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Just want to add something no one's mentioned - if you're using your personal vehicle for business driving, make sure your auto insurance knows you're doing delivery/rideshare! Many policies don't cover commercial use, and if you get in an accident while delivering, they might deny your claim. Most gig companies offer some coverage, but it's usually limited. I learned this the hard way after a small fender bender during a DoorDash delivery. My regular insurance wouldn't pay because I was "using the vehicle for commercial purposes" and DoorDash only covered liability, not my car repairs. Had to switch to a policy that specifically allows delivery driving.
Wow I hadn't even thought about the insurance angle. Does adding commercial coverage to your policy affect what you can deduct for taxes? Like does it increase the standard mileage rate or anything? And did your insurance premium go up a lot when you added the commercial coverage?
Adding commercial coverage doesn't change your tax deduction options at all. The standard mileage rate remains the same regardless of your insurance type - it's set by the IRS annually. You can still choose between standard mileage or actual expenses. Yes, my premium did increase when I added rideshare/delivery coverage - it went up about $32 per month. But the good news is that additional insurance cost is deductible as a business expense if you're using actual expenses method! If you're using standard mileage rate, it's already factored in though.
You should also consider tracking your cell phone usage for business! Since you're using delivery apps, part of your phone bill can be deducted. Same with any accessories like phone mounts, chargers, or hotspot data you use while working. I usually deduct about 60% of my phone costs since that's roughly how much I use it for gig work.
I switched from a CPA ($550/year) to doing my own taxes with software 4 years ago and haven't looked back. My situation is similar to yours - W-2 income, investments, and a rental property. The first year took me about 5 hours because I was learning, but now I can finish in about 2 hours. The software walks you through everything, and there are tons of forums online where you can ask questions about specific situations. The big advantage is that I actually understand my tax situation better now. My CPA never explained why he was making certain choices, but now I know exactly where my money is going and how different decisions affect my tax liability. I did have my old CPA review my self-prepared return the first year (paid him for an hour of time), and he only found a minor issue that wouldn't have triggered an audit anyway.
Did you find any good resources for learning about rental property tax treatment? That's my biggest concern with switching from my CPA.
The IRS Publication 527 (Residential Rental Property) is actually pretty readable and covers the basics well. I also found the BiggerPockets forums invaluable for specific rental tax questions - there are both CPAs and experienced landlords who can help with real-world situations. For me, the key was learning about depreciation (which is usually the trickiest part) and keeping meticulous records of expenses. I created a simple spreadsheet where I track every expense by category, which makes tax time much easier. Most tax software has decent guidance on rental properties, but I found that learning the basic concepts first made the whole process less intimidating.
Honestly, if you have a rental property AND a side business, I would NOT recommend doing your own taxes. I tried to save money last year and did my own with TurboTax. Ended up missing some key deductions and had to file an amended return that my friend (who's a CPA) caught. Cost me more in the long run. Maybe try negotiating with your current CPA? Or find a less expensive one? But with rental depreciation and business expenses, there's just too many places to mess up if you don't know what you're doing.
I went through this last year! You don't need to send a 1095 form if you didn't have insurance - that's the whole point. The IRS is just asking for verification because their system flagged your return when you indicated no coverage. Call them and explain your situation - that you couldn't afford coverage. For 2025 filing (2024 tax year), the individual mandate penalty isn't even enforced anymore at the federal level, though some states still have their own requirements.
Wait, are you sure the penalty is gone? I thought Biden brought back the healthcare mandate? I've been worried about this for my 2024 taxes.
The federal penalty for not having health insurance (the individual mandate) was reduced to $0 starting in 2019, and that's still the case for federal taxes. The American Rescue Plan didn't reinstate the penalty. Some states like California, Massachusetts, New Jersey, Rhode Island, and DC have their own individual mandates with penalties, so if you live in one of those states, you might still face a state tax penalty. But on your federal return, there's still no penalty for not having coverage.
Has anyone actually paid a penalty for no health insurance recently? I haven't had insurance for 3 years and never got any letters or penalties. I'm wondering if they're just randomly auditing some people?
The federal penalty is $0 now, but it's not an "audit" if they're asking about it - it's just verification. I think the IRS systems still flag returns with no coverage marked, but they don't actually charge a penalty. They just want to make sure you really don't have coverage vs. forgetting to include your insurance info.
Not sure if this helps, but I had a similar situation with my daughter at UCLA. Our tax advisor explained it this way: If you never received a bill, there was no expense. If there was no expense, there was no support provided for that expense. For the kiddie tax, they look at actual support provided, not theoretical costs that were waived. In our case, we were able to exclude the tuition waiver from the support calculation, which meant her part-time job provided more than 50% of her support. This only works with true tuition waivers though - not scholarships where money actually changes hands. Worth asking your accountant about this specific distinction.
That's exactly the kind of distinction I was wondering about! Did you have to provide any specific documentation to the IRS to prove it was a waiver and not a scholarship? My financial aid letter does say "tuition waiver" and "non-disbursing" but I'm worried that might not be enough.
We kept copies of her financial aid award letter that specifically called it a "tuition waiver" and noted it was "non-disbursing." We also kept documentation showing no tuition was ever billed to her student account - just the other expenses like room and board, books, etc. Our accountant said the specific terminology on the financial aid documents is crucial. The fact that yours says "non-disbursing" is very helpful. That's exactly the kind of language that indicates no support was actually provided - there was simply no charge applied. Definitely bring those documents to your accountant appointment!
One thing to consider that I haven't seen mentioned - look at how your university reported the tuition waiver on your 1098-T. Check Box 5 which shows "Scholarships or Grants." If they included the waiver amount there, the IRS might consider it support regardless of whether cash changed hands. I found this out the hard way. My daughter had a "presidential tuition waiver" but the university reported it in Box 5 of her 1098-T as a scholarship. When we got audited (bad luck!), the IRS considered it as support provided by the university, which meant her earned income wasn't over 50% of her support.
This is a really good point! The 1098-T reporting can make a huge difference. My son's school didn't include his tuition waiver in Box 5, and we had no issues excluding it from support calculations. But my nephew's university did include his waiver in Box 5, and they ended up having to pay kiddie tax.
Giovanni Colombo
If you still have the TurboTax, I might be interested. My situation is pretty basic - W2 job plus a small side business selling crafts online. Do you think the Home & Business version would be overkill for me? I used the Deluxe version last year but my online sales have increased.
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Yuki Kobayashi
ā¢I think the Home & Business would actually be perfect for your situation with the online craft sales. It's specifically designed for people with a small business or self-employment income. The Deluxe version doesn't include all the business expense categories and Schedule C support that you probably need. Let me figure out how to get this to you without violating any terms of service. Might need to check what the other commenter mentioned about transfers not being allowed.
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Giovanni Colombo
ā¢Thanks for the info! That makes sense about the Schedule C support. I didn't realize how many business deductions I might be missing with just the Deluxe version. Please let me know what you find out about transferring it.
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Fatima Al-Qasimi
Has anyone tried FreeTaxUSA? It's way cheaper than TurboTax and handles all the same forms. I switched last year and it was honestly better than TurboTax for my needs (W2 plus rental property). The interface isn't as pretty but it gets the job done for like 1/5 of the price.
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StarStrider
ā¢I second this! Been using FreeTaxUSA for 3 years now. It handles my freelance work and investment accounts perfectly. Federal filing is free and state is only like $15. No idea why people still pay $100+ for TurboTax.
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