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Have you considered looking for a tax professional who specializes in medical expenses? I've found that expertise in specific areas is more important than the company name. Some H&R Block locations actually have year-round tax pros who are quite knowledgeable, while some independent CPAs might not have much experience with medical deductions. I'd suggest calling a few places (both H&R Block and CPAs) and specifically asking about their experience with large medical expense deductions. The right person will immediately start asking you relevant questions about your situation rather than giving generic answers.
That's really good advice! Would you recommend asking them any specific questions to gauge their knowledge about medical deductions? I wouldn't even know how to tell if they're giving me good answers since I don't know much about this stuff myself.
Ask them specifically about the 7.5% AGI threshold for medical expenses and how they would help determine if you should itemize. A knowledgeable preparer will explain that medical expenses are only deductible for the amount exceeding 7.5% of your adjusted gross income, and they'll want to know if you have other potential deductions that could make itemizing worthwhile. You could also ask what types of medical expenses are deductible that people commonly miss. They should mention things like mileage to medical appointments, lodging while receiving medical care away from home, home modifications for medical purposes, or certain insurance premiums. If they only mention obvious things like doctor bills, they might not have specialized knowledge.
One thing to consider is that H&R Block actually has different tiers of tax preparers. Their basic preparers might not have much experience, but they do have "Tax Pros" and some locations even have CPAs and Enrolled Agents who work there. I'd skip the regular H&R Block route and either find one of their higher-level preparers or go with an independent CPA. Just call and specifically ask about their experience with large medical deductions.
Thats true, my local HR Block has an enrolled agent who specializes in medical deductions. Shes way better than the seasonal people they hire and not much more expensive. I've used her for 3 years now.
Has anyone used TurboTax for this situation? I'm trying to figure out if they ask the right questions to handle a dependent with SSI/SSDI correctly.
I used TurboTax last year to claim my father-in-law who gets SSDI. It asks you to enter their income including social security benefits. The key is making sure you know exactly how much is SSDI vs SSI because you'll need to enter the SSDI amount when it asks for Social Security benefits. TurboTax then correctly applies the gross income test.
Thanks for sharing your experience! Did TurboTax specifically ask you to separate SSI from SSDI, or did you just need to know that information in advance?
Quick tip from someone who went through an audit on this exact issue: keep DETAILED records of all expenses you pay for your grandmother. The IRS wanted documentation showing I provided more than 50% support. Save receipts for rent/mortgage, utilities, groceries, medical expenses, etc. Calculate the total cost of support and what portion you paid vs. what came from her benefits.
I'm a bit confused about this whole 1099-K situation. If I receive one but the money isn't taxable (like in your case where it's just reimbursements), do I still need to report it somewhere on my taxes? Or can I just ignore it entirely? CashApp Taxes is giving me a headache too.
You absolutely cannot ignore it! The IRS receives a copy of every 1099-K, and their systems automatically match them to your tax ID. If you don't account for it somehow on your return, you'll likely get a CP2000 notice (automated underreporting notice) which is basically the IRS saying "hey, we think you didn't report all your income." The correct approach is to report it and then exclude it with an explanation. Most tax software (including CashApp Taxes) has a way to indicate the money isn't taxable income. This satisfies the reporting requirement while ensuring you don't pay taxes on money that isn't actually income.
Thanks for explaining! That makes sense about the IRS matching the forms. So better to report it with the explanation than to trigger an automatic flag in their system. I'll make sure to include it in CashApp Taxes and check that box saying it's not taxable income.
Has anyone actually received a correction to an incorrect 1099-K? Venmo sent me one claiming I had $7,800 in "goods and services" when it was literally just my parents sending me help with rent. I disputed it with Venmo months ago and they just keep saying "we're looking into it" but never actually fix anything.
I managed to get Square to issue a corrected 1099-K last year, but it took persistence. The key was escalating beyond the first-level support. I had to specifically request to speak with their tax reporting department. It took about 6 weeks, but they eventually issued a corrected form. In the meantime, I filed my taxes as others here suggested - reporting the 1099-K but indicating the amounts weren't taxable. That way if the correction never came, my taxes were still accurate.
One thing nobody's mentioned is that you could set up a proper 501(c) organization for your tournament. I did this years ago for our community fundraiser. Yes there's some paperwork involved but then all donations go directly to the org, not through your personal account, and you avoid this whole issue. Plus donors get proper tax receipts they can use for their own deductions.
Isn't setting up a 501(c) really expensive and complicated though? I heard you need lawyers and stuff.
It's not as bad as people think. For a small organization, filing for 501(c)(3) status using Form 1023-EZ is relatively straightforward if your annual gross receipts are under $50,000. The filing fee is around $275. You don't necessarily need lawyers, though having someone with experience look over your application can help. There are also online services that guide you through the process for a few hundred dollars. The main requirements are having proper bylaws, a board structure, and clear charitable purpose. Once established, annual maintenance is just filing a simple Form 990-N if you stay under the $50,000 threshold.
I'm confused by some of the advice here. Couldn't you just have each golfer make their check directly to the charity instead of passing through your account? That way they get the deduction if they want it, and you avoid this whole issue.
Carmella Fromis
Don't forget another important consideration: state taxes! Depending on your state, the rental income might be taxed differently than your regular income. Some states have additional requirements for landlords too. Also, it might be worth looking into setting up an LLC for your rental property for liability protection. That can have different tax implications depending on how you file. I'd recommend talking to a CPA who specializes in real estate before you make the switch.
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Lucas Schmidt
ā¢I hadn't even thought about state taxes or the LLC angle. Do you know if forming an LLC changes how depreciation works? And would I need to file a separate business tax return if I create an LLC?
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Carmella Fromis
ā¢A single-member LLC is typically treated as a "disregarded entity" for tax purposes, so you'd still report everything on your personal return using Schedule E. The depreciation works the same way regardless of whether you have an LLC or not. You generally don't need to file a separate business return for a single-member LLC used for rental property. However, if you elect to have your LLC taxed as an S-corp (which some people do to potentially save on self-employment taxes), then you would file a separate return. But for most small landlords with one property, keeping it simple with a disregarded LLC is usually the way to go.
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Theodore Nelson
Has anyone used TurboTax for reporting rental income? Is the premium version good enough to handle all this rental stuff or do I need to pay for a CPA? I'm trying to figure out if I can manage this myself or if it's too complicated.
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AaliyahAli
ā¢I used TurboTax Premier last year for my rental and it worked fine. It walks you through all the Schedule E stuff and helps calculate depreciation. Just make sure you keep really good records of your expenses throughout the year. The one time I got confused, I used their live help feature and the tax expert cleared things up quickly.
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