What kinds of documentation do you recommend keeping for large medical expenses? My insurance company's explanation of benefits doesn't always match what I actually paid, and I'm worried about getting audited.

Documentation is crucial for medical deductions. Keep all receipts showing actual payment (not just bills or statements), explanation of benefits from insurance showing what wasn't covered, and bank/credit card statements proving payment. If there's a discrepancy between EOBs and what you paid, keep records explaining the difference. For unusual medical expenses (special equipment, home modifications, travel for treatment), get a letter from your doctor stating these were medically necessary. The IRS looks closely at large medical deductions, so documentation is your best defense. Organize everything by date and provider, and keep a spreadsheet summarizing all expenses. This preparation makes the process much smoother whether you use H&R Block or a CPA.

I've done both. Used H&R Block for years then switched to a CPA last year for a complicated medical situation with my special needs child. The CPA found almost $2,300 more in deductions than I would have gotten at H&R Block. She knew about specialized medical deductions for adaptive equipment and certain therapies that H&R Block missed in previous years.

Thanks for this perspective! Could you clarify what counts as "reasonable documentation" for small cash transactions? And how worried should I be about the home office deduction? I've heard mixed things about whether it increases audit risk.

For small cash transactions, a simple log or journal is sufficient - date, amount, purpose, and from whom if applicable. The IRS doesn't expect small business owners to provide receipts for every $5 transaction, but they do expect you to have a system. Apps that track expenses are great for this. The home office deduction has lost much of its audit trigger reputation in recent years, especially since so many more people work from home now. Just be honest about the square footage and exclusive use. The simplified option ($5 per square foot up to 300 sq ft) is very audit-friendly since it's standardized. If you're legitimately using the space exclusively for business, take the deduction - it's yours by right.

What's your method for the "reasonable monthly allowance" part? Do you just estimate an average or do you have some system to make sure it's accurate enough?

Thank you so much for this explanation! You're right - the Line 3 amount is actually a bonus she got for signing up new sellers. This makes perfect sense now that I should put it on Schedule C Line 6 since it's definitely related to her business activities, even though it's different from her regular product sales commissions. Do you know if there's any specific reference I should make on the tax return to explain this, or is just putting it on Line 6 of Schedule C sufficient?

Just putting it on Line 6 of Schedule C is technically sufficient for filing purposes. There's no special notation required on the form itself. However, I always recommend my clients keep a separate document in their tax records that explains the nature of any "Other income" reported, especially when it comes from a 1099-MISC Line 3. This documentation should include what the payment was for, when it was received, and why it's considered business income but not subject to self-employment tax. This isn't submitted with the return, but it's invaluable if questions ever come up later or in case of an audit.

I used TurboTax this year for my side gig and it actually handles this pretty well. When you enter the 1099-MISC, it asks you to break down the amounts by box number and then asks follow-up questions about the nature of any "Other income" on Line 3. Based on your answers, it will either put it on Schedule C or on Schedule 1 of your 1040. Just make sure you choose "Business" as the category when it asks what the Line 3 income relates to, assuming it's connected to your Etsy activities. TurboTax will then guide you to the right place on Schedule C.

Thanks for this info! I'll go back and double-check my entries. I think I might have rushed through those follow-up questions and that's why everything got lumped together. It's reassuring to know the software can handle this situation correctly if I input everything properly.

TurboTax does handle PTPs but not very elegantly. I've found TaxAct actually has a better interview process for PTPs specifically. It walks you through the basis adjustments more clearly and doesn't try to double-count. I switched last year after having the same issue with TurboTax and was much happier with how TaxAct handled my UCO and AMLP investments.

Thanks for the TaxAct suggestion. I've been using TurboTax for years and wasn't aware TaxAct might handle these situations better. I'll definitely look into switching for this tax season. I'm getting pretty frustrated with how TurboTax keeps trying to double-count my PTP income. Having to manually fix everything in forms view defeats the whole purpose of using tax software in the first place. Hopefully TaxAct's interview process for the basis adjustments will save me some headaches.

Your accountant is mistaken. UCO is a domestic PTP traded on US exchanges. You only need to file Form 8938 or FBAR for financial assets held outside the US. The fact that UCO might invest in commodities or futures contracts with international exposure doesn't make it a foreign financial asset for FBAR or 8938 purposes. This is a common misconception. You only need to report on those forms if YOU directly hold the foreign assets or accounts. Since you're just holding the PTP units which are domestic securities, there's no FBAR or 8938 requirement here.

Oh that's really good to know. I actually have a side gig in addition to my main job, but they're both withholding OASDI. How do I figure out if I've overpaid? Do I just add up the OASDI from both W-2 forms?

Yes, you just add up the OASDI tax amount (box 4) from all your W-2 forms. If the total exceeds $10,740 (for 2025), then you've overpaid and can claim the difference as a credit. Just make sure you're only looking at the employee portion. Some people mistakenly include both the employee and employer portions when calculating this, but you can only get a refund on what you personally paid over the limit.

Haha same! It's like a little year-end bonus. I actually think of it as forced savings that gets "returned" to me near the holidays.

Exactly! It comes right when holiday shopping starts ramping up. Not a huge amount extra but definitely noticeable and appreciated!