How much did appealing cost you? My CPA is charging $250/hour, and he estimates it would take at least 10-15 hours to prepare and handle an appeal. That's potentially $3,750, and with no guarantee of success. I'm trying to figure out if it's worth the fight or if I should cut my losses.

For my first audit appeal, I handled it myself and spent about $500 on organizing documents and preparing my case. It took about 25 hours of my time, but I saved almost $8,000 in disallowed deductions. For the second appeal, I hired a tax attorney for a flat fee of $2,500. This was more complex involving rental property deductions. We ended up saving about $12,000 in taxes, so the investment was worth it. The key is analyzing the potential savings versus the cost of fighting. If your total tax difference is less than $5,000, self-representation might make more sense. For larger amounts, professional help often pays for itself. Remember that if you win, you're not just saving the immediate tax bill but also setting precedent for future years of similar deductions.

Not OP, but this is important info. Many people don't realize that employee business expenses (including home office for W-2 employees) are completely suspended right now. The only workaround is if your employer would provide an accountable plan where they reimburse you for these expenses.

Where exactly do you report income without a 1099? Is it still on Schedule C or somewhere else? My tax software gets confused when I try to enter income without an associated form.

You would still report it on Schedule C as self-employment income if you're an independent contractor, even without a 1099. There's no requirement that you need a 1099 form to file Schedule C - it's based on the nature of your work, not whether you received a form. In the tax software, you typically just enter it as "income not reported on a 1099" or something similar. The IRS doesn't care whether you got the form or not - they care that you report all income. The forms are just a verification system, but the obligation to report exists regardless.

Is there a time limit for filing an amended return? Like what if they wait 2-3 years to deal with this?

Thanks for this explanation! I did some digging and it looks like you're right - it's definitely related to the qualified dividends. TurboTax is showing a lower amount on line 16 because it's correctly applying the reduced rate for qualified dividends, while FreeTaxUSA seems to be calculating it incorrectly. I also found the Qualified Dividends and Capital Gain Tax Worksheet in both programs, and TurboTax's version matches what I calculated manually. I think mystery solved! Really appreciate everyone's help with this.

Glad you figured it out! This is actually a common issue with tax software. The tax code treatment of qualified dividends and capital gains is pretty complex with all the different brackets and rates. If FreeTaxUSA is calculating it incorrectly, you might want to report that to them. Their customer service is usually pretty responsive about fixing calculation issues. Either way, you've done the right thing by double-checking and not just accepting the higher tax amount!

This is the real MVP advice right here! I never knew you could preview the 1040 in TurboTax without paying. Gonna try that right now because I'm in the same boat trying to decide between TT and H&R Block.

Do you need to have a business bank account to do the separate credit card thing? Or can you just use a personal card that you designate for business only?

You can absolutely use a personal credit card that you designate for business only - that's what I do! You don't need a formal business account unless you have an LLC or corporation. The key is consistency - just make sure you ONLY use that specific card for business expenses and nothing personal. Makes it super easy to download your year-end statement and have all your deductions in one place. I also take photos of receipts for cash expenses using a free app that organizes them by date.

That's a really helpful rule of thumb! I had no idea how much to set aside. If I start setting aside 30% of my freelance income going forward, should I just make quarterly payments with that? And when are those even due?

Exactly - set aside that 30% and make quarterly estimated tax payments with it. The quarterly due dates are April 15, June 15, September 15, and January 15 of the following year (for 2025, the dates would be April 15, 2025, etc.) You can pay online through the IRS Direct Pay system or through their EFTPS (Electronic Federal Tax Payment System). Either way works fine. Just make sure you select "estimated tax" as the payment reason. Some freelancers I know set calendar reminders a week before each due date so they never miss one.

That's a good point I hadn't considered. My commercial property is in Texas. Do you know if Texas follows the federal bonus depreciation rules or do they have their own system?

Texas doesn't have a state income tax, so you're in luck! You only need to track the federal depreciation schedule. That makes your situation much simpler than investors in states like California, New York, or Massachusetts that have their own depreciation rules. Just focus on maximizing your federal benefits through proper cost segregation and bonus depreciation strategies. The only state-level tax you'll need to worry about is the property tax, which isn't affected by how you depreciate the property for income tax purposes.

This is actually incorrect. QIP rules changed with the TCJA and then again with the CARES Act. QIP now has a 15-year recovery period regardless of when it was installed. You should double-check this before giving tax advice.