Thanks for this advice. I definitely have the county health department order that forced us to close completely except for takeout. We kept all our communications too since we were sending weekly updates to our staff. Would bank statements showing the revenue drop be helpful too, or should I focus more on the government orders themselves?

Bank statements showing the revenue drop would definitely be helpful as supporting evidence, but the government orders are the primary documentation you need for the "full or partial suspension" test. Keep both! The revenue drop actually relates more to the other qualifying test (the gross receipts test), which requires a 50% reduction in quarterly gross receipts for 2020 compared to the same quarter in 2019. But even if you don't meet that test, the suspension of operations from the health department order should qualify you on its own. Make sure you also document any capacity restrictions or operating limitations you faced after reopening. Things like reduced seating capacity, mask requirements, social distancing requirements, etc. can qualify as a "partial suspension" even after you were allowed to reopen. This documentation could potentially help you qualify for additional quarters beyond just the complete shutdown period.

Do you know what triggered the audit for your brother's company? Was it something specific about how they filed or just random?

Thanks for adding this! I do keep detailed rental logs, fortunately. But I'm still confused about the $100 floor and 10% AGI limitation - I thought those only applied to personal casualty losses from federally declared disasters after the TCJA? Does that mean I might not be able to deduct much of anything since this wasn't a declared disaster?

You're right that currently (through 2025) personal casualty losses are only deductible if they're from federally declared disasters. So for the personal-use portion of your property, you likely can't deduct anything unless your area was declared a disaster zone. For the business/rental portion, the $100 floor and 10% AGI limitations don't apply. That portion is fully deductible as an ordinary loss on Form 4684 Section B. So if your property is used 70% for business and 30% personal, you'd potentially be able to deduct 70% of your loss without those limitations.

Yes, security cameras for a rental property would be a deductible expense, but they'd be depreciated as improvements to the property rather than deducted as a casualty loss recovery expense. The business portion would be deductible based on your rental/personal use allocation.

Thanks for the info! That makes sense to depreciate them as improvements. I'll make sure to track the installation costs separately from the repair expenses for the damage.

Thanks for bringing this up - I had no idea about the tax lien or the 5-year compliance period. Does the lien stay on your credit report even after the OIC is accepted and paid? And what exactly constitutes "compliance" for those 5 years? Just filing on time or are there other requirements?

The lien is typically released about 30 days after you complete your OIC payment. However, it will remain on your credit report for several years even after it's released, though the impact lessens over time. Some lenders may be understanding once you explain it's been satisfied through an OIC. Compliance means filing all required tax returns on time and paying all required taxes when due for 5 years. This includes making estimated tax payments if you're self-employed. If you can't pay in full, you need to immediately set up an approved payment arrangement. Even one late filing or missed payment could potentially void your entire OIC agreement and reinstate the original debt plus additional interest.

Did you use a tax professional or DIY the whole OIC process? I've gotten quotes ranging from $2500-4000 just for the professional help with the OIC paperwork.

What about the Social Security overpayment though? I work two jobs and always end up overpaying. Is there a way to adjust for that during the year too?

The Social Security overpayment is trickier because employers don't coordinate with each other. If you know your total earnings will exceed the Social Security wage base ($168,600 for 2024), you can estimate how much you'll overpay. The calculation is basically 6.2% of the amount you'll earn above the wage base across all jobs. Once you have that number, you can adjust your W-4 at your highest-paying job to compensate by adding that estimated overpayment amount to Step 3 of your W-4 or reducing the additional withholding in Step 4(c). Just be careful not to adjust so much that you end up owing a lot at tax time. It's usually safer to get a small refund than to owe penalties.

I'm planning on erring on the side of caution. If your income might put you over the threshold, don't adjust your withholding for the credit. Better to get a refund than owe penalties. You could also do a partial adjustment if you're fairly confident you'll get at least some of the credit.

Thanks for this suggestion! My income is actually within the Roth IRA eligibility range but below the higher threshold. I was trying to diversify between pre-tax and post-tax retirement savings, but if I can't deduct the Traditional IRA contributions anyway, switching to Roth IRA might make more sense. Would there be any advantage to keeping non-deductible Traditional IRA contributions rather than just going with the Roth IRA directly?

If you can't deduct your Traditional IRA contributions and you're eligible for a Roth IRA, there's generally little advantage to making non-deductible Traditional IRA contributions instead of contributing directly to a Roth IRA. The main exception would be if you're planning to use the "Backdoor Roth" strategy in the future. Some people make non-deductible Traditional IRA contributions and then immediately convert them to Roth. This can be useful for those who exceed the Roth IRA income limits. However, this gets complicated if you already have other pre-tax money in Traditional IRAs due to the "pro-rata" rule.

I used TurboTax this year with the exact same retirement setup (Roth 401k + Traditional IRA), and it also said my Traditional IRA wasn't deductible because I participate in a workplace plan. So I think all the major tax software follows the same IRS rules on this.