


Ask the community...
Here's a tip if you're doing your own bookkeeping: create a separate "Sales Tax Collected" account in your accounting software as a current liability (not income). When Ebay collects the tax, you'd record it going into this account, and when they remit it to the state, it leaves this account. This keeps it completely separate from your income accounts and gives you a clean trail if you ever get audited. The balance should always zero out if Ebay is handling all the remittance for you.
What about if some of my sales are direct through my website where I have to collect and remit the tax myself? Do I treat those differently than the Ebay collected ones?
For sales through your own website, you'll use the same principles but with a few extra steps. You'll still record the collected sales tax in a liability account (not income), but since you're responsible for remitting it yourself, the balance won't automatically zero out like with Ebay. You'll need to regularly (monthly, quarterly, or annually depending on your state requirements) transfer that money to the appropriate tax authorities. When you make those payments, you'd record them as drawing down from your sales tax liability account. This keeps your income clean and gives you a clear record of your tax collection and remittance activities.
Important note: if you're selling on multiple platforms, double-check the marketplace facilitator laws for each state you sell into. Some states have different thresholds for when marketplaces must collect taxes vs when sellers need to handle it themselves. It gets complicated fast!
I've been using TaxJar for this and it's been pretty helpful for tracking all the different state thresholds. The economic nexus rules are such a pain to keep up with manually.
Has anyone else dealt with county property tax reassessment after inheriting rental property? In my case, continuing the federal tax depreciation was straightforward, but I got hit with a massive property tax increase because the county reassessed the property value when it transferred to me. Might want to check if that's an issue in your area.
One more tip - don't forget to depreciate the building separately from the improvements. The building itself (not including land) depreciates over 27.5 years from your date of inheritance based on the stepped-up basis. But as others said, the specific improvements like the roof continue on the original schedule. I messed this up my first year and had to file an amended return.
One thing nobody has mentioned yet - definitely check with your state's Secretary of State or equivalent department before doing a mid-year conversion. Some states don't allow direct C Corp to LLC conversions and require you to dissolve the corporation and form a completely new LLC. In those states, you'd need to: 1. Form a new LLC 2. Transfer all assets from C Corp to LLC 3. Formally dissolve the C Corp Also, if your C Corp has multiple shareholders, all of them need to agree to the conversion. And if you have business loans, check if the conversion would trigger any "change in business structure" clauses in your loan agreements.
This is incredibly helpful, thank you! I'm the only shareholder so that part isn't an issue, but I hadn't even thought about checking with my state requirements. Any idea how I find those rules for Illinois? Is it just on the Secretary of State website or is there a specific resource for business conversions?
For Illinois, you should check the Illinois Business Corporation Act and the Illinois Limited Liability Company Act on the Secretary of State website. Illinois does allow statutory conversions, which is the simpler method, but there are specific forms and procedures. You'll need to file Form LLC-37.17 (Articles of Conversion) with the Illinois Secretary of State along with Articles of Organization for your new LLC. Make sure you also check about any existing licenses, permits, or contracts that may need to be updated or transferred. Illinois has a $500 fee for the conversion filing plus the standard LLC formation fees, which is steep but still better than dissolving and reforming separately.
Curious what tax software people recommend for filing the partial year returns after conversion? I'm going through this exact scenario and usually use TurboTax Business but not sure if it handles this situation well.
Don't forget you can deduct a percentage of your cell phone bill as a business expense for food delivery! Since you need your phone for the app, navigation, customer communication, etc. Just calculate what percent of your phone usage is for delivery work (be honest - the IRS isn't stupid). I claim about 60% of my phone bill since I use it a ton for deliveries. Also, those insulated bags, car phone mounts, and even a portion of car insurance can be deductible! Just make sure to keep all receipts.
I use TurboTax Self-Employed for my delivery gig taxes and it's pretty straightforward. It walks you through all the possible deductions for delivery drivers. Just make sure to keep good records all year - the IRS has been cracking down on gig workers lately with all the new reporting requirements. The apps are supposed to issue 1099s for anyone making over $600 now, so there's no flying under the radar anymore. I learned the hard way after a messy audit last year!
Thanks for the advice! Was the audit process difficult? That's one of my big worries - I'm doing my best to track everything but I'm afraid I'll mess something up and get flagged.
Noah Lee
Don't forget that if you claim your parent as a dependent, you might qualify for head of household filing status which gives you better tax rates than filing as single! You need to provide more than half the cost of keeping up the home where your parent lives, but it sounds like you do that already.
0 coins
Evelyn Kim
β’Does that head of household thing really make a big difference? I've always just filed as single. Is it complicated to change to that?
0 coins
Noah Lee
β’Head of household makes a HUGE difference! For 2025, the standard deduction for HOH is around $20,800 compared to just $14,600 for single filers. That's over $6,000 more of your income that won't be taxed! It's not complicated at all to change your filing status. When you prepare your return, you just select "Head of Household" instead of "Single" and the tax software or forms will automatically apply the better tax rates and higher standard deduction. The requirements are that you're unmarried, pay more than half the cost of keeping up the home, and have a qualifying person living with you (your dependent parent counts for this).
0 coins
Ava Hernandez
Has anyone dealt with the situation where a parent gets too much Social Security to qualify as a dependent? My dad gets about $2,300/month and I heard there's a gross income limit.
0 coins
Isabella Martin
β’The gross income limit only applies to taxable income. Social Security is only partially taxable or not taxable at all depending on total income. Check out the worksheet in IRS Publication 501 for determining if Social Security counts toward the gross income test.
0 coins