Do you think it's worth hiring a CPA who specializes in real estate for the first year at least? I'm concerned I'll mess this up, and it seems like getting it right from the start would be easier than fixing it later.

Absolutely worth hiring a real estate specialized CPA at least for the first year. They'll set up your depreciation schedules correctly from the beginning, which makes future years much easier. The upfront cost of a good CPA is nothing compared to the potential headache of incorrectly calculated depreciation that might need to be fixed through amended returns. Plus, a real estate CPA will know about deductions and strategies you might miss on your own. My biggest regret was trying to DIY my rental taxes for the first few years - I missed several legitimate deductions and had to go back and amend returns once I finally got professional help.

Yes, what you're referring to is a cost segregation study, which is essentially a more detailed version of what we're discussing. A professional cost segregation study identifies many building components that can be depreciated over 5, 7, or 15 years instead of 27.5 years. This might include electrical systems, plumbing, specialized flooring, cabinetry, and many other components. The benefit is accelerated depreciation deductions, meaning larger tax savings in the early years. However, a formal cost segregation study typically makes financial sense only for properties valued at $500,000+ because of the cost to have it professionally done. For smaller properties, you can still segregate obvious components (like appliances and land improvements) without a formal study, but you won't be able to get as detailed with building components.

I hadn't even thought about insurance or retirement accounts! Do you have recommendations for affordable E&O insurance for a solo developer? And for the Solo 401(k), can I set that up myself or do I need to go through a special provider?

For E&O insurance, I use Hiscox which has reasonable rates for solo developers - usually $500-1000/year depending on your projects. Some clients actually require this in contracts, so it's worth having anyway. For the Solo 401(k), you can set it up yourself through providers like Fidelity, Vanguard, or Charles Schwab for free. The paperwork is a bit involved but not terrible. The huge advantage is you can contribute both as the "employee" (up to $22,500 in 2023) AND as the "employer" (up to 25% of your net earnings) for a much higher total than regular IRAs allow. Just make sure you set it up before December 31st of the tax year you want to use it for.

Adding to this - make sure you're accounting for self-employment tax (15.3%) on top of regular income tax. It catches a lot of first-time contractors off guard. You pay both the employer and employee portions of Medicare and Social Security taxes. You can deduct the employer half though.

This actually makes sense mathematically but seems like a lot of extra work just to avoid taxes. Wouldn't it be better to just charge more for your freelance work to cover the tax difference?

Do you know if converting from an FSA to HSA mid-year affects the contribution limits? My company is switching our health plans in July and I already contributed to an FSA.

Yes, it definitely affects your contribution limits. When you switch from an FSA to HSA mid-year, you generally have to prorate the HSA contribution limit based on the number of months you're eligible. If you make a mid-year switch, you can only contribute 1/12 of the annual limit for each month you're HSA-eligible. However, there's something called the "last-month rule" that might help - if you're HSA-eligible on December 1, you can potentially contribute the full year's limit, but you must remain HSA-eligible through December of the following year (called the testing period) or face penalties on the accelerated portion.

Does FreeTaxUSA handle situations where you've changed jobs mid-year and have HSA contributions from two different employers? That's what I'm dealing with now.

Can you contribute to both a 401k and an IRA in the same year? And if I already have a 401k at work, can I still deduct traditional IRA contributions?

Yes, you can definitely contribute to both a 401k and an IRA in the same year. They have separate contribution limits. Whether you can deduct traditional IRA contributions when you have a 401k depends on your income. For 2025, if you're single and your modified AGI is below $78,000, you can take a full deduction. Between $78,000-$88,000, you get a partial deduction. Above $88,000, no deduction. For married filing jointly, the phase-out range is $123,000-$143,000. Even if you can't deduct it, you could still do a non-deductible IRA contribution and then convert to Roth (the backdoor Roth strategy).

Does it make more sense to max out your 401k first or your IRA first? My company matches the first 5% in my 401k but the investment options aren't great.