What about repairs vs improvements? Like if I just replaced a broken dishwasher instead of remodeling the whole kitchen? Would that be fully deductible in the year it's done (well, 10% of it)?

For a repair like replacing a broken dishwasher, you're absolutely right - it would be handled differently than a full remodel. A repair maintains your property in good working condition without adding value or extending its life, so it would be fully deductible in the current year (at your business percentage of 10%). Capital improvements like remodeling that add value or extend the useful life of your property must be depreciated over time. This distinction is important because immediate deductions for repairs can provide better tax benefits in the short term than the small annual depreciation deductions for improvements.

I tried that but realized I was leaving too much money on the table. If you have a larger home office or live in an expensive area with high utility costs, the actual expenses method usually comes out ahead. It's definitely more paperwork though.

Thank you for this clear explanation! Since my current CPA isn't being very responsive, do you think this is something I could potentially handle myself with tax software? Or is it too complex for DIY?

I wouldn't recommend DIY for this particular situation. The amendments will need to properly document the IDC and depletion adjustments, and most consumer tax software doesn't handle these specialized oil and gas calculations well. If your current CPA continues to be unresponsive, I'd suggest finding a new preparer who has specific experience with oil and gas partnerships. Look for someone who regularly works with clients who have working interests rather than just royalty interests. This distinction is critical, as they have very different tax treatments, and it's where many CPAs get confused. The investment in a knowledgeable preparer will likely pay for itself many times over given the tax amounts at stake.

Is the 3-year clock from the original due date or the actual filing date? My 2020 return was on extension and filed in October 2021.

Good point! Do I need to wait for the federal amendment to be processed before I file the state amendment? Or can I do both at the same time?

You can typically file both amendments at the same time - you don't need to wait for the federal one to be processed first. However, make sure you use consistent information on both amendments. Some states may ask for information about your federal amendment, including any changes to your adjusted gross income. Also, many states have different timeframes for processing amendments than the IRS does. The IRS is currently taking 16+ weeks to process amendments, while some states might be faster or slower. Just keep track of both processes separately and follow up if either takes longer than expected.

That's not accurate info. The IRS doesn't "add" documents to an already processed return. They might have told your sister they already had the information from the 1099 issuer and would adjust her return automatically, which they sometimes do with document matching. But for a missing spouse's W-2 on a joint return, they definitely require an amendment. This is too significant a change to handle with a phone call.

I think I'm over the income limit for direct Roth contributions too. Do you know if I'd run into any issues if I go with the backdoor Roth approach mentioned above? I'm wondering if there's a timing issue since I already made the Traditional contribution a few months ago.

The timing shouldn't be an issue for the backdoor Roth approach. You can convert Traditional IRA funds to Roth at any time - there's no deadline for that part of the process. The only timing concern is getting your contribution classified correctly (as non-deductible) on your tax return. Just make sure you file Form 8606 with your taxes to document the non-deductible contribution, then do the conversion whenever you're ready. Some people prefer to wait a bit between contribution and conversion, while others do it immediately. Either way works fine from a tax perspective.

You're on the right track! When both spouses are over the income limit and covered by workplace plans, backdoor Roth is typically the way to go. Just make sure you're keeping separate IRAs (never combine them) and each filing Form 8606 annually.

The divorce was finalized in 2019, but the agreement definitely doesn't call it alimony. It's labeled as "property settlement" in the divorce decree. Is that clear enough for the IRS or does she need additional documentation? And would the extra amount he paid her ($2,500 over the agreed amount) fall under the same category?

If the agreement specifically labels it as "property settlement" in the divorce decree, that's very clear documentation for the IRS. That's exactly what you want - language that explicitly categorizes the payment as division of marital assets rather than support payments. For the extra $2,500, that's a bit trickier. Since it wasn't specified in the original agreement, the IRS might consider it as a separate transaction. If her ex specifically characterized it as interest or compensation for the delay, it could be considered taxable income. If it was presented as an additional property settlement or a gift, it would likely not be taxable to her. I'd recommend documenting any communication about that extra amount (emails, texts) that explains the nature of that additional payment.

This is a really good point. When I went through my divorce, my ex-spouse incorrectly issued me a 1099 for a property settlement payment. I had to file Form 8275 (Disclosure Statement) with my tax return to explain why I wasn't reporting the amount as income. Saved me from an automatic audit flag when the IRS computers saw the 1099 but didn't see matching income on my return.

She hasn't received any tax forms yet, but that's a really good point! I'll tell her to wait before filing her taxes to make sure she doesn't get a 1099 from him. If she does, we'll definitely need to file that Form 8275 with an explanation. The divorce was such a mess that I wouldn't be surprised if he reports it incorrectly just to cause problems.