Thanks for bringing that up - I didn't even think about documentation for an audit! For the CareCredit transaction, I have the initial statement showing the full payment to the provider. For the in-house financing, I have a payment contract and receipts for each payment. Should I also be getting something from my doctor confirming the medical necessity? These were both for necessary procedures, not elective or cosmetic.

Yes, you should get documentation from your doctor confirming these procedures were medically necessary. This could be in the form of a referral, prescription, or even a letter from your doctor stating the medical purpose. For large medical expenses like yours, having this documentation ready is especially important as they're more likely to trigger review. Make sure you keep all these records for at least seven years after filing, as the IRS can audit returns going back several years. It's much easier to gather this documentation now than trying to track it down years later if you do get audited.

Good point! Also worth noting that some states don't allow itemized deductions at all, or they handle them completely differently from federal. I'm in NJ and our state tax system is totally different from federal for medical expenses.

16 Do you use a specific software for keeping separate books for multiple LLCs? I've been using QuickBooks but it gets expensive with multiple companies.

7 I use Stessa for my rental properties - it's specifically designed for real estate and allows you to track multiple properties and entities. It's much more affordable than having separate QuickBooks accounts for each LLC. For non-real estate businesses, I've heard good things about Xero which has better multi-entity functionality at a lower price point than QuickBooks. The key is making sure you have clean, separate financial statements for each LLC that clearly show income, expenses, assets and liabilities, regardless of which software you use.

1 That's a really good point! Does anyone know about Texas requirements for multiple LLCs? We're paying the franchise tax for our parent LLC, but I'm not sure if we need to file anything for the property LLCs too.

Thanks for the detailed breakdown on the depreciation schedule! I definitely had the wrong percentages in mind. Do these figures account for bonus depreciation too or is that something separate?

The percentages I listed are just for regular MACRS depreciation without any bonus depreciation factored in. Bonus depreciation is separate and would actually allow you to deduct a significant portion upfront, similar to Section 179 but with different rules. For 2024, bonus depreciation is at 60% (it's been phasing down from 100%). So you could potentially deduct 60% of the cost in year 1 through bonus depreciation, and then apply the regular MACRS percentages to the remaining 40%. This is another option if Section 179 doesn't work for some reason.

There's no minimum cost to use Section 179, but your business needs to have enough income to offset the deduction. For something small like $800, you can definitely use Section 179 to write it off completely in year 1. Honestly, for that amount, even if you depreciated it over 5 years, the difference isn't huge, but might as well take the full deduction now if you can.

That's a really good suggestion. I do still have the same bank account I used back then, so I'll call them tomorrow and see if they can provide statements from that period. I think I used PayPal for most of my eBay transactions too so I'll definitely check there. Did you just manually go through each statement and categorize everything? How did you handle things like inventory where you might have purchased it in a different year than you sold it?

I did go through each statement manually and created a spreadsheet to categorize everything. It was time-consuming but gave me solid documentation. For inventory timing issues, I made my best estimate of which inventory was sold in which year based on my sales patterns. Since you're doing this retroactively, what worked for me was calculating my overall profit margin across all sales and then applying that same margin to each year's known revenue. For example, if I determined I generally made 40% profit after all costs, I would apply that to each year's total sales figure. The IRS is generally reasonable about reconstructed records as long as your approach is consistent and logical.

Not OP but sometimes people switch tax preparers or maybe they used software that year instead of a professional. I've been in a similar situation where I used TurboTax one year and then couldn't access the account years later because I had changed email addresses and couldn't verify my identity to recover the account.

I can't believe I didn't think of this! Just logged into our employee portal and there's a whole tax documents section I never noticed before. Found my W-2 right there, ready to download. Thank you so much for this suggestion - saved me so much stress. Sometimes the simplest solution is right in front of us!

Glad it worked out! Most employers with online systems make tax documents available electronically these days, but they don't always advertise it well. It's usually my first suggestion because it's the quickest solution when available. Remember to save a copy somewhere safe for your records too! Maybe even print one as backup. Good luck with your filing!

Is the transcript exactly the same as a W-2? I heard some tax software won't accept it and you need the actual form.