Isn't there a risk of getting audited if you claim too many expenses? I'm a new subcontractor and nervous about deducting too much.

There's always a small audit risk with any business deductions, but it's not about claiming "too many" expenses - it's about claiming legitimate business expenses and having proper documentation. Keep good records of everything - receipts, logs, payment statements. The IRS understands that businesses have expenses. As long as they're legitimate and you can back them up if questioned, you shouldn't be worried. It's your right to take all legal deductions you're entitled to! Just don't make things up or inflate numbers, and you'll be fine.

I've been using Stride for the past couple years. It's free and lets you track mileage with GPS plus all your other expenses. You can take photos of receipts right in the app. Really helpful at tax time because you can categorize everything properly for Schedule C.

What if my tax preparer was a local guy who's now retired? He did my taxes for years but closed his business last fall. Do preparers have to transfer their records when they close or am I just out of luck?

That's definitely a tough situation. When preparers retire, they're supposed to notify clients about what will happen with their records. Many transfer them to another preparer who takes over their business, or maintain limited access to records for situations exactly like this. If you know his name, try searching online to see if there's any information about who took over his clients. You could also check with other local tax offices - sometimes they absorb the clients and records from retiring preparers in the area.

How did you make an appointment? When I called the IRS appointment line it said the wait was over 3 weeks for my local office. Did you just walk in or is there a faster way to get seen?

23 That's smart but what about online orders? I do most of my shopping on Amazon and often mix personal and business items in the same order to save on shipping.

11 For online orders, especially Amazon, I've found a couple workable solutions. First, if you have Amazon Business, you can actually mark certain items as business purchases within a single order and it will generate separate receipt documentation for those items. If you don't have that, another approach is to maintain separate accounts - one for business and one for personal. Yes, you might occasionally pay extra shipping, but the time saved in accounting and the clarity it provides is often worth it. Some business credit cards also provide spending reports that can help categorize your purchases after the fact.

16 Dedicated business card was the best decision I ever made for my side hustle! I use Chase Ink and it automatically categorizes everything in their reporting portal. Only downside is you still need to split those mixed receipt purchases somehow.

I'm not entirely sure of their business structure, but that's definitely something I'll look into. How complicated was the paperwork for this approach? Did you need specialized legal help?

The paperwork is definitely more complex than a straightforward asset purchase. We needed both our tax attorney and accountant involved to structure it properly. The election itself is made on Form 8023, but the agreement needs very specific language to support it. The biggest challenge was agreeing on the asset allocation with the seller since this impacts the tax consequences for both sides. We ended up allocating more value to assets that gave us better depreciation/amortization treatment while minimizing their gain recognition. It took about 6 weeks to finalize all the details, but the tax savings made it worthwhile.

Great point. If bankruptcy is filed within 90 days of any payment or transfer, it could potentially be clawed back as a preferential transfer. I'd recommend doing a solvency analysis as part of your due diligence.

That's a really good point I hadn't even thought about! My friend is living in Germany now - would they have a similar tax treaty situation? How complicated is it to claim those foreign tax credits?

Yes, Germany and Canada do have a tax treaty that should prevent double taxation. Your friend will need to report the Canadian property sale on their German tax return, but they can claim a credit for taxes paid in Canada. For claiming the credits, they'll need documentation showing the exact amount of Canadian tax paid specifically attributable to the property sale. The process isn't super complicated, but it does require careful documentation. Make sure they keep copies of their Canadian non-resident return, the T2062 form, and proof of the tax withholding and any refund they receive. German tax authorities may want to see these documents.

This is so true! My family had the same issue with a property in Montreal. The 1994 capital gains election can make a huge difference in the adjusted cost base. Also worth noting that if they ever did any major renovations, those costs should be added to the ACB as well.

Yeah, finding documentation from 20+ years ago can be a real challenge though. If they made the election back in 1994, the CRA should have it on file, but you might need to specifically request that information. Some accountants keep spreadsheets showing the impact of various capital gains changes over the years for long-term held properties. Especially important for non-residents since they don't get the principal residence exemption for years they weren't Canadian residents.