The Donor Advised Fund sounds interesting! If I bunch several years of donations together, would that help me stay under the IRMAA threshold for multiple years, or just give me one good year and then potentially push me over in subsequent years? Also, do you know if medical premiums count toward that 7.5% threshold? I have some pretty hefty supplemental insurance costs.

Bunching donations can give you one year with a lower MAGI, which helps with IRMAA for just that determining year. You're right that you'd need to plan for the subsequent years too - that's where QCDs become helpful since they can reduce your taxable income each year without needing to itemize. Yes, your premiums for Medicare Part B, Part D, Medicare Advantage, and supplemental policies all count toward the 7.5% medical expense threshold! Many retirees don't realize this. Track all your out-of-pocket medical costs including dental, vision, hearing aids, and long-term care insurance premiums too. With the higher healthcare costs in retirement, you might be surprised how often you can clear that 7.5% threshold.

That's really interesting! How much did you have to invest to make it worthwhile from a tax perspective? I've been thinking about helping my son with his landscaping business but wasn't sure if it would make a meaningful impact on my taxes.

How exactly does depreciation work with rental properties? I've heard you HAVE to take it even if you don't want to - is that true?

Yes, you absolutely must take depreciation on rental properties whether you want to or not. The IRS considers it "allowed or allowable" which means even if you don't claim it, they'll act as if you did when you sell the property. Residential rental properties are typically depreciated over 27.5 years (straight-line method). You can only depreciate the building value, not the land value, so you'll need a reasonable allocation between the two. Most county tax assessments separate these values, which is an acceptable method for determining the split. If you've never taken depreciation but should have, you generally need to file a Form 3115 to correct this. Not claiming depreciation can create a mess when you sell, as the IRS will reduce your basis by the depreciation you should have taken, potentially creating a larger gain.

But with 650k income no amount of contributions would get them below 150k threshold right? I mean you can only put like 22k in 401k per person.

How do I tell from the 1099-R which system he was in? I'm looking at the form now but don't see anything that specifically says CSRS or FERS.

Look at Box 7 on the 1099-R, which shows the distribution code. For federal pensions, you'll typically see code "7" which means normal distribution. More importantly, examine the payer information at the top of the 1099-R. If it mentions "CSRS" specifically, that's your answer. If you still can't tell, another approach is to check if there's a Social Security benefit. FERS recipients typically receive Social Security benefits alongside their pension, while CSRS employees generally don't (unless they had other qualifying employment). So if your father received both an OPM pension AND Social Security, he was likely under FERS.

That publication is super helpful but also really confusing for beginners. I found the worksheets for calculating the taxable portion almost impossible to follow without help.

Thanks for suggesting FreshBooks! How does it handle retroactive data? I'd need to import all my transactions from January 2024 onward. Also, does it generate proper tax forms or just the basic reports?

Retroactive data import works great in FreshBooks. You can import past transactions either directly from Stripe (going back as far as you need) or via CSV if you have the data exported already. I've done this multiple times when switching between systems. For tax forms, it doesn't generate the actual forms like 1099-K, but it creates all the reports you need to fill those forms accurately. There's a specific "Tax Summary" report that breaks everything down by category for tax filing purposes. It also integrates with most tax filing software, so you can export your data directly if needed. Most small business owners still need an accountant or tax software for the final filing, but FreshBooks gives you all the organized data you need.

That price is way out of range for many small startups though. $249/month is $3000/year which is hard to justify when you're just starting out. Do they have any lower tiers for businesses with fewer transactions?

What's the current threshold for the 1099-K? I thought they pushed it back to $20,000 and 200 transactions again for 2023 taxes? Has that changed for 2024 filing?

For 2023 tax returns (filing in 2024), the threshold was kept at $20,000 and 200 transactions after the IRS delayed the lower threshold. But for 2024 transactions (filing in 2025), it's currently set at $5,000, though this could change again. The important thing to remember is that receiving a 1099-K doesn't automatically mean you owe taxes on that amount. It's just reporting money that moved through your account using payment methods that weren't marked as friends and family. Your actual tax liability depends on whether those payments represent income or not.

I used TurboTax last year for a similar situation. It works fine but you have to be careful where you enter it. Don't just follow their automated guidance when they ask about 1099-Ks. Instead, you'll want to manually add it as "Other Income" on Schedule 1 and then provide the explanation that these were loan repayments.

Thanks for this info! I was worried I'd need to spend money on a tax professional, but sounds like TurboTax can handle it if I'm careful about where I enter the information. That's exactly what I needed to know - I'll make sure to enter it manually as "Other Income" rather than letting their automatic system categorize it as business income. Appreciate the help!