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Has anyone used tax software to figure this out? I tried entering a similar expense in TurboTax for my home business and it wasn't clear where to put it.
Has anyone used a property improvement like tree removal as a direct materials cost if you use the wood in your woodworking business? I had a similar situation and my accountant let me fully expense the tree removal because I milled the wood for inventory. Might be worth considering if the trees are a usable species.
That's brilliant! What documentation did you need to provide to make that work? I'm guessing you'd need to show the wood was actually used in products?
Just a quick tip - most states have an online portal where you can register and view your filing history. Google "[your state] tax portal" or "[your state] department of revenue account" and you should find it. You'll need to create an account and verify your identity, but then you can see if you filed last year without having to call anyone. That's how I confirmed I had accidentally skipped filing state taxes one year (had to pay a small penalty but it wasn't too bad).
Do you know if these state portals also show if you owe money still? I filed state taxes last year but got a letter recently saying I have an outstanding balance, which seems wrong.
Yes, most state tax portals will show any outstanding balances you might have. They typically display your filing history, payment history, and any current amounts due including penalties or interest that might have accrued. If you received a letter saying you have an outstanding balance that you believe is incorrect, definitely log into your state's portal to verify. Sometimes there can be processing errors or payments that weren't properly credited to your account. The portal should show the breakdown of what they think you owe and why, which can help you determine if there's a legitimate issue or a mistake.
I made this exact mistake two years ago and didn't file my state taxes! I filed through what I thought was the "official site" and only did federal. Didn't realize until I got a notice from my state a year later. Had to pay penalties and interest. Check your state's department of revenue website asap to see if you have any unfiled returns or balances due. You might still be able to file a late return and reduce any penalties if you act quickly!
I had the same issue last year and ended up using TaxAct. Their system allowed me to manually input the information from my PDFs. It took some time, but they had a reasonable price for e-filing federal and state returns. The interface is pretty straightforward and helps catch errors too.
Did you have to pay again to use TaxAct even though you'd already paid for the other service to create your PDFs? That seems like paying twice for basically the same thing?
Yes, unfortunately I did have to pay again for TaxAct. You're right that it feels like paying twice, which was frustrating. That's the downside of creating PDFs without e-filing capability built-in. Some services advertise "create tax documents" but don't clearly explain that those documents aren't suitable for e-filing. Next year, I'll just start with a service that includes e-filing from the beginning to avoid the double cost. The lesson I learned is to check if e-filing is included before starting the tax preparation process.
honestly at this point just print and mail it. i know its old school but if u already did all the work making the PDFs then why start over? the irs processess paper returns fine it just takes a little longer for refunds. sometimes the simplest solution is best lol
Based on what you described, you're operating as a partnership. The 1099 suggestion is incorrect - that's for independent contractors, not business partners. Since you're splitting income 50/50, you should: 1. File Form 1065 (Partnership Return) 2. Generate Schedule K-1 forms for each partner 3. Each partner reports their income on their individual returns You don't need a formal business entity to be a partnership for tax purposes. Even without paperwork, if you're splitting profits, you're a partnership in the eyes of the IRS.
Thanks for this clear explanation! Just to double check - even though the payments all come to my personal account, we should still file as a partnership rather than me paying my partner as a contractor? And we'd both still use Schedule C on our individual returns?
Yes, even though payments come to your personal account, you should still file as a partnership if you're truly operating as equal partners. The money coming to your account is just a logistical detail - the business relationship is what matters to the IRS. After filing Form 1065, you would each report your partnership income on Schedule E, not Schedule C. Schedule C is for sole proprietorships, while partnership income flows through Schedule E based on the information from your K-1.
My wife and I do content creation and had this EXACT issue last year! We just formed an LLC and elected partnership taxation (its super easy). Now all income goes to the LLC bank account and we file Form 1065. Saved us so much headache and actually some tax money too!
Freya Larsen
Unpopular opinion maybe but I think we DO have a say in where our tax dollars go - it's called voting! We elect representatives to make these decisions. If you don't like how money is spent, vote for candidates who share your priorities. The problem is most Americans don't bother researching candidates' positions on budget priorities. They vote based on a few hot-button issues or party loyalty without looking at actual budget proposals.
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Omar Hassan
β’Voting barely matters tho. Both parties spend crazy amounts on military and corporate subsidies no matter who wins. The choices we get are so limited and once they're in office they do whatever lobbyists want anyway.
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Freya Larsen
β’Voting absolutely matters, but you need to look beyond just the presidential race. Congressional, state and local elections have huge impacts on how your tax dollars are spent. In fact, a much higher percentage of your state/local taxes go to things that directly affect your daily life. You're right that there's bipartisan agreement on some big spending categories, but there are still significant differences in budget priorities between parties and individual candidates. The key is getting involved in primaries and supporting candidates who align with your spending priorities. Democracy isn't a spectator sport - it requires active participation beyond just complaining.
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Chloe Taylor
Has anyone tried writing to their congressman about this? I've heard they sometimes respond if enough constituents bring up the same issue.
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ShadowHunter
β’I actually did this last year! I wrote to my representative about wanting more transparency in tax spending. Got a form letter back with general budget info. Not super helpful but at least they logged my concern.
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