One thing to consider - the American Opportunity Tax Credit your parents claimed might actually have been correct if they were supporting you. That credit can be claimed by whoever claims you as a dependent. But the taxable portion of scholarships above qualified education expenses is always taxable to the student, regardless of dependent status. A lot of students and parents don't realize these are separate issues. If I were you, I'd file the late return for 2023 and request first-time penalty abatement. The IRS is generally pretty understanding for first-time issues, especially with students who didn't understand the filing requirements.

Just wanted to add that the standard deduction for 2023 was $12,950 for single filers. So even if you had $14,700 in taxable scholarship income, your actual taxable income after the standard deduction would be around $1,750, putting your tax liability much lower than you're calculating. Also, don't forget that scholarships that go toward qualified education expenses (tuition, fees, books required for courses) aren't taxable. Only the portion that exceeds these expenses or goes toward room and board is taxable.

Has anyone tried the automatic OBD mileage trackers? They plug into your car's diagnostic port and track trips automatically. My tax guy recommended one called Vehmo but i'm not sure if it's worth the $80.

I've been doing gig work for about 2 years now and went through the same mileage tracking nightmare! What finally worked for me was combining two approaches: I use a simple voice memo app to record my starting and ending odometer readings while I'm sitting in my car (takes literally 5 seconds), then I have a weekly reminder on my phone to transcribe those voice memos into a simple spreadsheet. The voice memo method is foolproof because I can do it even when my hands are full or I'm in a hurry. I just say "Starting DoorDash shift, odometer 45,230" and then "Ending shift, odometer 45,267" when I'm done. At the end of the week, I listen to all the recordings and update my spreadsheet with dates, start/end miles, and total business miles. This system has saved me from losing track of about $3,000 worth of deductions last year. The key is finding something so simple that you literally can't forget or mess it up, even when you're tired after a long shift. Apps are great but they can fail or you can forget to use them - your voice is always available!

Just to be clear, since they're your ex-spouse, they don't have to meet the "member of household" test that normally applies for qualifying relatives. That's a special exception in the tax code for ex-spouses. But you still need to provide more than half their support for the year. Make sure they don't have other income sources you're not aware of. My ex had a small online business selling crafts that I didn't know about, and it pushed them over the income limit. Created a huge headache during tax filing.

One thing I haven't seen mentioned yet is that you should also keep track of any income your ex might receive throughout the year, even if it seems minimal. This includes things like unemployment benefits, cash gifts from family members, or any occasional odd jobs they might do. The $4,950 gross income limit is pretty strict, and even small amounts can add up. Also, since you mentioned they haven't filed taxes in several years, you might want to encourage them to get caught up on any required filings before you claim them as a dependent. While it shouldn't directly affect your ability to claim them, having clean tax records for both of you will make things smoother if the IRS has any questions. For the support test calculation, don't forget to include the fair rental value of them living in your home. If your rent/mortgage is $1,500/month and they're living there for 10 months, that's $15,000 in housing support you're providing. This often makes up a large portion of the "more than half support" requirement.

Just to add some clarity about special depreciation allowance vs. Section 179 since I see some confusion in the responses. They're related but different: Section 179 allows you to immediately expense (deduct) the cost of qualifying property rather than depreciating it over several years. For 2023, the limit was $1,160,000. The special depreciation allowance (also called bonus depreciation) was 80% for 2023 and applies after Section 179 deductions. So if you bought $50,000 of qualifying equipment and took $30,000 as a Section 179 deduction, you could then apply 80% bonus depreciation to the remaining $20,000. For vehicles specifically, there are luxury auto limits that cap how much you can deduct. For passenger vehicles placed in service in 2023, the max combined Section 179 and depreciation is generally $20,200 for the first year. The key thing OP should verify is that these limits were properly applied in their tax software. The software should have done this automatically, but it's always good to double-check when claiming substantial deductions.

Has anyone addressed what happens if you claim special depreciation allowance and then in a later year your business use drops below 50%? This happened to me and it created a real tax headache. I claimed Section 179 and bonus depreciation when my business use was 70%, but two years later my business use dropped to 30%. I had to recapture some of the excess depreciation I'd taken and pay tax on it. The IRS calls this "listed property" recapture. Basically, if business use drops below 50% during the recovery period, you have to recalculate depreciation as if you had used the straight-line method from the beginning and pay tax on the difference. Just something to be aware of if you think your business use percentage might drop significantly in future years.

Has anyone successfully passed an IRS audit while claiming QBI deductions on just 2-3 residential rentals? I'm in a similar situation and wondering what documentation actually satisfied the IRS. My CPA says we need detailed logs showing exactly what was done each day but that seems excessive for managing a couple properties.

This is a great question that many rental property owners face. I'd strongly recommend being conservative with the QBI deduction if you can't clearly document the 250 hours annually. A few additional points to consider: The IRS has been increasingly scrutinizing rental property QBI deductions, especially for smaller portfolios. With just 2 properties, reaching 250 hours of qualifying activities can be challenging unless your aunt and uncle are very hands-on with property management, maintenance, and tenant interactions. For documentation going forward, I'd suggest starting a contemporaneous log immediately. Include activities like property inspections, tenant communications, maintenance work, showing properties to prospective tenants, and any repair supervision. Don't try to recreate historical logs - that could backfire in an audit. If they can't meet the 250-hour safe harbor, they might still qualify under the general Section 162 "trade or business" test, but this is much more subjective and riskier. The IRS looks at factors like regularity, continuity, and whether the activity is conducted with a profit motive in a businesslike manner. Given their age and the recent change in tax preparers, it might be worth consulting with a tax professional who specializes in rental property taxation to review their specific situation. The potential tax savings need to be weighed against the audit risk and documentation burden.