Does anyone know if probate court fees can be included in deductible trustee expenses? The estate I'm handling had to go through partial probate and I personally paid about $1,850 in court costs.

Court fees related to administering the trust assets can typically be deducted as trustee expenses if you paid them yourself as part of your trustee duties. These would be considered necessary expenses in fulfilling your fiduciary responsibility. Make sure you have documentation showing you personally paid these costs rather than having them paid directly from trust assets. If they were paid from trust assets, they would be deducted on the trust's tax return (Form 1041) rather than your personal return.

I used TurboTax last year for my trustee income. It actually handled it pretty well. When you get to the income section, it asks about different types of income and there's an option for self-employment or business income. That's where I entered my trustee fees. Then it walks you through business expenses where you can deduct your trustee-related costs. Just make sure to answer the questions accurately about how active your trustee role is. That determines whether it guides you to Schedule C or "other income.

This is exactly what I'm afraid of. Did you try calling the IRS beforehand to discuss settlement options, or did you go straight to representing yourself in court?

I tried calling the IRS multiple times but could never get through to anyone helpful. I just got transferred around and eventually disconnected. That's part of why I decided to fight it in court. Looking back, I should have been more persistent about reaching someone at the IRS who could discuss my case before the court date. Many cases get settled before court through their appeals process if you can actually reach the right person.

This is great advice! Do you need to qualify based on income to use these services? And how did you find them - did you just call the law school directly?

Did you have any issues with the IRS questioning the deduction? I'm worried about raising audit flags since credit card interest isn't the typical way people finance investments.

No issues with the IRS so far. The key was having super clear documentation showing exactly which charges were for the investment and keeping those separate from personal expenses. I also made sure the investment itself was properly documented with a business plan and formal agreements. Having a dedicated card helps a lot. If you're already using a mixed-use card, at least try to stop using it for anything but the investment going forward. Makes the paper trail much cleaner.

Thanks for pointing that out! My investment is actually in a private tech startup, not muni bonds or tax-exempt securities. Does that change anything about how I should approach this?

Is there any advantage to them putting themselves on actual payroll instead of just taking draws? I've heard something about S-corps saving on self-employment taxes but I'm fuzzy on the details.

There can be significant tax advantages to electing S-corporation status and putting yourself on payroll, but it comes with more complexity and costs. With an S-corp, you can pay yourself a "reasonable salary" subject to employment taxes, then take additional money as distributions that aren't subject to self-employment tax. This can save thousands in self-employment taxes depending on your profit level, but you'll have additional costs: payroll processing, employment tax filings (including Forms 940 and 941), workers' comp insurance, and additional accounting complexity. Generally, businesses making $40,000+ in profit might benefit from this structure, but it's very situation-dependent and requires professional guidance to do correctly.

Thanks for the practical advice! We're definitely keeping track of all our expenses. Is there anything specific to the cleaning business that people commonly miss as legitimate deductions? We're currently using our personal cars to get to jobs.

What exactly should I be writing down? Just the total amount or do I need to break it down by credit card vs cash tips?

Ideally you should record both your cash and credit card tips separately for each shift. Credit card tips are already tracked by the restaurant's system, but having your own record helps you verify everything's correct. For cash, just the total amount per shift is fine - you don't need to track each individual transaction. Also record the date, which shift you worked (lunch/dinner), and your total sales if possible. This helps establish the reasonableness of your reported tips if there's ever a question. Many servers use tip tracking apps now that make this super simple - just a quick entry at the end of each shift.

This is so true. I'm in New York and the state department of taxation came after me even though I'd settled things with the IRS. They have their own penalty structures too.