Thank you for this! Does FreeTaxUSA handle 1099 income too? I have a small side gig that I get a 1099 for and that's usually when TurboTax hits me with the "upgrade to premium" nonsense.

Yes, FreeTaxUSA handles 1099 income with no extra charge for the federal return. I have a side gig too and I enter multiple 1099s every year without any "premium upgrade" nonsense. That's one of the main reasons I switched from TurboTax years ago. They have a pretty straightforward interface for entering self-employment income and expenses. You'll still fill out a Schedule C just like with any other service, but they don't charge extra for it. The state return does cost about $15, but that's still way cheaper than most alternatives.

This is terrible advice. You should always file your taxes if you meet the filing requirements. Sometimes there are credits or deductions you don't know about, and establishing a history of filing on time can help if you ever do get audited in the future.

Good point! I completely forgot to consider state tax implications. I'm in California - any idea if they allow investment interest deductions similarly to the federal rules?

California generally conforms to federal treatment of investment interest expense deductions. So if you can deduct it on your federal Schedule A, you should be able to deduct it on your California Schedule CA (540), assuming you're itemizing on both returns. Just make sure all your documentation is solid since family transactions get extra scrutiny from both the IRS and the California Franchise Tax Board. The loan should absolutely have a reasonable interest rate and formal payment schedule.

The IRS publishes the Applicable Federal Rates (AFR) monthly, which are the minimum interest rates they consider legitimate for loans. You can Google "IRS AFR rates" to find the current ones. They have different rates for short-term, mid-term, and long-term loans. If you charge less than the AFR, the IRS might consider part of the loan as a gift, which creates a whole different tax situation. For family loans for investments, it's usually safest to use the exact AFR rate or slightly above it.

I hadn't even considered an EA! How did you find one who specializes in tech compensation? That price point sounds much more reasonable than what the CPAs are quoting.

I found mine through the National Association of Enrolled Agents website (naea.org) - they have a directory where you can search by specialty. I filtered for ones who listed "equity compensation" as a specialty. Many EAs who work with tech employees advertise their familiarity with ISOs, RSUs, ESPPs, and startup equity. Some even offer free initial consultations where you can discuss your situation before committing. I'd look for someone who has experience with both rental properties and equity compensation specifically. The sweet spot for your situation is definitely an EA who has tech industry experience but doesn't charge CPA rates.

Does FreeTaxUSA handle multi-state returns well? I have property in one state but live in another like OP.

That's a great idea! Do you know if there's a way to check what specific type of nonprofit they are? Their website just says "nonprofit organization" but doesn't specify the 501c classification.

You can look up their tax-exempt status using the IRS Tax Exempt Organization Search tool at https://apps.irs.gov/app/eos/. Just enter the organization's name or EIN number. You could also just ask the organization directly - they should know their tax status. If they're a 501(c)(3), they're eligible to receive tax-deductible contributions. If they're another type of 501(c) organization (like a 501(c)(7) social club), then donations wouldn't be deductible even if made directly to them.

This is actually a gray area that could get the nonprofit in trouble. If there's an understanding that donations to the "general fund" are actually intended to pay for specific students' expenses, the IRS could consider it a disguised payment for services rather than a donation. The nonprofit could risk their tax-exempt status if they're facilitating this type of arrangement.

I've been claiming depreciation each year, but I'm not sure I understand how the recapture works. Do I pay 25% on the total amount I've claimed in depreciation over the years? And is there any way to reduce this tax hit?

Yes, you'll pay 25% on all the depreciation you've claimed (or were required to claim even if you didn't). It's separate from your capital gains tax and is reported on Form 4797. One way to potentially defer both capital gains and depreciation recapture tax is by doing a 1031 exchange into another investment property. But that only works if you want to stay in real estate investing, not if you're cashing out. There are strict timelines though - you need to identify potential replacement properties within 45 days of selling and complete the purchase within 180 days. You also need to use a qualified intermediary to hold the funds. Not simple, but it can save a ton in taxes if you're staying in the real estate game.

Replacing carpet is generally considered a repair as long as you're not upgrading substantially. So if you're replacing worn carpet with similar quality carpet, that would be a repair expense you can deduct on Schedule E this year rather than adding to basis.