Thanks for pointing this out! Would the bond company typically help with making sure the language is correct, or is that something I need to specifically request? And do you have to physically mail copies of the bond to the state agencies or can it be done electronically?

The bond company should help with correct language, but it's ultimately your responsibility to make sure it meets state requirements. Be specific when you request the bond - say "I need a tax preparer bond that meets X state requirements" rather than just asking for a general bond. Most states now accept electronic submissions of bond documentation, typically through their tax preparer registration portal or business licensing system. However, some smaller states still require paper copies mailed to them with original signatures. Your state's Department of Revenue website should have a section specifically for tax preparer requirements that spells this out.

I had a client file a claim against my bond last year. I made an error on their Schedule C that resulted in an underpayment penalty of about $1,800. The surety company investigated, determined I was at fault, and paid the claim. Then I had to reimburse the surety company. The process was actually pretty straightforward, but it definitely incentivized me to be more careful and to get better professional liability insurance beyond just the required bond!

That's a really helpful suggestion! Did the IRS accept your return with the spreadsheet attachment without any issues? And did you organize the spreadsheet in exactly the same format as Form 8949 or did you use a different layout?

Yes, the IRS accepted it without any issues. I organized the spreadsheet to match Form 8949's column structure exactly - description of property, date acquired, date sold, proceeds, cost basis, gain/loss, etc. I made sure to include all the same information that would be on the official form. I also included subtotals at the bottom of each page and made sure those matched what I reported on the summary section of the official 8949. The key is making sure your attachment contains all the required information in a clear, organized format that an auditor could easily follow if needed.

I tried both last year. Koinly was better for my situation since it handled DeFi transactions more accurately. Still had to manually fix some things though. The exported 8949 forms worked fine with TurboTax.

Would this work if the student paid for tuition themselves from their own savings? My son is using money from his 529 plan that's in his name, not mine.

That's a great question - yes, it can still work! What matters is who can claim the student as a dependent, not who actually paid the expenses. Even if your son paid his tuition from his own 529 plan, as long as he qualifies as your dependent (under 24, full-time student, you provide more than half his support), you can claim the education credits on your return. The IRS doesn't track whose bank account paid the school - they care about dependent status.

I had to prove this during an IRS review last year. They wanted documentation for EVERYTHING. Make sure you keep records of all your expenses, income, loans, etc. The housing part is tricky - they count the fair rental value of your parents' support.

What about short term rentals like Airbnb? I have a vacation property I rent out and I'm taking QBI on it, but now I'm worried about the self employment tax thing.

Short-term rentals exist in a gray area that depends entirely on the level of services you provide. If you're just providing the basic rental with minimal services (cleaning between guests, basic amenities), it's still generally treated as rental income without SE tax. If you're providing substantial services like daily cleaning, breakfast, concierge services, guided tours, etc., then it starts looking more like a hotel operation and could trigger SE tax. The more your rental resembles a hotel experience rather than just a place to stay, the more likely you'll face SE tax. This is true even if you're using Airbnb or similar platforms.

Using a property management company actually strengthens your position that it's passive income not subject to self-employment tax. When you hire a management company, you're further removed from the day-to-day operations, which reinforces the passive nature of your investment. The management company might need to pay self-employment tax on their fees (depending on their business structure), but you as the property owner are just collecting passive rental income. This arrangement makes it very clear that you're an investor, not running an active business, so you can still potentially qualify for QBI without worrying about SE tax.

Do you know if the payment shows up before the return is fully processed? Mine came out of my bank already but I'm still waiting on confirmation the return was accepted.

Yes, the payment typically shows up in your IRS online account before your return is fully processed. The payment system and return processing system operate somewhat independently. So you might see your payment listed as "received" while your return is still showing as "processing." In my experience last year, my payment appeared in my IRS account about 3 days after I made it, but my return wasn't marked as fully processed for almost 2 weeks. As long as your payment shows up there, you should be fine even if your return takes longer.

How do you know if you need to make estimated payments? I'm in the same boat this year.