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Something important nobody's mentioned yet - the timing of when you sell matters for Section 179! If you sell in the same tax year that you stop using it for business, the calculations are different than if you switch to personal use in one year and then sell in a later year. Also, don't forget the EV tax credit angle. If you claimed the EV credit when you purchased, and you sell within 3 years, you might have to recapture part of that credit too! It's something like $7,500 Γ (36 - months held)/36.
Thanks for bringing up these points! Do you know if the EV credit recapture applies even if I took Section 179 instead of regular depreciation? And does the business/personal split affect the EV credit recapture calculation?
The EV credit recapture is separate from the Section 179 recapture, so yes, it still applies even if you took Section 179 instead of regular depreciation. The IRS treats these as completely separate tax benefits. The business/personal split doesn't directly affect the EV credit recapture calculation. The EV credit recapture is simply based on the full original credit amount and how long you owned the vehicle. So if you received a $7,500 credit and sell after 24 months, you'd recapture $7,500 Γ (36-24)/36 = $2,500, regardless of business use percentage.
Has anyone actually gone through a Section 179 recapture situation with the current IRS software systems? I tried entering mine last year and TurboTax kept giving me errors.
5 Something nobody mentioned yet - check if your parents are claiming you as a dependent on their taxes! This is super important. If they are, you need to check a box on your return indicating this. It affects which tax credits you can claim. When I was 20 and filed my first return from my coffee shop job, I messed this up and both my parents and I claimed me, which caused a huge headache with the IRS sending letters later.
14 How do I know if they're claiming me? I live in their house but pay some rent. I'm also taking a couple community college classes. Does that matter?
5 You need to ask them directly if they're planning to claim you as a dependent. Generally, if you're a full-time student under 24 and they provide more than half of your support (housing, food, etc.), they probably can claim you. The fact that you're taking community college classes could matter - if you're enrolled at least half-time, it makes it more likely you qualify as their dependent. Even if you pay some rent, if it's below market rate and they cover most of your other expenses, they're likely still providing more than half your support. This is super important to coordinate before either of you file! The IRS computers will flag returns if you claim yourself and your parents also claim you.
16 Don't forget about state taxes too! Your W-2 might have state tax info on it, and depending on where you live, you might need to file a state return in addition to federal. Some states don't have income tax tho.
Something else to consider - if you're expecting a large refund from a 2019 return filed on the deadline, be prepared that the IRS might issue a paper check instead of direct deposit. This happened to my brother who filed his 2019 return on July 15th. Apparently for some older returns, especially ones filed at the deadline, the IRS sometimes defaults to paper checks for security reasons. Just something to keep in mind if you don't see the direct deposit and start panicking.
Thanks for mentioning this! Do you know how long it typically takes for paper checks to arrive after the IRS approves the refund? Also, is there any way to check if they're sending it as a check vs direct deposit?
Paper checks typically take about 1-2 weeks to arrive after the IRS approves the refund, so you're looking at potentially 6-10 weeks total from filing if they go this route. You can check whether they're sending a direct deposit or paper check by using the "Where's My Refund" tool on the IRS website. Once your return is approved, it should tell you which method they're using for your refund. If it shows they're mailing a check when you requested direct deposit, it's usually because of their security protocols for older returns or when there's a long gap between filing seasons.
Has anyone had experience with amended returns filed on the deadline day? I originally filed my 2019 taxes back in 2020, but then realized I missed some deductions. I filed an amended return (1040-X) on July 17th and I'm wondering if the same timeline applies?
Amended returns unfortunately take much longer to process than original returns, even when filed electronically. The current processing time for amended returns (Form 1040-X) is running about 20+ weeks according to the IRS.
Lots of good advice here but one thing: If you ever need to visit a client or customer directly from your home on days you work from home, that travel may be deductible since you're going from one workplace (home office) to another business location that's not your regular place of business. It gets complicated but keep track of all business-related travel just in case!
This is actually incorrect information. Traveling from your home to ANY client is considered commuting by the IRS and isn't deductible - even if you have a home office. The only exception is if your home office is your principal place of business AND you're traveling to a temporary work location.
Has anyone used IRS Publication 463? It covers all of this transportation deduction stuff in detail. Pages 14-15 specifically talk about the difference between deductible travel and non-deductible commuting. Helped me figure out my similar situation with multiple workplaces.
Thanks for the reference! I'll definitely check out Publication 463. I'm trying to understand all the rules before I file my 2025 taxes and want to make sure I'm claiming everything I'm legitimately entitled to without raising any red flags.
Jamal Wilson
Another option is to request that your sister hire a trust tax professional to handle the 1041 filing. My family did this after my dad passed, and it removed a lot of the confusion and delays. The tax preparer knew exactly when to file and how to handle the K-1s properly. Many trustees don't realize they can (and often should) use trust assets to pay for professional tax preparation. This takes the burden off the trustee and ensures everything is done correctly and timely.
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Mateo Hernandez
β’That's actually a really helpful suggestion. Did the tax professional charge a lot? And did they handle everything directly or still need to coordinate with the Trustee?
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Jamal Wilson
β’The cost was reasonable - around $800 for our situation which involved a house sale and some investments. Most importantly, it was paid from the trust assets, not out of anyone's pocket directly. The tax professional worked directly with our trustee (my brother), but needed minimal involvement from him - basically just collecting the necessary documents and signatures. They handled all the calculations, form preparation, and filing deadlines. The trust document allowed for hiring professionals, which is common language in most trusts.
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Mei Lin
This sounds exactly like what my cousin did to delay distributions! Just FYI, what often happens is the trustee is investing the funds during the "delay" and keeping the investment returns for themselves. Check if there's a provision in the trust about interest on delayed distributions.
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Liam Fitzgerald
β’That's a serious accusation to make without knowing the specifics. Sometimes trustees are just confused about the requirements or overwhelmed with the responsibility. Not everything is malicious.
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