Hadn't even considered the retirement account implications. Do you know if this affects 401k contributions as well? My employer matches up to 6% and I wouldn't want to lose that benefit.

Your 401k contribution limits actually aren't affected by filing status - you can still contribute the full amount ($23,000 for 2025, plus catch-up contributions if you're eligible) and get your employer match regardless of whether you file jointly or separately. The issue is specifically with IRAs, particularly Roth IRAs where the income limits are drastically lower for MFS. If you're currently doing backdoor Roth IRA conversions, which many high-income professionals do, you'll face additional complexities with MFS status due to the pro-rata rule calculations being done separately, but it's still doable with proper planning.

Yeah it depends on if they're in a community property state or not. In non-community property states, you generally split based on who paid. In community property, it's usually 50/50 regardless of who paid. Gets complicated fast.

Thank you for pointing this out! I had no idea about the 80% limitation. Does this mean I need to file any special forms for my 2024 taxes next year when I use the NOL? And should I be keeping copies of anything specific from my 2023 return as proof?

Yes, when you apply your NOL to your 2024 taxes next year, you'll need to file Form 1045 Schedule B to show how you're applying the carryforward. It's a good idea to keep a complete copy of your entire 2023 tax return, especially Schedule A of Form 1045 where you calculated the original NOL. Also keep any supporting documentation for the business losses that created the NOL - receipts, invoices, mileage logs, etc. The IRS tends to look more closely at returns with NOLs, so being able to substantiate everything is important. I recommend creating a dedicated "NOL documentation" folder with copies of everything, since you might be carrying this forward for several years.

Good point about state taxes! I've also seen some states limit the amount of NOL you can claim in a single year, regardless of the federal 80% rule. My state (Illinois) has its own NOL worksheet that's completely different from the federal one.

This is exactly what I'm worried about. How detailed does the documentation need to be for proving the revenue decline was COVID-related? We definitely had a 32% drop, but how do I PROVE it was because of COVID vs other market factors? We're in manufacturing and there were supply chain issues, reduced orders, etc.

For proving COVID causation, you'll want to create a narrative document that connects specific COVID factors to your business decline. Include things like: emails from customers canceling or reducing orders citing COVID concerns, documentation of supply chain disruptions with vendor communications, any relevant COVID restrictions that affected your operations, contemporaneous business records showing canceled projects or reduced capacity. The key is showing a clear cause-and-effect relationship. Also maintain detailed quarterly revenue reports that clearly show the percentage decline from 2019 to 2021 for the same quarters. The more specific documentation you have linking COVID factors directly to your revenue decline, the stronger your position will be if audited.

My brother's construction business got audited for their ERC claim last month. They claimed about $135k total. The auditor mainly focused on two things: documentation of their revenue decline and making sure they didn't count wages that were paid with PPP funds. They had good records and passed, but the agent mentioned they're specifically targeting claims filed by third-party "ERC specialists" since they've found a lot of fraud there.

Thanks for mentioning this! I told my mom right away and she checked her online account with the IRS. Her return was processed correctly with me as her dependent, which makes this even more confusing. Seems like different IRS systems aren't talking to each other properly.

That's definitely the issue then - the system that processes tax returns correctly marked you as a dependent, but the system that distributes stimulus payments didn't get that information. Classic government tech problems! Based on everything I've seen in similar cases, you're very likely in the "safe harbor" category where you can keep the payment without worry.

I'm so sorry about your daughter. Yes, deceased person payments are one of the few cases where the IRS explicitly tells you to return the money. For dependent status confusion like OP's situation, they've been much more lenient. I think they realized the administrative cost of processing returns would exceed the benefits.

I've heard about 1031 exchanges but wasn't sure if they applied to properties you build yourself. Do you know if there are any special rules for self-built investment properties? And do I need to identify the replacement property before I sell?

1031 exchanges absolutely can work for self-built investment properties. The fact that you built it yourself doesn't matter for exchange purposes - what matters is that it was held as an investment property. Yes, you must identify potential replacement properties within 45 days of selling your property, and you must close on one of those identified properties within 180 days. This is absolutely strict - miss those deadlines by even one day and the entire exchange fails. Also critical: you cannot touch the proceeds from your sale - they must go directly to a qualified intermediary who will hold them until you're ready to purchase the replacement property.

That's not how QBI works for real estate. You'd need to be classified as a real estate professional and spend 750+ hours annually in real estate activities. A one-off project like this wouldn't qualify unless OP is regularly in the business of building and selling properties.