Thanks for explaining this! I'm confused about the "incremental cost" part though. How exactly is that calculated? Does the IRS provide specific comparisons somewhere of EV vs gas vehicle costs?

The incremental cost calculation is indeed one of the more confusing aspects. The IRS hasn't provided an official database of comparisons, which leaves it somewhat open to interpretation. Generally, you'd need to identify a comparable gas-powered vehicle with similar features and capacity, then calculate the price difference. For many passenger vehicles and light trucks, the 30% calculation usually results in an amount exceeding $7,500, so you'll often just get the maximum $7,500 credit. The incremental cost calculation becomes more relevant for specialty commercial vehicles where the EV premium might be less pronounced or for vehicles over 14,000 lbs where the higher credit limit applies.

Did you have to make any modifications to the truck to qualify it as a business vehicle? I've heard some people say you need commercial insurance or special registration for it to count.

Do digital textbooks and access codes count too? Almost all my "textbooks" are actually digital access codes that my professors require us to buy for online homework systems. Does the IRS consider those qualified expenses for the American Opportunity Credit?

Yes, digital textbooks and required access codes absolutely count as qualified education expenses! The IRS doesn't distinguish between physical and digital textbooks as long as they're required for your courses. Those online homework system access codes are specifically mentioned in IRS guidance as qualifying expenses when they're required for your coursework. Just make sure you keep digital receipts or confirmation emails showing your purchases. These expenses can significantly increase your credit amount when they're not included on your 1098-T.

Super helpful info about the income limits! Quick question though - does money received from foreign parents count toward that income limit? OP mentioned getting money from parents abroad, and I'm in a similar situation getting about $15K yearly from my parents in Korea plus my $12K campus job income.

Did they help with state taxes too? I heard nonresident aliens sometimes have to file state returns differently than the federal.

Yes, they helped with both federal and state returns. You're right that state filing can be different - some states follow the federal definitions of residency while others have their own rules. In my case, I needed to file as a nonresident for federal purposes but was considered a resident for state tax purposes since I lived there the entire year. The VITA volunteers were trained on both federal and state requirements for international students. Just be aware that these programs usually have income limits (I think around $58,000), but most students fall under that threshold anyway.

Oh no, did you have to file an amended return? How did you fix the situation?

Good point! Did you find that you needed different documentation for state vs federal? My state seems even pickier than the IRS about business/hobby distinctions.

Yes, I definitely needed more specific documentation for my state return. My state required me to show a more direct connection between competition participation and actual business revenue. I had to keep a log of new clients who mentioned seeing me compete or found me through competition networking. The state auditor also wanted to see that I was treating the activity consistently as a business on all fronts - separate business accounts for these expenses, formal marketing plans including competitions, and proof that I approached competitions differently than a hobbyist would. It was much more detailed than what the federal documentation required.

That's a really good idea, I hadn't thought about structuring it that way. So basically my business would directly pay the tournament fees and expenses rather than "giving me money" that I then use for tournaments. That seems cleaner from a documentation standpoint. Is your friend's face/name/image used in the business's marketing materials? I'm trying to figure out if I need to create more separation between "me the artist" and "me the player" for this to work properly.

I thought you can't day trade in an IRA because of the limited deposits each year and trading restrictions?

You're right that there are limitations. IRAs have annual contribution limits ($7,000 for 2025 if you're under 50), and you can't use margin or do certain types of options trading. But you absolutely can do active trading within those limitations. Just no pattern day trading using margin, which requires $25,000 minimum equity in regular accounts. Some brokerages also have additional restrictions on IRAs, but the tax benefits can be huge for the trading you can do in there.

Thanks for the suggestion. I actually started doing this after I got confused about the tax implications. Do you happen to have a template you could share? I'm tracking basic info like buy/sell prices and dates, but wonder if I'm missing anything important for tax purposes.