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Something else to consider - if you're expecting a large refund from a 2019 return filed on the deadline, be prepared that the IRS might issue a paper check instead of direct deposit. This happened to my brother who filed his 2019 return on July 15th. Apparently for some older returns, especially ones filed at the deadline, the IRS sometimes defaults to paper checks for security reasons. Just something to keep in mind if you don't see the direct deposit and start panicking.
Thanks for mentioning this! Do you know how long it typically takes for paper checks to arrive after the IRS approves the refund? Also, is there any way to check if they're sending it as a check vs direct deposit?
Paper checks typically take about 1-2 weeks to arrive after the IRS approves the refund, so you're looking at potentially 6-10 weeks total from filing if they go this route. You can check whether they're sending a direct deposit or paper check by using the "Where's My Refund" tool on the IRS website. Once your return is approved, it should tell you which method they're using for your refund. If it shows they're mailing a check when you requested direct deposit, it's usually because of their security protocols for older returns or when there's a long gap between filing seasons.
Has anyone had experience with amended returns filed on the deadline day? I originally filed my 2019 taxes back in 2020, but then realized I missed some deductions. I filed an amended return (1040-X) on July 17th and I'm wondering if the same timeline applies?
Amended returns unfortunately take much longer to process than original returns, even when filed electronically. The current processing time for amended returns (Form 1040-X) is running about 20+ weeks according to the IRS.
Lots of good advice here but one thing: If you ever need to visit a client or customer directly from your home on days you work from home, that travel may be deductible since you're going from one workplace (home office) to another business location that's not your regular place of business. It gets complicated but keep track of all business-related travel just in case!
This is actually incorrect information. Traveling from your home to ANY client is considered commuting by the IRS and isn't deductible - even if you have a home office. The only exception is if your home office is your principal place of business AND you're traveling to a temporary work location.
Has anyone used IRS Publication 463? It covers all of this transportation deduction stuff in detail. Pages 14-15 specifically talk about the difference between deductible travel and non-deductible commuting. Helped me figure out my similar situation with multiple workplaces.
Thanks for the reference! I'll definitely check out Publication 463. I'm trying to understand all the rules before I file my 2025 taxes and want to make sure I'm claiming everything I'm legitimately entitled to without raising any red flags.
Another option to consider - if your stepchild is important to your business and you want those tax benefits, you could legally adopt them. I did this with my stepdaughter years ago, and besides the emotional benefits, it does qualify them for the same tax treatment as biological children. Obviously adoption is a big decision that shouldn't be made for tax purposes alone, but if you're already thinking about it for family reasons, it's an added benefit.
That's interesting - I hadn't considered the adoption angle. We've actually talked about it before for family reasons, but I didn't realize it would also have this tax benefit. Do you happen to know how complicated the adoption process is for a stepchild? I'm guessing it's simpler than other adoptions.
Stepchild adoption is generally much simpler than adopting a non-related child. The biggest hurdle is usually getting consent from the other biological parent, if they're still in the picture and have parental rights. In my case, the biological father had been out of the picture for years, so it was fairly straightforward. The process typically involves a home study, filing adoption papers with the court, and a hearing. Costs vary by state but are often lower for stepparent adoptions - ours was about $1,500 total including attorney fees.
Has anyone considered just setting up an LLC taxed as an S-Corp and putting both yourself and your stepchild as shareholders? Might be a workaround for this whole issue and could have other tax advantages.
That's actually not a great solution for this specific issue. Even with an S-Corp structure, payments to shareholders that are related to services performed are still considered wages subject to employment taxes. The IRS is pretty strict about ensuring reasonable compensation is paid for work performed. Additionally, there are restrictions on how S-Corp stock can be issued, especially to minors, and the administrative burden of maintaining an S-Corp is significant. For most small businesses, the cost and complexity of setting up and maintaining an S-Corp just to try to work around this rule would far outweigh any potential tax benefits.
Don't forget to check state tax rules for clergy housing allowances! Federal excludes it from income tax but includes it for SE tax. But states vary wildly - some follow federal exclusion, others tax it fully, and some have special clergy provisions. In my state of California, the housing allowance is excluded from income for state tax purposes if it qualifies for federal exclusion. But I have a clergy client who moved from Pennsylvania where they DO tax housing allowances. Make sure you know your state rules!
Good point about state variations! Do you know if there's a good resource that lists how each state handles clergy housing allowances? I've looked around but haven't found a comprehensive guide.
I don't know of a single comprehensive guide for all states. Your best bet is to check with your specific state's department of revenue or taxation. Most have publications or sections of their tax guides dedicated to clergy income. For the most complex states, denominational offices often provide state-specific guidance for their ministers. The Church Law & Tax organization also has some good state-by-state resources, though you might need a subscription to access the detailed information.
One thing nobody mentioned - make sure your clergy client is aware of the Parsonage Allowance Lawsuit situation. Some court cases have challenged the constitutionality of the housing allowance exclusion as a violation of separation of church and state. The latest case (Gaylor v. Mnuchin) upheld the allowance, but it's been challenged multiple times. Just something to be aware of since this area of tax law could potentially change in future years.
Is there actually any real chance of this benefit going away? My pastor client is planning his finances around this exclusion for years to come. Should I be warning him that this might not be something he can count on long-term?
Gianna Scott
Something important nobody's mentioned yet - the timing of when you sell matters for Section 179! If you sell in the same tax year that you stop using it for business, the calculations are different than if you switch to personal use in one year and then sell in a later year. Also, don't forget the EV tax credit angle. If you claimed the EV credit when you purchased, and you sell within 3 years, you might have to recapture part of that credit too! It's something like $7,500 Γ (36 - months held)/36.
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Declan Ramirez
β’Thanks for bringing up these points! Do you know if the EV credit recapture applies even if I took Section 179 instead of regular depreciation? And does the business/personal split affect the EV credit recapture calculation?
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Gianna Scott
β’The EV credit recapture is separate from the Section 179 recapture, so yes, it still applies even if you took Section 179 instead of regular depreciation. The IRS treats these as completely separate tax benefits. The business/personal split doesn't directly affect the EV credit recapture calculation. The EV credit recapture is simply based on the full original credit amount and how long you owned the vehicle. So if you received a $7,500 credit and sell after 24 months, you'd recapture $7,500 Γ (36-24)/36 = $2,500, regardless of business use percentage.
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Alfredo Lugo
Has anyone actually gone through a Section 179 recapture situation with the current IRS software systems? I tried entering mine last year and TurboTax kept giving me errors.
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Sydney Torres
β’I used FreeTaxUSA last year for a similar situation and it worked fine. You need to make sure you're using Form 4797 correctly - Part III is for the recapture. The key is getting your adjusted basis right first, then the rest falls into place.
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