Thanks for suggesting this! Do they handle more complex situations like investment income or HSA contributions? I've got both this year and keep running into "upgrade required" walls with the free options I've tried.

They handled my HSA contributions with no problem on the free version. For investments, they cover basic investment income reporting (interest, dividends, capital gains) without upgrading. The only time you might hit a paywall is if you have rental property income or very complex investment situations. Their interface isn't as slick as TurboTax but it's straightforward enough. Just make sure you access it through the IRS Free File portal to guarantee you get the fully free version with state included.

This!!! The tax prep companies are so sneaky. There's actually two completely different "free" versions of most tax software - the truly free ones through the IRS Free File program and the "free" ones advertised on their websites that almost always end up charging you for something.

My wife does have access to a Dependent Care FSA through her company, but we weren't sure if it made sense to use it since I'm self-employed. Would this be better than the Child and Dependent Care Credit you think? We're probably in the 24% bracket if that matters.

At the 24% tax bracket, the Dependent Care FSA would likely be more beneficial. With the FSA, you'd save 24% federal income tax plus 7.65% FICA on up to $5,000, potentially saving around $1,583. The Child and Dependent Care Credit at your income level would probably be at the 20% rate, giving you a maximum credit of $1,200 for two or more children (20% of $6,000). The FSA is generally the better choice for higher-income families, plus it reduces your FICA taxes which the credit doesn't do. Your wife's employment status is what matters for the FSA eligibility, so you being self-employed doesn't affect your ability to use her employer's FSA. Just make sure to coordinate this with your tax planning since you can't use the same expenses for both benefits.

I've been using TaxSlayer Self-Employed for my home consulting business and it's been surprisingly good for the price. Much better questionnaire for finding business deductions than the big names, especially for home office stuff.

I didn't even think about state taxes! Do you know if most states follow the federal rules for the $250k exclusion or do they have their own systems?

Most states do follow the federal capital gains exclusion rules, but there are definitely exceptions. For example, Massachusetts has its own rules that sometimes differ from federal treatment. It's also worth checking if your state has any special forms for reporting real estate transactions. My state required an additional form that wasn't part of the federal return. Your state's tax department website should have information specific to your location.

Yes, if you claimed a home office deduction, it can affect your capital gains exclusion. When you take a home office deduction, that portion of your home is considered business use, not personal use. If you claimed a home office deduction for part of your home, you may have to pay taxes on the gain allocated to that portion of your home, even if the gain on the residential portion is excluded. It's proportional - so if 10% of your home was used as an office, 10% of the gain might be taxable regardless of the exclusion.

Thanks for explaining that. I only used about 8% of the house as my office, so it sounds like a small portion might be taxable. I'll make sure to track that separately when I file.

Thanks for this warning! What mileage tracking app do you recommend? I want to make sure I'm keeping proper records from day one with this new vehicle purchase.

I've been using MileIQ for the past year and it's been a game-changer. It runs in the background on your phone and automatically detects when you're driving. After each trip, you just swipe right for business or left for personal. It logs the date, time, starting point, destination, and mileage for every trip. At tax time, you can generate detailed reports that show exactly what percentage was business vs. personal use. There are other good options too like Everlance or TripLog. The important thing is having contemporaneous records - trying to recreate a mileage log at tax time or during an audit is extremely difficult and the IRS can tell when records were created after the fact.

Yeah, but beware that the clean vehicle credit has a bunch of new requirements about where the car and batteries are manufactured. A lot of EVs only qualify for partial credits now or none at all. Check the IRS website for the official list of qualifying vehicles before making any decisions based on getting the credit.

Thanks for pointing that out. You're absolutely right about checking the IRS website first. I should have mentioned that the rules got much more complicated with the Inflation Reduction Act. There's now both manufacturing requirements and price caps on vehicles to qualify for the full credit. The IRS maintains an updated list of qualifying vehicles at fueleconomy.gov. Definitely verify eligibility before counting on that credit, as it varies not just by make and model but sometimes even by specific trim levels and manufacturing locations.

Is a paper log still acceptable? I'm old school and keep a notebook in my glove compartment where I write down all my business trips.

Yes, a paper log is absolutely acceptable! The IRS doesn't require any specific format as long as you're capturing all the necessary information (date, starting point, destination, purpose, and miles driven). Your glove compartment notebook works perfectly fine as long as you're consistent with recording your trips. Some people actually prefer paper logs because they can't be altered as easily as digital records, which can sometimes be an advantage if you're ever questioned. Just make sure you're keeping up with it in real-time rather than trying to reconstruct it at tax time. The IRS is particularly suspicious of logs that appear to have been created all at once.

Absolutely you can! It doesn't matter if you're part-time or full-time - what matters is the business use percentage. If you use your SUV 30% of the time for DoorDash, you can deduct 30% of your actual expenses (including depreciation) OR use the standard mileage rate for the business miles. Just make sure you're tracking your delivery miles separately from personal use. Most delivery drivers I know use the standard mileage method since it's simpler, but you should run the numbers both ways to see which gives you a better deduction.