That's what I suspected! I was so confused because it directly contradicted what other teachers in my district told me about their education expenses. Is there any documentation I should specifically request from the university to help with claiming education credits?

You should definitely request Form 1098-T from your university, which shows your tuition payments and is required for claiming education credits. Also keep all receipts for required books, supplies, and equipment as these can sometimes be included in qualified education expenses depending on the credit you're claiming. Make sure the 1098-T shows your payments rather than just amounts billed. Some universities only report billed amounts by default, which can cause issues with your tax filing. You may need to specifically request a 1098-T that shows actual payments made during the tax year.

You can potentially do both but NOT for the same expenses. If you claim certain expenses for the LLC, you cannot also deduct those same expenses on Schedule C. It would be considered double-dipping. However, if you have enough education expenses, you could use some for the LLC (up to the $10k limit) and then deduct additional, separate expenses on Schedule C if they're directly related to your self-employment work.

Thanks for clarifying! That makes sense - I wasn't sure if it was an either/or situation or if I could split the expenses between the two. I'll make sure to track which expenses I'm applying to each category.

Do you need to keep gas receipts too or just the mileage log?

For farm vehicles, you generally have two options: deduct actual expenses (gas, maintenance, insurance, etc.) OR take the standard mileage deduction. You can't do both. For most small farmers, the standard mileage deduction is simpler and often more beneficial. In that case, you only need to keep a mileage log with dates, destinations, purpose, and miles driven - no gas receipts needed. The log should differentiate between farm use and personal use if it's a vehicle you use for both. If you choose to deduct actual expenses instead, then yes, you'd need to keep all those gas receipts and maintenance records.

How far back do you need to keep farm tax records? Is it different than regular tax returns?

Is there any way to see this breakdown before finalizing the return? I'm using TaxAct and it's just giving me a big total number for "education credits" without splitting it up.

Yes, in TaxAct you can view the forms directly before filing. Go to the "Review" section, then look for an option like "View Tax Forms" or "Preview Tax Return." Find Form 8863 (Education Credits) in the forms list. On that form, you'll see the breakdown with line 8c showing specifically how much is refundable. In general, any good tax software should let you preview the actual IRS forms before filing. This is the best way to see exactly what's happening with your credits, rather than relying on the simplified summary screens which can be misleading.

Did you end up owing money back after your audit? I'm worried because I claimed some textbooks but don't have all the receipts.

This is exactly the kind of real-world experience I was hoping to learn from. Would you mind sharing what documentation the IRS specifically questioned during your audit? And did you qualify as a real estate professional or were you trying a different approach?

The documentation they zeroed in on was my activity log for proving real estate professional status. I claimed to meet the requirements but my records were inconsistent and some activities I counted weren't considered "material participation" by the auditor. I did qualify as a real estate professional based on hours, but they questioned whether I was truly spending more time on real estate than my primary job. They wanted to see detailed, contemporaneous records - not just a spreadsheet I created after the fact. They also scrutinized whether the rent I charged myself was truly market rate, asking for multiple comparable properties and professional rental assessments. One major issue was commingling of funds between personal and business accounts. They viewed this as evidence I wasn't treating the LLC as a separate entity. Make sure every expense goes through separate accounts and that you have a formal process for paying rent that looks like a true landlord-tenant relationship.

Good points. Also worth mentioning that mortgage rates for investment properties are typically higher than primary residences, often by 0.5-1%. So even if you find a lender willing to do this arrangement, you'll likely pay more for the mortgage, which could offset some of the tax savings.

Yes!! Cashapp was a disaster for my multi-state situation. I have rentals in Colorado but live in Texas. It kept trying to make me file resident returns in both states and the support was clueless. FreeTaxUSA correctly set up non-resident return for the rental state.

I had exactly the same experience! The software seemed to get confused between resident and non-resident state filing requirements. It kept prompting me to enter information that wasn't relevant to my situation. FreeTaxUSA immediately recognized that I needed a non-resident return for the state where my rental was located. The questionnaire was much more straightforward and accurately allocated income to the appropriate states. Their state filing support is definitely superior for rental property owners with multi-state situations.

FreeTaxUSA handles it pretty well. I sold a rental last year after owning it for 9 years and it walked me through calculating the recaptured depreciation at the 25% rate separate from the long-term capital gains. Just make sure you have good records of all the depreciation you've taken over the years!