Thanks for mentioning insurance! What's a ballpark figure I should expect to pay for decent coverage as a solo preparer? And are there specific coverage amounts you'd recommend?

For a new solo preparer with no prior claims, expect to pay between $500-800 annually for a basic policy with $100,000 in coverage. I'd recommend starting with at least $250,000 in coverage if you can swing it, especially if you'll be doing anything beyond basic W-2 returns. As your practice grows and you take on more complex returns like business filings, you'll want to increase coverage to $500,000 or more. Many policies also include coverage for representation costs if a client is audited, which clients really appreciate. Some insurers offer monthly payment options which helps with cash flow when you're just starting out.

Flat rate all the way. Clients hate surprises with billing. I have a menu of services with set prices based on form complexity. Like $350 for basic returns, $500 with Schedule C, etc. Then add-ons for extra schedules. Much easier to market and clients know exactly what they're getting.

I used this option back in January and it took almost 3 weeks! I think it depends on the time of year and how busy the IRS is. Right now with tax season ramping up, I wouldn't count on it being quick.

That's an interesting idea I hadn't considered! My friend actually has some web design experience that could help my online store. Would I need to file any special paperwork if I paid him as a contractor? And would this potentially impact any benefits he currently receives?

If you pay him as a contractor and it's $600 or more in a year, you'll need to issue a 1099-NEC form to both him and the IRS. It's pretty straightforward - you'll need to get him to fill out a W-9 form first to collect his tax information. As for benefits, that's definitely something to consider. Earned income could potentially impact certain government benefits he receives, depending on the programs and income thresholds. This is something he should look into carefully before you proceed, as the extra income might reduce benefits by more than the amount earned in some cases. He might want to check with his benefits counselor to understand exactly how additional income would affect his specific situation.

This is super helpful! Does inventory include shipping costs to get the products to me? Or are those separate expenses?

Wait really? I can still make charitable donations now that count for 2023? Does this work if I take the standard deduction or only if I itemize?

This only works if you itemize your deductions. If you're taking the standard deduction, additional charitable contributions won't help reduce your taxes. The standard deduction for 2023 is $13,850 for single filers, so your total itemized deductions (including charitable contributions, mortgage interest, state and local taxes up to $10,000, etc.) would need to exceed that amount to make itemizing worthwhile. For your 2023 taxes, there's unfortunately no above-the-line charitable deduction available for those taking the standard deduction. That was a temporary COVID provision that has expired.

Thanks for the rental property tips! I actually did quite a few visits last year but wasn't tracking mileage. Can I estimate it now based on my address and the property address for those trips I know I made?

You can use a reasonable estimate based on the distance between your home and the rental property multiplied by the number of trips you can substantiate. Just be prepared to justify those trips if asked - having calendar entries, texts with tenants, or receipts from the same days as your visits can help establish that you actually made those trips. For future reference, it's best to keep a contemporaneous mileage log with dates, starting/ending mileage, and the purpose of each trip. Many people use smartphone apps for this now, which makes it much easier to track.

I do have some investments but nothing on margin. What about tax preparation software? I usually spend around $150 on TurboTax Premium - is that deductible if I itemize?

Unfortunately, tax preparation fees including software like TurboTax aren't deductible for individuals anymore. That deduction was eliminated for tax years 2018-2025 by the Tax Cuts and Jobs Act. However, if you have self-employment income or rental property income, you can still deduct the portion of your tax prep fees related to those business activities on Schedule C or Schedule E. But for regular personal tax preparation, those costs aren't deductible currently.

Bunching works really well! We do this with our church donations - double up in December and January of the same tax year, then skip a year. Our CPA ran the numbers and we save about $1,800 every two years compared to giving the same amount spread evenly. Just make sure your charities are cool with the irregular donation schedule.