My kids are 12 and 15, so they qualify for the Child Tax Credit. Would that really reduce my withholding to zero though? And yes, both employers use the new W-4 form (the one without allowances).

The Child Tax Credit could significantly reduce withholding but shouldn't take it all the way to zero, especially with your combined income. The credit is worth up to $2,000 per qualifying child, but that's spread across your entire tax year. With the new W-4 form, the issue is almost certainly that neither employer knows about your other job. When you earn $1,750 bi-weekly from one job, that's about $45,500 annually - and a single taxpayer with two dependents making that amount would have very little federal tax liability after standard deduction and child tax credits. Same with your second job at $54,600 annually. But when combined ($100,100), you're in a higher tax bracket and the calculations completely change. This is exactly why the W-4 has that multiple jobs section that needs to be completed.

This happened to my brother too. If you check that box on both forms, each employer thinks the other one is handling most of the withholding. It's counterintuitive but checking that box actually LOWERS the withholding from that job because it assumes withholding is happening elsewhere.

Do you think the $600 was worth the fee you paid to the tax pro? I'm wondering about the cost-benefit analysis. Also, now that you know about that credit, couldn't you just claim it yourself using software in future years?

Totally worth it - I paid $220 for the service, so I came out $380 ahead. And yes, now that I know about the credit, I can claim it myself going forward. I actually went back to software this year and made sure to look for that specific credit. I think seeing a pro once every few years as a "check-up" is a good strategy. Then you can self-file in between knowing you're doing it right. Tax laws also change pretty frequently, so it's good to get a professional review periodically.

Be careful with "free" filing! I tried that last year and as soon as I needed to file in two states they hit me with charges. Read the fine print - most of them only include ONE state for free.

Oh this is a great point I hadn't even considered! I do arrange installation through subcontractors for about 60% of my projects. Would that still count as me providing installation services even though I'm subcontracting it out? Or does it matter that I'm including it as one bill to the client?

Generally what matters is how you present it to the client. If you're billing the client for a single transaction that includes both products and installation (even if subcontracted), most states will look at the entire transaction as a whole when determining tax treatment. If you separately state the charges on the invoice, some states will allow you to collect tax only on the product portion. But this varies dramatically by state. In some states like California, even separated charges might be considered part of a "bundled transaction" if they're part of the same project.

Yep, Colorado is especially bad with this! Almost 100 different local tax jurisdictions, many with their own rules. Louisiana is another nightmare state for local taxes. That's why I ended up using a sales tax compliance service rather than trying to figure it all out myself.

Thank you for this suggestion! We did replace the roof about 7 years ago (around $11,000) and installed central air conditioning (about $8,500) about 5 years ago. We also replaced all the windows about 9 years ago for around $6,500. I don't think our tax person asked about any of this specifically. Would these count as improvements that could help reduce our tax bill? And if so, do we need receipts or some kind of proof, because honestly I'm not sure if we kept all of that paperwork.

Yes, all of those would absolutely count as capital improvements that increase your cost basis! The roof, HVAC, and windows are all classic examples of capital improvements rather than repairs. Even without receipts, you can still claim these improvements, though documentation is preferred. If you don't have receipts, try to gather whatever evidence you can - canceled checks, credit card statements, emails with contractors, or even photos showing the before and after. You could also get estimates from contractors showing what similar work would have cost in those years as supporting evidence. These improvements total around $26,000, which could significantly reduce your tax bill. Definitely bring this information to your tax preparer right away or consider getting a second opinion from a CPA who specializes in real estate taxation.

This is an important point - loan amount doesn't impact basis, but if the loan proceeds were used for property improvements, those DO increase basis. I made this mistake on my first rental and it cost me thousands.

How do you track this yourself? My syndicator doesn't provide any details beyond the K-1 and when I asked about my carryover basis after our 1031, they just said "talk to your CPA." But my CPA wants documentation from THEM about how they calculated everything.

You need to maintain your own parallel records. Start with your original capital contribution, then add income reported on K-1s each year and subtract losses and distributions. This is your "outside basis" tracking. When the 1031 exchange happens, this basis should transfer to your interest in the new property, with adjustments if there was any boot or mortgage relief that triggered gain recognition. If your syndicator won't provide the calculations, you can derive them by comparing the final K-1 from the old partnership with the initial K-1 from the new one. The capital account sections should show how your investment transferred.

California is notorious for this. They consider it a sale if property leaves CA, even if it qualifies for 1031 treatment federally. Had the same issue when our syndication sold CA property and bought in Arizona. We all had to file nonresident CA returns and pay tax on the gain.