Can you use per diem for just some trips and actual receipts for others? Or once you choose a method, do you have to stick with it for the whole year?

You can absolutely mix methods throughout the tax year. You can use per diem for some trips and actual receipts for others. The only requirement is consistency within each individual business trip. So, for a 3-day convention in Chicago, you need to use either per diem OR actual receipts for that entire trip - you can't switch methods mid-trip. But for your next event in a different city, you could use the other method.

Client meals are still subject to the 50% limitation. There's no specific dollar limit per person, but deductions need to be "reasonable" in the eyes of the IRS - so a $500 meal for one client might raise eyebrows during an audit. Make sure you document the specific business purpose of these meals, who attended, and what business topics were discussed. Without that documentation, the IRS could disallow the entire deduction, even the 50% portion.

Can you explain more about this step transaction thing? If the kids become legitimate partners with economic risk, why would the timing matter? Seems like as long as they're real partners with real rights the IRS shouldn't be able to collapse anything?

The step transaction doctrine is an IRS principle that looks at the substance over the form of a series of related transactions. Even if each step is technically legal, if the IRS determines they were pre-planned steps to achieve a tax result that wouldn't be available if done directly, they can collapse them into a single transaction. For family LP transfers specifically, if you gift LP interests to your kids and then the partnership sells the property shortly after, it can appear that the only purpose of bringing them in was to split the capital gain among more taxpayers. This is especially true if there were discussions about selling before the transfer of interests. The key is establishing that each partner has legitimate economic risk and that the transfer of interests had independent business purpose beyond just tax savings. Documentation of meetings, legitimate business reasons for the transfers, and allowing time between transactions all help demonstrate these weren't just predetermined steps in a tax avoidance scheme.

Yes, a CRT can work with property held in an LP, but it gets complicated. The LP would typically distribute the property to the partners first, then the partners would contribute their interests to the CRT. The main benefit is you avoid immediate capital gains tax on the appreciation when the property is sold inside the CRT.

That sounds like a good option! How did you find them and was there a long wait time to get an appointment? I'm wondering if they're available year-round or just during tax season?

I found my local VITA site by using the IRS's locator tool on their website - just search "VITA locator IRS" and it should come up. The wait time varies depending on the time of year. During tax season (January-April), it can be 1-2 weeks for an appointment, but they often have walk-in hours too. Most VITA sites are only open during tax season, typically January through April 15th, with some sites remaining open until October for extension filers. A few larger sites in major cities operate year-round, but they're the exception. If you're outside tax season, you might want to call ahead to check if any sites in your area are still operating.

I used a Certified Acceptance Agent last year and it was worth every penny. Paid $150 but they handled everything - verified my documents, made sure my W-7 was filled out correctly, and submitted everything together with my tax return. Got my ITIN in about 6 weeks with zero hassle. Just make sure you find one that's actually IRS-authorized! You can check on the IRS website for legitimate CAAs.

Wait seriously? So even if they approve my extension request, I'm still on the hook for late penalties for not getting them to the contractors by 1/31? That's not what I was expecting at all.

Yes, that's correct. The extension for 1099-NEC forms only applies to the portion you file with the IRS, not the requirement to furnish copies to recipients by January 31. This is different from some other tax forms, and it confuses many business owners. The recipient copies were legally required to be delivered by January 31 regardless of any extension. This is because the recipients need this information to accurately prepare their own tax returns. However, documenting your reasonable cause (the employee turnover) is still important, as it may help reduce penalties through a penalty abatement request even though it won't eliminate them entirely.

The IRS rarely hits people with the "intentional disregard" penalty though - that's usually reserved for repeat offenders or when there's evidence you were deliberately trying to avoid your obligations. As long as you're making a genuine effort to correct the situation now, you'll likely just face the standard penalties.

This is so true! I accidentally collected tax in Nevada for 6 months when I didn't need to because my shopping cart software defaulted to it. When I realized the mistake, I had to FIND all those customers and issue refunds because I couldn't remit the tax without registering, and I didn't want to register since I was below the threshold. The whole system is a mess.

Exactly! And many businesses don't even realize that collecting the tax creates the obligation to file returns, even if you're below the Economic Nexus threshold. So they think they're being "extra compliant" by collecting tax everywhere, not understanding they're creating filing obligations in states where they wouldn't otherwise have them. The real problem is we need a simplified national approach instead of this patchwork of state requirements. Until then, I don't think we should jump to assuming fraud when confusion and software limitations are much more likely explanations.

OMG I've seen this too! A site charged me 7.25% "tax" but the receipt called it a "marketplace facilitation fee" in the itemized breakdown. When I called them out they said it covers their costs for tax compliance software. Shady AF but apparently not illegal as long as they don't explicitly call it "sales tax" in their accounting.

Yeah it seems like there's this gray area where they can call something a "tax" or "fee" to the customer but as long as they account for it differently in their books, they're technically not committing tax fraud. Still feels deceptive though. I started looking more carefully at receipts after that experience and found several small businesses doing similar things. One even had a 5% "interstate regulatory compliance fee" that was grouped with the tax on the checkout page but separated in the final receipt. Consumers would never notice unless they scrutinized the itemized receipt.