This is really helpful info, thank you! How many hours would I need to spend on my rental business for it to be considered "material participation"? And does managing my existing rooms count toward that total if I'm also using those hours to justify business travel to look at other properties?

For material participation in a short-term rental business, you generally need to meet one of several tests, but the most common is spending more than 500 hours per year on the activity. For smaller rental operations, there's also a 100-hour test if you have the most participation of any individual in the activity. Yes, all the time you spend managing your existing rental rooms absolutely counts toward your material participation hours. This includes time communicating with guests, cleaning, maintenance, bookkeeping, researching prices, updating listings, processing payments, etc. All of this builds your case for being actively engaged in the rental business, which supports both the material participation standard and justifies business travel to expand your existing operation.

You definitely need at least TurboTax Premier for rental properties. The Deluxe version won't have the Schedule E forms you need. I tried doing it with Deluxe last year and had to upgrade halfway through. Save yourself the headache.

1 Oh that's an important point I hadn't considered! So are you saying that the $3500 work-study might already be enough earned income to maximize our Additional Child Tax Credit without needing to make the scholarship taxable?

14 It depends on your total tax situation and other income. The refundable portion of the Additional Child Tax Credit is calculated as 15% of earned income above $2,500, up to the maximum credit amount. So with $3,500 work-study, that's $1,000 above the $2,500 threshold, which would give you $150 in refundable credit (15% of $1,000). If you need more than $150 of the refundable portion, then you might consider other options, but making the scholarship taxable won't help since it's not earned income. And as others pointed out, it could hurt your Premium Tax Credit. Your best bet is to run the calculations both ways with actual tax software to see which approach gives your family the best overall result.

22 Thanks for the correction on the threshold! Do you know if there's a way to calculate exactly how much including his income would reduce the Premium Tax Credit? I'm trying to figure out if it's worth it.

This happened to my sister too! The dealership claimed it was an "accounting error" but had been collecting both payments for 4 months before she caught it. She had to threaten legal action to get refunded.

Does this apply if you're not fully self-employed? I use my car about 30% for a side gig but have a regular W-2 job too.

Yes, it absolutely applies even if you're not fully self-employed! The business use of your vehicle for your side gig would be reported on Schedule C along with your other business expenses and income. You'd only deduct the percentage used for business - so in your case, you'd track all your mileage and then deduct 30% of it at the standard rate. Make sure you keep detailed records showing the date, starting point, destination, purpose, and mileage for each business trip. The IRS is particularly strict about vehicle deductions, so good documentation is essential. There are several good apps like MileIQ or Everlance that can help you track this automatically.

Thanks for bringing this up! Do you have any recommendations for figuring out the specific tax rules for different countries? I'm considering properties in either Portugal or Greece.

For Portugal and Greece specifically, you'll want to look into their "Golden Visa" programs if you're investing enough, as these can offer some tax advantages for foreign investors. Portugal has a decent tax treaty with the US, and they offer a Non-Habitual Resident tax regime that might benefit you. For accurate country-specific advice, I strongly recommend consulting with a tax professional who specializes in expat taxes and has specific experience with those countries. Local property taxes, transfer taxes, and income tax rules vary significantly by country and sometimes even by region within countries. In my experience, spending money on good tax advice before making an international property purchase saved me from some expensive surprises later.

I did one in 2023 and it was definitely complicated but doable. The key was using a qualified intermediary who handled all the details. The hardest part was finding suitable replacement properties within the 45-day identification period in the crazy market. You absolutely need to follow the timelines exactly - no extensions. I almost lost my tax deferral because my closing got delayed, but we pushed hard to get it done just under the wire. But remember, as others mentioned, this won't work for foreign property - has to be US to US.

This is really helpful! A lot of that money did go to developers creating new algorithms for the app. Is there a specific way I need to document these expenses to qualify for the R&D credit? And can I claim this credit as a single-member LLC?

You can absolutely claim the R&D credit as a single-member LLC, since the credit will flow through to your personal return. Documentation is crucial though - you need to track not just the expenses but also what specifically was being developed. For developer costs to qualify, you need to document what technical uncertainties they were addressing, the process of experimentation, and how it relies on hard sciences (computer science counts). Keep timesheets showing hours spent on qualified activities, project plans showing the research component, and any technical documentation describing the innovations.

Did you face any issues with the IRS questioning your business vs hobby status since you weren't profitable? I've heard they scrutinize tech startups that show losses for multiple years.