Do you happen to know if health insurance premiums for yourself (the sole prop) count as eligible expenses for the remaining 40%? I've been getting conflicting information.

For sole proprietors with no employees, health insurance premiums for yourself do NOT count as an additional eligible expense for the 40% portion. This is because health insurance for the owner is already factored into your net profit calculation on Schedule C. The eligible expenses for the 40% portion are limited to business mortgage interest, rent or lease payments, and utilities that were in place before February 15, 2020. The rules are a bit different for businesses with employees, which is probably why you've been seeing conflicting information. Always best to check with your specific lender since they'll be the ones processing your forgiveness application.

I got PPP for my sole prop photography business while having a full-time W2 job. Your bank is wrong - there's nothing in the PPP rules that disqualifies you for having W2 income. Try applying through a smaller bank or credit union, or one of the fintech lenders like BlueVine or Kabbage. I applied through BlueVine after BofA gave me similar pushback and was approved in 3 days.

Thanks so much for this suggestion! Did you need to create a new account with H&R Block or could you somehow import your return from TurboTax? I'm worried about having to re-enter all my information from scratch.

You do need to create a new H&R Block account, and unfortunately there's no direct import from TurboTax. However, you don't have to re-enter everything from scratch either. What I did was download my tax return transcript from the IRS website (the "Get Transcript" tool), which had all my basic info already included. Then in H&R Block, I just had to enter the main details from my original return based on that transcript, plus the correct 1099-NEC information. It took maybe 30-45 minutes total, which was worth it to avoid paying TurboTax's premium fee. They make the amendment process pretty straightforward, especially for correcting income on a 1099-NEC.

That's actually not a great approach because the IRS will charge you interest and penalties if they catch the mistake first. When you file your own amendment, you can often avoid the penalties (though you'll still owe interest on any unpaid tax). Plus, having the IRS send you notices can increase your audit risk.

Don't bank statements expire after 7 years? How would someone even get statements from 10 years ago to reconstruct income?

Most banks only provide online access to 7 years of statements, but they often retain records for longer periods. Your client can request older statements directly from their bank - there's usually a fee, but many banks can produce statements from 10+ years ago if needed. This can be extremely valuable for income reconstruction. If bank statements truly aren't available, there are alternative approaches: industry standard rates applied to known work activity, client's recollection of approximate customer counts and average charges, third-party records (like appointment books or contracts), and even client's lifestyle expenses during those periods can establish baseline income needed to maintain that lifestyle.

FTA typically only applies to one tax year - usually the earliest one with penalties. However, I've had success requesting reasonable cause abatements for the additional years by documenting why the client failed to file (medical issues, natural disasters, bad advice from previous accountants, etc). Worth trying for all years, but expect FTA to only work for one.

8 Does that apply even if you occasionally used the car for work and claimed mileage deductions? I'm in a similar situation but I used my car for both personal and some business travel.

3 That's a good question. If you used the car for business and claimed mileage deductions, then it's considered a mixed-use asset. In that case, you might be able to deduct a portion of the loss that corresponds to the business use percentage. For example, if you can document that 30% of your vehicle use was for business (through mileage logs), you might be able to deduct 30% of the loss. However, this gets complicated because you've already received tax benefits through the mileage deductions during ownership. It's definitely one of those situations where having good documentation of your business use percentage is crucial, and you might want to consult with a tax professional for your specific case.

5 There's no minimum threshold for reporting capital gains like this. Technically, any profit should be reported on your tax return, even small amounts.

I tried to get my transcript online but couldn't pass the identity verification since I don't have a mortgage, car loan, or credit card in my name yet (I'm pretty young). Is there another way to get this information?

Yes, if you can't verify your identity online, you can use Form 4506-T to request your transcripts by mail. It takes about 10 days to receive them. You can also call the IRS transcript request line at 800-908-9946 to order transcripts by phone. Another option is visiting a local IRS Taxpayer Assistance Center in person - they can provide transcripts on the spot, but you need to schedule an appointment first by calling 844-545-5640. Bring your photo ID if you go this route.

This is really good advice! My friend works for the state AG office and says they take tax preparer fraud very seriously. They can also help document the fraud for the IRS which speeds up your refund recovery.