14 Yes, it applies to most business equipment! I claimed it on my MacBook Pro and a high-end printer last year. Computer equipment, office furniture, machinery - all qualify as long as it's used more than 50% for business.

9 There's a bit more nuance here that's important. While the business purpose test is certainly key, the IRS specifically looks at whether the reimbursement primarily benefits the business versus the employee personally. Capital improvements to an employee's personal residence almost always fail this test because they add permanent value to the employee's property. The IRS has consistently viewed these as disguised compensation rather than legitimate business expense reimbursements. Similarly, regular coffee and snack purchases can look like personal meal expenses unless there's clear documentation of why working from that location was necessary for business purposes on each specific occasion.

11 I have a client who was audited specifically on their Accountable Plan reimbursements last year. The IRS was particularly interested in home office-related expenses. They disallowed reimbursements for home improvements (including partial reimbursement for painting and flooring) and reclassified them as taxable wages, resulting in additional employment taxes plus penalties.

3 That's concerning to hear. Were they reimbursing for major improvements or just regular expenses? Did the employees have legitimate home offices that were used exclusively for business?

I did track some miles but honestly not consistently. I remember putting in something like 4,000 miles but I was driving a lot more than that. Probably closer to 18,000 miles for Lyft that year. I think you're right that this might be a big part of the problem.

That would definitely explain a large portion of the deficiency! At 56 cents per mile in 2021, the difference between claiming 4,000 miles versus 18,000 miles is about $7,840 in additional deductions. Depending on your tax bracket, that alone could account for $1,700-$2,700 in tax differences.

This happened to me! I reported all my Uber income but completely missed the Schedule SE part. Ended up with a $7k notice a year later. I recommend getting a tax transcript from the IRS website to see exactly what they have on file versus what you submitted.

Thanks for pointing that out. I didn't realize I was so close to the phase-out limit. Is the MAGI calculation different from regular AGI? Are there specific things that get added back in that I should be aware of?

For the rental real estate loss allowance, MAGI is calculated by taking your AGI and adding back any passive activity losses, rental real estate losses, taxable social security benefits, IRA contribution deductions, student loan interest deductions, tuition and fees deduction, and several other items. The biggest ones for most people are the IRA deductions and student loan interest. So if you've made deductible contributions to a traditional IRA or paid student loan interest, your MAGI would be higher than your AGI by those amounts. Given that you're at $95k AGI, you should carefully calculate your MAGI to see how much of the $25,000 allowance you might qualify for.

I use TurboTax Premier for my rentals. It asks you a series of questions about your rental activity and automatically puts everything on Schedule E. When you go through the rental property section, it will specifically ask about your level of participation and calculate the $25k allowance if you qualify. It's pretty straightforward once you get into the rental section.

This actually has me worried now. We have a few people who work pretty regularly for us but we've always considered them contractors. Is there a simple test to determine if someone should get a W-2 vs a 1099-NEC?

The IRS looks at three main categories: Behavioral Control (do you control how they work?), Financial Control (do they have opportunity for profit/loss?), and Relationship Type (written contracts, benefits, permanency of relationship). A good rule of thumb is if you control WHEN and HOW someone does their work, provide their tools/equipment, and they work exclusively for you over a long period, they're more likely to be classified as an employee. If they control their own schedule, use their own methods/equipment, and work for multiple clients, they're more likely to properly be classified as a contractor.

I used TaxBandits last year and it was pretty straightforward. The interface is a bit dated but they have good customer service. One tip - they charge per form, so double check your forms before submitting since corrections cost extra.