Thanks for this advice! Do you know if the IRS is more likely to audit returns with EITC claims from self-employed people versus regular employees? I'm keeping all my delivery app summaries and expense receipts, but wondering if I should be doing anything else to protect myself.

Yes, unfortunately self-employed EITC claims do face higher audit rates than W-2 employee claims. The IRS has historically focused more attention on self-employment income because it's self-reported rather than verified by an employer. For additional protection, I recommend keeping a simple business journal that notes your work days and hours alongside your app summaries. Also maintain separate bank accounts for business versus personal use if possible. Having a consistent pattern of deposits that match your reported income is very helpful during an audit. Finally, consider using accounting software specifically for self-employed workers that can categorize your expenses properly - this organization makes a huge difference if you're ever questioned.

I've had good luck with Cash App Taxes (formerly Credit Karma Tax). It's completely free even with self-employment and handles EITC well. The questions about Schedule C income for EITC purposes were pretty clear and it walked me through everything.

How do you find accountants who are just starting out? Is there a website or something? I wouldn't even know where to begin looking for someone like that.

100% agree. I cheaped out two years ago ($350 for a budget preparer) and ended up getting audited because they messed up my home office deduction. Ended up paying the original tax plus penalties AND $1,800 to a real accountant to handle the audit. Sometimes cheaper is WAY more expensive in the long run.

Is there a minimum amount of 1099 income before you need to do quarterly payments? Like if it's just a side gig making a few thousand?

You generally need to make quarterly estimated tax payments if you expect to owe at least $1,000 in taxes when you file your return. Even for side gigs, this can happen quicker than you'd think when you factor in both income tax and self-employment tax (which is about 15.3%). A good rule of thumb is to set aside around 25-30% of your 1099 income for taxes, depending on your tax bracket. The IRS has a form called 1040-ES that helps you calculate what you should pay quarterly.

I switched to FreeTaxUSA and it handles both W-2 and 1099 income really well. Federal filing is free and state is like $15. Way cheaper than what TurboTax charged me for self-employment.

That's interesting! So with the 14-day rule, could we still deduct all the property taxes and mortgage interest on Schedule A as a second home? Also, does the 14-day rule still apply if you're using a property management company or Airbnb to handle the rentals?

Yes, with the 14-day rule, you can still deduct all eligible property taxes and mortgage interest on Schedule A as a second home, subject to the usual limits like the SALT cap. It's basically treated just like a second home for tax purposes, but you get the bonus of tax-free rental income. The 14-day rule absolutely still applies even if you use a property management company or Airbnb. The rule is based on the number of days rented, not how you manage the rental. So you can use Airbnb or a management company and still qualify for tax-free income as long as the total rental period is 14 days or less per year.

True story - my parents bought in a golf community in Florida last year and the HOA changed their rental rules 3 months later. Now they can't rent for less than 90 days which ruined their whole investment strategy!

This is super helpful! Question though - my daughter's 1098-T has an amount in Box 5 for scholarships. Do I literally just subtract Box 5 from Box 1 to figure out what expenses I can claim for the education credit?

Yes, that's exactly right. Take the amount in Box 1 (payments received by the school) and subtract the amount in Box 5 (scholarships/grants). The result is your eligible qualified education expenses that you can use for calculating education credits. Just be aware that if Box 5 is larger than Box 1, it means the scholarships/grants exceeded the tuition/fees, and you generally can't claim education credits in that case. Also, don't forget that expenses for books, supplies, and equipment required for courses can be qualified education expenses even if they weren't paid directly to the school (so they wouldn't be included in Box 1).

I used TurboTax last year for this. When it asks who paid, you can select "you" as long as you're claiming the student as a dependent. They don't need the breakdown of where each dollar came from - they just need to know if you (as the taxpayer claiming the dependent) are the one claiming the expenses.