We do own a home, so I'll make sure the mortgage interest is included. I think we've got about $8k in state taxes too. Do you know if student loan interest is still deductible if we file MFS for the IDR benefits?

Unfortunately, one of the major downsides of filing MFS is that you cannot deduct student loan interest. This is one of several tax benefits you lose when filing separately. The student loan interest deduction starts phasing out at $75,000 for single filers and $155,000 for joint filers, and is eliminated completely at $90,000 and $185,000 respectively. You should definitely make sure you're capturing the mortgage interest and state/local taxes (SALT). Keep in mind that the standard deduction for MFJ is $27,700 for 2023, so your itemized deductions would need to exceed that amount to be worthwhile. For MFS, each of you would have a $13,850 standard deduction.

Good point about checking the W-2s. Another thing to check is if either of your employers did any special bonus payouts. Those are often withheld at a flat 22% rate, which can be too low if you're in a higher tax bracket. This happens to me every year with my annual bonus.

The 30% rule of thumb is helpful! Do you think it's worth using accounting software like QuickBooks Self-Employed at my income level, or is that overkill?

For your income level ($10-15K), I think a simple spreadsheet might be sufficient if you're organized, but QuickBooks Self-Employed is actually pretty reasonably priced and automates a lot. The time you save categorizing expenses and calculating quarterly taxes might be worth the subscription cost. What I like about dedicated accounting software is that it lets you snap photos of receipts on the go and automatically categorizes transactions. It also helps track mileage if you're driving for business purposes. Plus, when your business grows, you'll already have a system in place rather than trying to transition later.

For 2025, you can deduct 67 cents per mile for business travel (the rate is adjusted annually). So if you drive 100 miles for business, that's a $67 deduction. You need to track your starting mileage, ending mileage, date, and business purpose for each trip. There are apps that can help track this automatically.

1 Thanks for this info. I'm actually not sure I'm doing this correctly. Do you use specific inventory tracking software or do you have another system? My business is fairly small but growing, and I've mostly been tracking things in spreadsheets so far.

4 I started with spreadsheets too, but as my business grew, I invested in QuickBooks Online with their inventory add-on. It was a game-changer for tracking cost of goods sold properly. The key thing the IRS looks for is consistency in your inventory methods - whether you're using FIFO (first in, first out) or another approved method. For a smaller business, good spreadsheets can work fine as long as you're methodical. Just make sure you're tracking: 1) Beginning inventory value 2) Purchases made throughout the year 3) Ending inventory value. The formula is: Beginning inventory + Purchases - Ending inventory = Cost of Goods Sold for the year.

19 Is this really true? So I could pay someone's entire college tuition directly to the school and it wouldn't count against the gift tax limit at all?

Did you write this letter yourself or have a professional help you? I'm wondering if I should add something similar but I'm not sure how to structure it without sounding like I'm making excuses.

I wrote it myself, but I followed a clear structure. First paragraph explained the events that led to my tax debt (medical crisis + job loss). Second section outlined my current financial situation with specific numbers referenced from my 433-A form. Third part detailed why my situation was unlikely to improve (permanent disability affecting earning capacity). Last section expressed my good faith desire to resolve the debt while acknowledging my limitations. Keep it factual rather than emotional. Reference specific supporting documents you've included (medical records, disability determination, etc). I also had my accountant review it to make sure I wasn't saying anything that contradicted my financial statements. About 2 pages total - not too long, but enough to tell the complete story.

This is such good advice. I missed my appeal window by 2 days and had to restart the entire process. Added 6 months to the whole ordeal. Make sure your contact info is current with the IRS too! My rejection letter went to an old address even though I'd updated everything on my forms.

10 Wouldn't making Sunset a subsidiary of Blue Ridge defeat the purpose of having separate LLCs for liability protection though? I thought the whole point was to keep the properties legally separate so problems with one don't affect the other.

7 You raise an excellent point about liability protection. Yes, having Sunset as a subsidiary of Blue Ridge would potentially undermine some of the liability protection since they would be connected entities. If liability protection between properties is your primary concern, then keeping them as truly separate entities makes sense. In that case, the capital contribution approach might not be ideal either. You might be better off having Sunset LLC obtain its own financing directly for the new property purchase. That way each property and its associated debt are clearly contained within their respective entities, and the interest expense clearly matches the income-producing activity in each LLC.

1 That makes a lot of sense and aligns with what I've read. Both LLCs are indeed single-member and disregarded for tax purposes, flowing through to my personal return. I was overthinking this! If everything ends up on my Schedule E anyway, then the interest should be deductible against my rental income regardless of which LLC technically has the loan or property. I guess the important thing is just making sure I have proper documentation showing the business purpose of the loan (acquiring rental property). Thanks for pointing this out - sometimes the simplest answer is right there but easy to miss when you're deep in the details!