Interesting point! I actually made this loan with the intention of potentially becoming a partner in the business later, so there was a business motive beyond just earning interest. Would that help establish it as a business rather than personal loan?

That business connection definitely strengthens your case for treating it as a business bad debt. Keep any emails or documents that show discussions about partnership or business involvement. The key distinction the IRS looks for is whether you made the loan as an investment with business interests or simply as a personal loan. If you can document that connection to your own business activities or potential participation in their business, you're in a much better position to claim it as a business bad debt, which gives you the more favorable ordinary loss treatment rather than capital loss limitations.

This is so important! My accountant told me the IRS is particularly picky about the timing of bad debt deductions. They expect you to take reasonable steps to collect before claiming worthlessness, but also don't want you waiting years after it's clearly uncollectible.

That's such a good point. Do you think it's a red flag if they're still using mostly paper documents instead of digital systems?

It's not necessarily a deal-breaker if they use paper documents, but it's definitely something to consider. In my experience, CPAs who have embraced secure digital document sharing, e-signatures, and modern client portals tend to be more efficient and organized overall. These systems create automatic backups and make it easier to find information quickly. That said, some excellent accountants still prefer traditional methods. If they use paper but have rock-solid systems for tracking and organizing everything, that can work too. The real red flags are disorganization, frequently misplacing documents, or making you resend information multiple times regardless of whether they're using paper or digital systems.

This is so important. My CPA gives me an estimate range before starting work, and if something comes up that will push it higher, she calls to discuss first. That transparency is worth its weight in gold.

Quick question - if the county website shows a different amount than what's on my mortgage statement, which one should I use for my tax return? My county site shows $4,120 but my mortgage escrow statement shows $3,985.

You should use the amount that was actually paid during the tax year, regardless of what was billed. The difference you're seeing is likely due to timing - maybe your mortgage company paid part of one year's taxes in the previous or following calendar year. Look at the payment dates on your county website. If you're filing taxes for 2024, you want to report the total property tax payments that were actually made during calendar year 2024 (January 1 - December 31), regardless of which tax year they were applied to by the county.

Thank you everyone for all the helpful advice! I managed to find exactly what I needed by checking my escrow statements online. Turns out my lender does include the property tax info on the 1098, but it's split between two different boxes and labeled weirdly. For anyone else struggling with this: definitely check your online mortgage account for the escrow analysis or year-end statement, which breaks everything down clearly. And the county tax website was super helpful too!

Are there any disadvantages to holding MLP ETFs instead of the MLPs directly? I know MLPs have some tax advantages with distributions often being partially tax-deferred return of capital.

Yes, there's definitely a trade-off. When you own an MLP directly, a significant portion of distributions is often classified as return of capital, which isn't immediately taxable (it just lowers your cost basis). That tax deferral benefit is one of the main advantages of MLPs. When you own an MLP ETF, it's structured differently for regulatory reasons. The fund itself pays corporate taxes on the MLP income before distributing to you, which creates some tax inefficiency. So while you avoid the K-1 hassle with an ETF, you potentially give up some of the tax advantages that make MLPs attractive in the first place.

Does TaxAct or H&R Block handle K-1s better? I've been using TurboTax but I'm getting tired of their upsells every time something slightly complicated comes up on my return.

Thanks for sharing your experience! Did you have to deal with the FBAR (Foreign Bank Account Reporting) requirements once you made the election to treat your spouse as a US resident? That's one concern I have about going that route.

Yes, making the election meant we had to report her foreign accounts on FBAR if they exceeded $10,000 combined at any point during the year. We also had to file Form 8938 for foreign financial assets. The additional reporting requirements added some complexity, but for us, the tax savings from filing jointly outweighed the extra paperwork. The key was documenting everything meticulously and using the foreign tax credits correctly to avoid double taxation. Make sure you consider these reporting requirements if you're thinking about making the election.

I e-filed successfully using H&R Block online. TurboTax has issues with ITINs sometimes. Make sure the ITIN hasn't expired - they need to be renewed if not used on a tax return for 3 consecutive years.