, repairs, collecting rent, etc. So yes, you can potentially claim QBI on rental income even with another job, as long as you meet the 250 hour requirement for your rental activities specifically.

That's a great idea. I actually do have some photos of the damage and after the repairs. Did you organize them in any specific way for your audit? Did they ask for anything else besides the photos?

I created a simple document with before/after photos side by side, each labeled with the date and a brief description of the work performed. Under each photo set, I noted how many hours I spent on that specific repair and any materials purchased. They also asked for my activity log (which matched the photo document), bank statements showing material purchases, and communications with tenants about the repairs/issues. Having text messages where tenants reported problems and my responses about fixing them was surprisingly helpful as supporting evidence. The auditor seemed most impressed with the thoroughness and consistency across all the documentation rather than any single piece.

Thanks for mentioning the fair rental value! I hadn't thought about that. Do you know if I need to get some kind of official appraisal of what the room is worth, or can I just look at comparable room rentals in my area?

No official appraisal needed! Just check some local listings for room rentals in similar houses in your neighborhood. Print out a few comparable listings and save them with your tax records. That's all I did when I got audited (yes, it happened to me), and the IRS accepted it with no problem. Just be reasonable - don't claim your spare bedroom is worth $2,000/month if rooms in your area typically rent for $600-700. The IRS mainly wants to see that you've made a good faith effort to calculate a fair amount.

Great question! Tax dependency status and benefit eligibility are separate systems, but they can interact. Claiming someone as a tax dependent generally doesn't affect their SSI or Medicaid eligibility directly. However, if you provide significant financial support that you haven't been reporting to SSI, that could potentially affect their benefit amount - not because you claimed them on taxes, but because support should be reported to SSI regardless of tax filing.

Do you know if New York has something similar? I've been paying $15 for state filing when using FreeTaxUSA and would love to save that money.

Yes, New York does have its own free filing program called NY Free File. You can access it through the NY Department of Taxation and Finance website. They partner with several tax software providers, and many New Yorkers qualify regardless of income level, depending on which software you use. For specific eligibility, visit the NY tax department website and look for their Free File program. This could save you that $15 state filing fee. Just make sure you access it directly through the official NY state tax website to ensure you get the free version.

They make money by recommending financial products to you based on your tax info (like credit cards, loans, etc). The tax service itself is legitimately free, but they're hoping you'll sign up for other services they get paid to promote.

Thanks for sharing your real-world experience! Do you track your inventory of supplies at all, or just expense them as you buy them throughout the year? My wife sometimes buys in bulk when there are deals.

I just expense supplies as I purchase them throughout the year, even when buying in bulk. Unless you're selling these products retail (which would make them inventory), supplies used in services are considered consumed when purchased for tax purposes. When my salon buys in bulk during sales, I still deduct it all in that tax year. The IRS understands this is normal business practice. Just keep your receipts organized in case of an audit, but don't overthink the timing of the deduction. This approach has worked for me for over 15 years without any issues.

What about things that fall into a gray area? Like those expensive brushes that last a few years but eventually wear out? Or the salon capes that might last 1-2 years? I'm never sure if those should be supplies or de minimis items.