That's an interesting angle I hadn't considered. This is my first time doing seller financing, but I do have two other rental properties that I might sell in the next few years. Would doing just 2-3 of these transactions be enough to qualify as a business? Or would I need to do this more regularly?

Just 2-3 transactions over several years would probably not be enough to qualify as being in the lending business. The IRS would likely view that as investment activity rather than a business. To be considered a business, you'd typically need to show more regular activity and perhaps even advertise your services or create a formal business structure. Most people who do occasional seller financing end up treating it as investment activity and reporting it on Schedule B with the associated expenses offsetting the interest income. If you were doing multiple loans per year and actively seeking out opportunities to provide seller financing, that might cross the threshold into business territory.

I've done seller financing for several properties and found that H&R Block's premium version handled it better than TurboTax. It specifically asked about loan origination costs and gave clear guidance on amortizing them over the loan term. It also had a specific section for investment expenses related to interest income.

Can you deduct a home office if you're only doing this 1099 work part time? I use my spare bedroom for my freelance design work but it's not my main job.

Yes, you can still claim a home office deduction for part-time self-employment work. The key requirement is that the space must be used "regularly and exclusively" for your business activities. If your spare bedroom is used solely for your freelance design work and not for other purposes, you can deduct it. You have two options: the simplified method (currently $5 per square foot up to 300 sq ft) or the regular method where you calculate the actual expenses based on the percentage of your home used for business.

Would that be better than just using a Roth IRA? I thought those had better long-term tax benefits.

That's a good point about tax credits! I was getting some education credits last year that might have phased out with our combined income. Is there any way to figure out if filing separately would be better in our situation? Or is joint filing almost always better?

Filing separately is rarely better than filing jointly, but there are exceptions. The main situations where filing separately might benefit you are if one spouse has significant medical expenses (which have a 7.5% AGI threshold), student loan interest deductions with income-based repayment plans, or if one spouse has past tax debts the other doesn't want to be responsible for. You can run your tax return both ways to see which results in a lower combined tax. Just be aware that if you file separately, neither of you can take certain credits like education credits, and if one spouse itemizes, the other must also itemize even if they have few deductions. Most tax software will let you compare both scenarios to see which is better for your specific situation.

This is spot on. People obsess about refunds vs. owing, but what really matters is your ACTUAL tax liability. My wife and I owed $2k after marriage but our effective tax rate dropped from 14% to 13.2% combined. So we actually saved money despite owing at filing time. The withholding tables just aren't designed well for dual-income couples. The W-4 calculator on the IRS website is actually pretty accurate if you take the time to use it properly.

Oh that's really helpful! Summit is actually an LLC, but I don't know how they're taxed. So I definitely need that W-9 to determine whether they're taxed as a partnership or a corporation before I figure out the 1099 situation?

That's exactly right. The W-9 will indicate how they're taxed. If their LLC is taxed as a partnership or single-member LLC (disregarded entity), you'll need to issue the 1099-NEC. If they're taxed as an S-Corp or C-Corp, then you generally don't need to issue the 1099. This is why it's best practice to get W-9s from all vendors when you first start doing business with them, so you know from the beginning whether you'll need to track their payments for 1099 purposes. In your case, definitely request their W-9 now so you're prepared when tax time comes around.

I used TurboTax Self-Employed last year to handle 1099s for my business, including some referral fees similar to what you're describing. It does walk you through the process, but you need to have all your information organized beforehand. Make sure you have the W-9s collected and total payment amounts calculated per vendor before you start. The system will guide you through creating and filing the 1099-NECs, but it's not as intuitive as it could be for percentage-based payments that accumulated throughout the year. I ended up creating a separate spreadsheet to track all my commission payments to make sure the totals were accurate.

Thanks for the mileage tip! Does that work if I'm driving to these coffee shops where I do my contract work? Also, I'm on my parents' health insurance still (I'm 24) - does that disqualify me from any health insurance deductions?

Driving to coffee shops can be deductible if they're not considered your principal place of business. If you primarily work from your home office and occasionally go to coffee shops for a change of scene or specific tasks, those trips might qualify as business travel. Keep a detailed log of these trips including date, starting point, destination, purpose, and miles driven. Regarding health insurance, since you're covered under your parents' plan and not paying the premiums yourself, you wouldn't be eligible for the self-employed health insurance deduction. That deduction is specifically for self-employed individuals who pay for their own health insurance policies.

This is such a weird and unhelpful comment. OP asked specifically about deductions, not business growth advice. Why not just answer the question that was asked instead of changing the subject?