I'm having the same childcare credit issue but with foreign income. Did you find any specific IRS guidance on this? My accountant says one thing but TurboTax is calculating it differently. Really frustrating that the 2023 childcare credit seems so simple but has so many hidden complications!

The IRS Publication 503 covers how foreign income affects the childcare credit. Basically, all income (including foreign) counts toward determining your credit percentage, but only income subject to US tax can qualify you for the credit itself. It's a subtle but important distinction. Your foreign income might be pushing you into a different percentage bracket even if it's excluded from US taxation. This is one of those situations where the basic "20% of $3,000" formula breaks down. TurboTax is actually correct to include worldwide income for determining the percentage, but many accountants miss this detail.

Which IRS Free File program did you use specifically? There are several options and I've heard some are better than others for handling childcare credits. I'm especially interested if you have a recommendation for someone with variable income (1099 and W-2 mix) trying to claim the childcare credit.

Does the liability insurance actually protect your personal assets though? I was told insurance has coverage limits and exclusions, while a limited company provides a more complete separation between business and personal assets?

That's a fair question. The insurance does have limits and some exclusions (like if I was found to be grossly negligent or committed fraud). A limited company gives more comprehensive separation between personal and business assets. For me, it came down to a risk assessment. With the procedures I do, the worst-case realistic claim would likely be covered by my insurance limits. But if you're doing more invasive procedures with higher risk, the limited company route might give you better peace of mind. It's definitely a personal decision based on your specific risk profile.

I did this last year. Yes, there's a process called "striking off" your limited company, and any assets left in the company (including cash) are treated as capital distributions to shareholders. If you have significant retained earnings in the company, there could be a tax hit when closing down. In my case, I had about £35,000 in the company and ended up paying around £6,300 in taxes to extract it all when closing down. If you're considering switching, it might be worth planning ahead and gradually extracting money from the company in the most tax-efficient way before closing it down.

Thanks for sharing your experience. That's really helpful information! The tax hit on extraction does sound significant. Did you notice any other unexpected challenges when switching? And have you found the sole trader structure to be better for your situation overall?

Wow, thanks for sharing this. Do you know which specific documentation was missing in your brother-in-law's case? I definitely want to avoid that situation.

From what he told me, the project didn't have proper engineering certification proving it met the IRS technical requirements. Also, the transfer agreement wasn't detailed enough - apparently the IRS wants specific language acknowledging the transfer of tax attributes and representations about project qualification. The other issue was timing - the project claimed it was placed in service in 2023, but couldn't provide evidence. Since these credits are based on when projects are completed and operational, that's a big deal to the IRS.

That's correct. The transferability provisions in the Inflation Reduction Act only apply to certain business credits (primarily Section 45 and Section 48 credits for commercial/business installations). The Residential Clean Energy Credit (Section 25D) that applies to systems installed on your personal residence cannot be transferred or sold. This is one of the most common misconceptions about the new transferability rules. Only business-generated credits can be sold, not personal residential credits. However, your unused residential solar credit can carry forward for up to 5 years on your own tax returns, so you might be able to use it gradually if you have tax liability in future years.

Does it handle casualty losses well? I had damage from the tornado in Kentucky and I'm worried about messing up the documentation.

Yes, FreeTaxUSA does handle casualty losses - they have a guided interview process for Form 4684 Casualties and Thefts. It asks all the relevant questions about your loss, insurance reimbursements, and fair market values. For tornado damage documentation, make sure you have before/after photos if possible, all repair receipts, insurance claim documents, and any FEMA assistance information. The software prompts you for all this, but it's good to have everything organized beforehand. I found their help articles very thorough on casualty loss requirements.

Thanks for the insight! Do you think it's worth paying a CPA $1000 vs H&R Block for my situation with the Florida casualty loss? I'm trying to decide if the extra cost is worth it.

For a significant casualty loss like yours ($200K), I'd absolutely recommend going with the CPA over H&R Block. While H&R Block has some good preparers, their training specifically on casualty losses is often limited compared to a CPA's education and experience. A good CPA will likely save you more than the $200-400 difference in fees through proper documentation strategies, timing considerations for your loss claim, and potentially finding additional disaster relief provisions you qualify for. They'll also provide better audit protection and assistance if questions arise later. With losses of that magnitude, the additional expertise is definitely worth the investment.

You're right, there were additional pages with the K-1. Looking back at them, it says it's related to "business property partially destroyed in a natural disaster" but it doesn't give specific filing instructions. Would this change where I enter it?

That changes everything! A loss from business property damaged in a natural disaster is definitely a casualty loss from a federally declared disaster area, which gets special treatment. This should be reported on Form 4684 (Casualties and Thefts), Section B since it's business property. The good news is that these losses aren't subject to the usual personal casualty loss limitations and can be deducted even if you take the standard deduction. After completing Form 4684, the business casualty loss will then flow to your Schedule A, but in a different section than regular itemized deductions, potentially allowing you to claim both the standard deduction and this special loss.

This is correct. If it's from rental property, it would go on Schedule E. Schedule K-1 codes can be really confusing because the same code might be reported differently depending on the nature of the underlying asset or activity. My accountant spent hours sorting through similar issues with my K-1s last year.