Hmm that's interesting! So how do I know if my situation counts as "regular business" vs just "other income"? I did babysit for them for about 3 weeks but it was just while their regular childcare was unavailable.

It comes down to whether you're in the "trade or business" of babysitting. If this was a one-off situation where you were helping out a family temporarily with no intention of continuing to offer babysitting services to the general public, you could make a case for "other income." But if you advertise your services, do this for multiple families, or plan to continue babysitting regularly, the IRS would likely consider it self-employment. Since you mentioned it was just for a few weeks during a specific situation, it sounds more like "other income" to me, but this is definitely a gray area where reasonable people disagree.

This is terrible advice. Venmo now reports transactions to the IRS if you receive more than $600 in payments for goods and services. Plus not reporting income is literally tax evasion.

Venmo only reports if you have a business account or mark the payments as goods and services. Regular personal payments aren't reported. And let's be real, the IRS isn't coming after babysitters making a few hundred bucks. They want the big fish.

Thanks for all the great advice everyone! So just to make sure I understand: 1) We won't owe capital gains tax on the co-op sale since we've lived there over 2 years and the profit is well under the $500k married exclusion. 2) The gift from my parents and our gift back to them are separate transactions that may require gift tax forms but probably no actual tax. Does that sound right?

Yes, that's exactly right! You won't owe any capital gains tax on the co-op sale because you meet the primary residence requirements and your gain is well below the $500,000 exclusion for married couples. As for the gifts, they're indeed separate transactions. If any single person gives more than $17,000 to another individual in a year, the giver needs to file Form 709 (Gift Tax Return). But this is just for reporting purposes - no actual tax would be due unless someone has already used up their lifetime gift exemption of over $12 million. For example, if your parents are married and gave you $75,000, they could structure it as each giving $17,000 to both you and your wife ($68,000 total) without even needing to file Form 709, with only $7,000 counting against their lifetime exemption.

Do HOA special assessments count toward basis? Our co-op had a major plumbing project and we paid about $8k in special assessments over the years.

That's a really interesting point! I actually do have a home office I use for my side business that takes up about 15% of my house. If I'm replacing the HVAC system as part of this renovation, could I deduct 15% of that cost as a business expense then? Would the same apply to a roof replacement?

Yes, if you legitimately use that space exclusively as a home office for your business, you could potentially deduct 15% of the HVAC cost as a business expense. The IRS allows this when repairs/improvements benefit both personal and business parts of your home. For a roof replacement, the same principle applies - you could potentially deduct 15% of the cost. However, these would likely need to be depreciated over time rather than deducted all at once. Definitely keep detailed records of all costs and how you calculated the business percentage. This is definitely an area where good documentation is essential if you're ever audited.

This is such important advice! My brother just sold his house and wasn't able to prove about $30k in improvements he had made over the years because he didn't keep receipts. That's potentially thousands in extra taxes he had to pay.

15 Does the SIMPLE IRA allow for Roth contributions like his current solo 401k? I thought SIMPLE IRAs were all traditional pre-tax money. If he's been doing Roth contributions, wouldn't switching to a SIMPLE change his tax strategy pretty significantly?

22 You're absolutely right about the Roth consideration. SIMPLE IRAs don't have a Roth option currently - they're all traditional pre-tax money. This would be a significant change from the solo Roth 401k strategy. If maintaining Roth contribution capability is important, then a regular 401k plan with a Roth option would be needed despite the higher administrative costs. Some providers have started offering more affordable 401k options for small businesses that include Roth capabilities. The tax strategy difference is substantial - immediate tax deduction with traditional contributions versus tax-free growth and distributions with Roth.

11 I use Vanguard for my small construction business (7 employees). The transition from solo 401k was pretty straightforward - about $1200 setup fee and $800 annual administration fee. The bigger issue was the timeline - took about 2 months to get everything set up, so if you're planning to hire in March/April, start the process ASAP. The investment options are solid though, and their customer service has been helpful with the transition questions.

Florida repealed their intangible tax in 2007. There's no Florida state tax on interest income anymore. Been a Florida resident for 20+ years and a tax preparer for 15.

Thanks for the correction! I was confusing it with documentary stamp taxes on other financial instruments. That's why I should check my facts before posting. Good to know Florida residents truly don't have to worry about state taxes on interest income.

I hadn't considered that! Is it too late to do that for this tax year or can I still make a contribution that would count for this filing?

You're in luck! You can still make IRA contributions for the previous tax year until the tax filing deadline (usually April 15th). So you absolutely still have time to make a contribution and have it count for this filing. Just make sure when you make the contribution you specifically tell your financial institution it's for tax year 2024 (assuming that's the year you're filing for). They'll know how to code it properly. Then you can include that deduction in your tax return and it should reduce what you owe.