Thanks for bringing that up - I hadn't even considered the luxury auto limits. My lease will be for a standard SUV around $42k, so I should be under that threshold. But good to know about the inclusion amount for future reference! Do you find the lease deduction to be worth it overall for your business? I'm still debating whether the record-keeping hassle is worth the tax benefit.

For me, the lease deduction is definitely worth it even with the extra paperwork. Since I use my vehicle about 70% for showing properties to clients, I get a substantial deduction that offsets a good chunk of my monthly payments. The record-keeping isn't too bad once you get a system in place. I use a mileage tracking app that automatically logs my trips, then I just categorize them once a week as business or personal. Takes maybe 10 minutes weekly. I also take photos of any car-related receipts with my phone and store them in a dedicated folder. My tax person loves me for being so organized!

Is that really necessary? Isn't it all just Schedule C income that can be lumped together?

Does that 4-year rule apply to employees or just to employers? Like, do I as a regular employee need to keep my W-2s for 4 years, or is that just for businesses?

The 4-year retention rule for employment tax records applies primarily to employers who need to maintain payroll records, tax forms, etc. However, as an employee, it's still wise to keep your W-2s for at least 4 years too because they're essential for verifying your Social Security contributions and earnings history. If there's ever a discrepancy in your Social Security earnings record (which can happen), having those W-2s can be crucial evidence. The Social Security Administration can make corrections to your earnings record beyond the typical IRS audit period, so having documentation for longer than 3 years can be important for your future benefits.

Do you have a recommendation for a good shredder brand? Mine keeps jamming every time I try to do more than 2-3 pages.

That's really helpful to know about your audit experience. Did they give you a hard time about the missing receipts initially? How long did the whole audit process take from start to finish?

They definitely asked for the receipts first and I had a moment of panic when I couldn't produce many of them. But when I showed my expense tracking spreadsheet along with the corresponding bank statements, they were pretty reasonable about it. They focused way more attention on verifying my larger deductions like my home office and some camera equipment I bought for my online business. The whole process took about three and a half months from the initial letter to resolution. It was stressful but not nearly as bad as I expected. The key was being organized with the records I did have and being able to explain my business purpose for each category of expense.

I'm doing online tutoring! I use the notebooks and folders to organize materials for different students, printer paper/ink for worksheets, and pens/markers for creating visual aids. So everything is pretty directly tied to my actual work activities.

This is so true! I'm a freelance designer and my art supplies are obviously business expenses, but when I tried deducting general office stuff like a stapler and paper clips, my tax guy said those are harder to justify without good documentation.

Do you have to file special forms for the state disaster loss claim? My state tax form seems way simpler than federal and doesn't mention disaster losses anywhere.

You usually need to file an attachment or schedule with your state return specifically for casualty losses. Many states have their own version of the federal Form 4684. Check your state's department of revenue website - they often have specific instructions for disaster victims in federally declared disaster areas. Some states automatically conform to federal tax treatment, while others have their own rules. The good news is that several states are more generous than the federal government and don't apply the 10% AGI limitation.

You don't have to wait for FEMA to file your taxes, but you'll need to reduce your loss amount by any FEMA payments you expect to receive. If you file before getting FEMA money and then receive it later, you might need to report it as income on next year's return, depending on how much tax benefit you got from the deduction.

That's reassuring! So even if my status did change in December from full-time to something else, it wouldn't necessarily impact my tax return? I was worried I'd have to get the form corrected before filing.

That's exactly right. The 1095-C is more of an informational form for most employees. As long as you had health insurance coverage throughout the year (whether through your employer or another source), the specific codes typically don't affect your tax calculations. You only need to worry about the codes if you're claiming the premium tax credit through the Marketplace, which you wouldn't be eligible for during months your employer offered affordable coverage. Based on what you've described, this doesn't sound like it applies in your situation.

Is there a specific department in HR that typically handles these forms? I need to ask about my own 1095-C but I'm not sure who to contact. Would it be benefits, payroll, or someone else?