I think the Home & Business would actually be perfect for your situation with the online craft sales. It's specifically designed for people with a small business or self-employment income. The Deluxe version doesn't include all the business expense categories and Schedule C support that you probably need. Let me figure out how to get this to you without violating any terms of service. Might need to check what the other commenter mentioned about transfers not being allowed.

Thanks for the info! That makes sense about the Schedule C support. I didn't realize how many business deductions I might be missing with just the Deluxe version. Please let me know what you find out about transferring it.

I second this! Been using FreeTaxUSA for 3 years now. It handles my freelance work and investment accounts perfectly. Federal filing is free and state is only like $15. No idea why people still pay $100+ for TurboTax.

Thanks for bringing that up! Unfortunately, she already closed on the sale in April without setting up a 1031 exchange, and she's planning to retire with the proceeds rather than buying another investment property. I definitely should have mentioned that in my original post. I'm more concerned with making sure I've got the tax calculation right so she knows exactly what she'll owe. I realized I should also check if she's eligible for any state-specific tax breaks since this is a pretty significant capital gain and she's in her 70s.

Yes, that's an important consideration. The bonus depreciation taken would still be subject to recapture, but at ordinary income tax rates (not just the 25% rate that applies to straight-line depreciation). Make sure you separate out the portion that was taken as bonus depreciation from the regular depreciation when calculating the tax. Also remember that for improvements made in 2020, they would have been eligible for 100% bonus depreciation, so likely the entire cost was written off in that year. You'll need to recapture all of that at ordinary income rates.

This makes so much sense! So basically each of our employers is calculating withholding like we're in a lower tax bracket because they only see their portion of our income? Now I understand why we keep owing despite claiming "0" on the old forms. If we both make roughly the same amount (I make about $115k and she makes about $108k), should we both check that box in Step 2(c) or just one of us? And do we still select "Married filing jointly" at the top?

Yes, you've got it exactly right! Each employer only "sees" their portion of your income, so they withhold at lower rates than what applies to your combined income. When your incomes are that close (both around $110k), you should only have one of you check the box in Step 2(c). If you both did it, you'd over-withhold by quite a bit. And yes, you should both still select "Married filing jointly" at the top of the form. The spouse with slightly higher income (you in this case) should be the one to check the box, while your wife's W4 should just have the filing status and nothing checked in Step 2.

This is actually pretty smart. No complex calculations, just fixing the shortfall directly. I might try this approach since my eyes glaze over with all the W4 worksheet stuff.

Did you find any good resources for learning about rental property tax treatment? That's my biggest concern with switching from my CPA.

The IRS Publication 527 (Residential Rental Property) is actually pretty readable and covers the basics well. I also found the BiggerPockets forums invaluable for specific rental tax questions - there are both CPAs and experienced landlords who can help with real-world situations. For me, the key was learning about depreciation (which is usually the trickiest part) and keeping meticulous records of expenses. I created a simple spreadsheet where I track every expense by category, which makes tax time much easier. Most tax software has decent guidance on rental properties, but I found that learning the basic concepts first made the whole process less intimidating.

What kinds of deductions did you miss? I'm curious because I'm in a similar boat and wondering what I might be overlooking.

That's really helpful info. Does "placed in service" mean when we buy the property, or is there something specific we need to do to consider it "placed in service" for tax purposes?

Placed in" service generally means when the property is ready and available for its intended use - so for a rental property, it would typically be when'it s ready to be rented out to tenants. If you purchase a property'that s already tenant-ready, the placed-in-service date would likely be the purchase date. However, if you buy a property that needs substantial renovations before it can be rented, the placed-in-service date would be when those renovations are complete and the property is ready for rental. This is an important distinction because it determines which'year s bonus depreciation percentageapplies.

Good point about depreciation recapture! One strategy to deal with this is using 1031 exchanges when you sell to defer both the capital gains and the depreciation recapture. We've been doing this for years - selling properties and rolling the proceeds into larger ones without paying tax.