That's a really interesting point I hadn't considered. Do you think it's possible to switch from Section 179 to regular depreciation for assets where I've already started with Section 179 but have carryovers?

Unfortunately, once you've elected Section 179 for a specific asset, you generally can't switch to regular depreciation for that same asset in future years. The election is irrevocable for that property. However, for any new assets you place in service going forward, you can choose regular depreciation instead of Section 179. This might be a better strategy if your business income is consistently limited. You could do a hybrid approach where high-cost items get regular depreciation and only smaller purchases get Section 179 treatment.

The dollar limits aren't usually an issue for small businesses though. Most of us are hitting the business income limitation way before we reach the $1.16 million Section 179 limit lol. I wish I had that problem!

What about using my Roth IRA for a first-time home purchase? I heard there's a special exemption? I'm 34 and have had my Roth for 6 years.

For first-time home purchases, you're in luck with that exemption! You can withdraw up to $10,000 of EARNINGS (not just contributions) from your Roth IRA without the 10% early withdrawal penalty for a first-time home purchase. And since you've had your Roth for more than 5 years, those earnings would actually be completely tax-free too. Remember, your contributions always come out first and are always tax-free regardless. The $10,000 exemption is specifically for the earnings portion, which would normally be taxable if you're under 59½. Since you've satisfied the 5-year rule and are using it for a qualifying first-time home purchase, you get the best of both worlds.

Omg yes. I did a backdoor Roth last year and got hit with a surprise tax bill because I didn't realize I had an old Traditional IRA from a previous job with like $3k in it. Made my entire conversion partially taxable because of that stupid pro-rata rule. Now I'm trying to reverse it somehow.

Thanks for the Minnesota-specific info! I hadn't even thought about state-level considerations. Is the Form M8 complicated? And that minimum fee threshold seems really high - I'm definitely not going to hit $1,020,000 anytime soon, so that's good to know! I'll definitely check out Firefly Credit Union - that $1,500 minimum balance seems totally manageable. Do they have good online banking too?

The Form M8 isn't too bad - if you're already preparing federal Form 1120S for your S-Corp, the M8 uses much of the same information. Most tax software automatically generates it when you prepare your federal return. And yes, that minimum fee threshold is high - most small service businesses won't hit it for years, if ever. Firefly's online banking is surprisingly good for a local credit union. Their mobile app lets you deposit checks, transfer funds, pay bills, and even integrates with QuickBooks if you're using that. I've found their customer service to be much more responsive than when I was with Wells Fargo - you can actually talk to the same person consistently when you have questions.

Can you share what tax filing software you used for your S-Corp? I'm trying to decide if I can handle this myself or if I need to budget for an accountant.

It's notable because with all the recent Fed changes, people were expecting the IRS rates to change too. The fact that they're keeping them stable suggests they believe the current economic conditions and inflation outlook are stable. For taxpayers who have payment plans or are dealing with back taxes, any change in these rates can significantly impact how much they end up paying over time. For example, I've been paying down a tax debt from 2022, and a 1% rate change would affect my total cost by hundreds of dollars.

That makes sense, thanks for explaining. I hadn't made the connection to the Fed rate changes. I guess it's good news for anyone with payment plans since the rate isn't going up. My friend has been paying off a pretty substantial tax bill from a few years ago, so I'll let him know the rate is holding steady. He's been worried about the possibility of increases making his payment plan more expensive.

Does setting up a payment plan affect your credit score? I might need to do this this year but I'm also trying to buy a house soon and don't want anything negative on my credit report.

That's really helpful! I've been operating my rental properties for about 4 years now, so sounds like I'm in a similar situation to yours. How detailed did you have to get with your documentation? Did you keep syllabus info for each course to show relevance?

Yes, documentation was crucial. I kept copies of all course syllabi and highlighted specific modules that directly related to property management, tenant relations, and real estate finance. I also maintained a simple log noting when and how I applied specific concepts from my courses to my rental business. For example, when I redesigned my lease based on contract law principles from a course, I documented that change with dates and notes. The IRS didn't ultimately request all of this during my review, but having it ready demonstrated I was serious about the legitimate business purpose. Also keep records showing your rental business was established before starting courses - tax returns showing rental income, business licenses, property management records, etc.

This is an important distinction. I tried deducting real estate courses a few years back and got audited because they determined I was using the education to expand into commercial real estate when I had only been managing residential properties before. The expansion was considered a new business category by the auditor.