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One thing to consider - the church might be required to provide you with a statement anyway for their own tax compliance. Churches have to give donation receipts to people who give more than $250 in a single donation. So they might keep contacting you regardless. If you really want to avoid interaction, maybe just ask them to email it? That way you don't have to see anyone in person or give your address, but you still have official documentation to go with your Tithe.ly records. That's what I did when I left my church.
Thanks for pointing that out. I wasn't aware of the $250 requirement. None of my individual donations were over $250 (I did about $145 twice a month), so maybe they're not technically required to provide a statement in my case? But I might take your advice about just asking them to email it to have both records. That seems like the path of least resistance.
You're right that the $250 requirement is per individual donation, not the annual total. If all your individual donations were under $250, they're not legally required to provide a statement, though many churches do it as a courtesy for all donors. Email is definitely the easiest option if they continue to contact you. Just a quick "please email it to this address" response should suffice without getting into any explanations about why you're not attending anymore. The Tithe.ly records are still perfectly valid for your taxes either way.
Has anyone had issues with Tithe.ly showing the wrong organization name? I donated to my church through the app, but when I downloaded my annual statement, it shows the parent denomination instead of my specific church. Will this cause problems with the IRS since technically they're different organizations with different tax IDs?
That could potentially be an issue. The IRS wants to know the specific organization that received your donation. If the parent denomination and your local church are separate legal entities with different EINs, you should use the correct one on your tax return. Contact Tithe.ly support about this - they may be able to correct your statement. If not, you might need to get the statement from your church after all, or at least confirm which entity actually received your donations and which EIN to use.
Have you considered using a "blocker" corporation structure? This is something my business did with our hybrid activities. Essentially, we created a parent holding company that owned both the excluded activities (financial services) and a separate blocker corporation that contained only the qualified business activities (manufacturing in our case). The key is making sure the blocker corporation independently meets all QSBS requirements, including the gross asset test and the active business requirement. Investors then purchase shares directly in the blocker corporation rather than the parent company. Our tax attorney structured it so that profit flows appropriately between entities while maintaining the QSBS qualification.
That's really interesting! I hadn't heard of using a blocker corporation like that. Would this approach work better than simply having two separate subsidiaries under the parent company? And did you have to deal with any step-transaction concerns from the IRS?
The blocker approach works better than two subsidiaries under a parent because when you have subsidiaries, the parent's qualification depends on the aggregate activities of all subsidiaries. With the blocker structure, you're allowing direct investment into the qualified entity. We didn't face step-transaction concerns because we established the structure well before any sale was contemplated (about 3 years prior). The IRS generally respects properly structured entities with legitimate business purposes. The key is having proper governance, separate books, arm's length transactions between entities, and maintaining the structure for a substantial time before any sale. Also make sure your qualified corporation meets the active business requirement independently and isn't just a passive investment vehicle.
Be careful with Section 1202! Our company initially thought we qualified, claimed the QSBS exclusion on a partial sale, and then got audited. The IRS determined that just 15% of our "consulting" business was actually providing training (qualified) while 85% was financial advice (excluded). We had to pay back taxes plus penalties. Make sure whatever structure you set up has a clear operational separation between the activities, with separate accounting, management, and business purposes. And document EVERYTHING! Get your structure reviewed by someone who specializes in QSBS - most regular CPAs don't understand all the nuances.
How much was the penalty? I'm planning to sell shares in our business next year and now I'm worried about claiming QSBS incorrectly!
You should definitely file the SS-8! I was in almost the exact same situation last year - worked as an "after school coordinator" at an elementary school, got paid hourly, they controlled all my work, but they gave me a 1099. I filed the SS-8 in April after filing my taxes and got a determination in December that I was indeed an employee. Filed an amended return with Form 8919 and got back about $1400 in self-employment taxes I shouldn't have paid. My employer was initially annoyed but ultimately had to fix their classification system for everyone. They couldn't legally fire me for filing, though things were awkward for a bit. Regarding your 2021 situation - yes, you should have filed taxes on that income since the threshold for self-employment income is only $400.
Did you keep working there while the SS-8 was being processed? I'm worried about the awkwardness but really can't afford to pay that extra tax. Was the amended return process complicated?
Yes, I continued working there the whole time. It was definitely awkward for a few weeks after they received the IRS letter asking for their side of the story. My supervisor made a few passive-aggressive comments but nothing they could actually fire me for. By the time the determination came through, they'd mostly gotten over it. The amended return wasn't too difficult. I used Form 8919 with code G (I believe) since I had already received a favorable SS-8 determination. Then filed a 1040X showing the difference. It took about 3 months to get my refund after amending. One tip - include a copy of your SS-8 determination letter with your amended return to speed up processing. And remember, the employer will be responsible for paying their portion of the Social Security and Medicare taxes that they should have been paying all along.
Has anyone here used TurboTax to file the amended return after getting a favorable SS-8 determination? I'm in a similar situation but not sure which tax software handles this scenario best.
I wouldn't recommend TurboTax for this specific situation. I tried using it for my worker misclassification amendment and it didn't handle Form 8919 well at all. I ended up using FreeTaxUSA which was much better for this particular scenario and way cheaper too.
Just wanted to add my experience as someone who went through this exact situation last year. I converted my primary home to a rental in November 2022, put new flooring in, and didn't get tenants until February 2023. My CPA told me that "placed in service" date is when you make the property available and ACTIVELY try to rent it. Having a property management agreement in December 2022 is definitely good evidence of this. He said I could deduct December HOA, utilities, insurance, etc. even though I had zero rental income that year. For the flooring, he made me split it into two categories: 1. The portion that was clearly replacing damaged materials (about 60% of my project) was classified as a repair and fully deductible in 2022 2. The portion that was upgrading/improving (going from carpet to luxury vinyl) had to be depreciated over 27.5 years This created a rental loss in 2022 that I was able to use against my other income (subject to passive activity limits). Made a big difference on my tax bill!
This is so helpful! Did your CPA require any specific documentation to prove the "placed in service" date? I have the property management contract, but I'm wondering if I should gather anything else just to be safe.
My CPA wanted several things to document the "placed in service" date: 1. The signed property management agreement (most important) 2. Listing photos and official listing date from the property management company 3. Evidence of any advertising for tenants (online listings, etc.) 4. Email communications showing we were actively trying to find tenants He also suggested I keep all receipts for the flooring work along with photos of the damaged original flooring to justify the "repair" classification for the damaged portion. Having documentation of the water damage was particularly important in our case. Better to gather too much documentation than not enough, especially if you're claiming a loss in a year with no rental income. It raises the audit risk a bit, but if you have good documentation, you should be fine.
Has anyone used TurboTax for this situation? I'm trying to figure out if their rental property section can handle this kind of scenario with no income but expenses in the first year. Their interface is confusing me...
I used TurboTax last year for this exact situation. Their rental property section actually handles it pretty well. When you add the property, there's a field for "date placed in service" - put your December 2022 date there. Then it will let you enter all expenses even if you show $0 for income. For the flooring, TurboTax will ask if each expense is a repair or improvement. If you classify as repair, you deduct it all immediately. If improvement, it adds it to the depreciation schedule. The key is being consistent with how you classify things. One tip: make sure you answer "Yes" to actively participating in the rental when it asks. This is important for being able to deduct losses against other income (up to $25,000 depending on your overall income level).
Jade Lopez
Another option you might not have considered: check last year's tax return if you claimed the childcare credit then too. The EIN would be listed on Form 2441 that you filed. You can get a transcript of your previous returns on the IRS website pretty easily.
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Alice Coleman
β’That's really smart! I did claim them on last year's taxes so the EIN should definitely be on my old Form 2441. I'll check my copy of last year's return tonight. If I can't find my copy, is the transcript free to get from the IRS website?
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Jade Lopez
β’Yes, getting your tax transcript from the IRS website is completely free! Just go to IRS.gov and search for "Get Transcript Online." You'll need to create an account if you don't already have one, and they'll verify your identity with some security questions. Once you're in, you can request a "Tax Return Transcript" for the previous year. It should show up immediately and you can download it as a PDF. Form 2441 will be included, and line 1 should have the provider's name, address, and EIN. Super easy and definitely faster than waiting for the IRS on the phone.
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Tony Brooks
Just a heads up - if you absolutely cannot find the EIN, the IRS does allow you to still claim the credit! You'll need to show you made a "reasonable effort" to get it (document your attempts) and fill out Form W-10. There's a special procedure for this situation specifically because so many small daycares close without providing proper documentation.
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Ella rollingthunder87
β’This happened to me 2 years ago. I wrote "BUSINESS CLOSED" in the EIN field and attached a statement explaining my attempts to locate the information. The IRS accepted it without any issues.
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