Thanks for this reference! I've been searching the code sections but didn't think to look at 404(a) specifically. Do you know if there's a clear distinction in the code between contributions for the owner vs employees? That's where I kept getting confused.

The key distinction is in Section 404(a)(8) which specifically addresses contributions by self-employed individuals. It essentially treats the business owner as both employer and employee for retirement plan purposes. For employees, the deduction is a business expense because you're paying it as the employer. For yourself, it's an adjustment to income on Schedule 1 because you can't technically "employ" yourself as a sole proprietor.

Which software are you using? I had the same issue with TurboTax last year and had to manually override it. The correct place is definitely Schedule 1, Line 16 for both portions of your solo 401k (employee and employer contributions).

That's really interesting! I hadn't considered cost segregation. Do you know roughly what percentage of the property value you were able to accelerate the depreciation on? And did you use a specialized firm for the study or was it something your regular accountant handled?

We were able to accelerate depreciation on about 25-30% of our property value, which made a substantial difference in our first-year deductions. The components included things like specialized electrical systems, certain fixtures, landscaping elements, and some interior components that could be depreciated over 5-15 years instead of the standard 39 years for commercial property. We used a specialized engineering firm that works alongside our accountant for the study. While it cost around $4,500 for our $750k property, the tax savings in the first few years more than covered this expense. Your regular accountant likely won't have the engineering expertise to properly classify all building components, so I'd recommend finding a firm that specializes specifically in cost segregation studies.

This is actually really good advice depending on your overall situation. My tax attorney suggested this exact approach, and it's worked out much better for me tax-wise. The corporation gets the full deduction for rent payments, and I can take advantage of depreciation plus potential appreciation personally. Just make sure to set a fair market rent to avoid IRS scrutiny.

I never thought about it that way. The reason I was hesitant to bring it up is because I didn't want to cause tension, but a compromise could work. Do you think there's a tactful way to bring up this reimbursement idea without sounding like I'm just asking for money?

Approach it as a practical math problem rather than an emotional issue. Say something like: "Dad, I noticed that being claimed as a dependent is costing me $800 in taxes this year. I understand it probably saves our family more overall, but that's a big hit for me. Could we look at the numbers together and find a fair solution? Maybe you could help cover some of what I'm losing?" Most parents don't realize the tax impact on their working teens. Frame it as working together to maximize the family's overall financial situation. This makes it about smart family finances rather than independence or money-grabbing. Avoid phrases like "it's not fair" and stick to the practical impacts.

This is important! The "support test" is key here. If OP is providing more than half of their own support, the parent might not legally be able to claim them regardless of age or living situation. The IRS has a worksheet for calculating this.

Wait, I thought the support test was only for kids over 19? Or is that a different rule?

How would using someone else's identity for business losses even help the thief? I don't get the motivation.

The most common scheme is that someone has a legitimate business with profits they need to offset. They use your identity to create fake losses that they can then "sell" to their business. Basically they're manufacturing deductions. For example: They create a fake Schedule C business under your name showing $50k in losses. Then in their real business, they create fake invoices showing they paid "your" business $50k for services. Their real business gets a $50k deduction, while the taxes on that $50k income are assigned to you (but offset by the fake $50k in expenses they created). The result is they get a tax deduction while you get a mess to clean up.

Did the IRS eventually get you your refund? I'm worried I'll never see that $5.5k at this point.

Fired him on the spot? But then you had to find someone new during tax season? How did you even manage that? Most good accountants are completely booked up by March.

This is an important point. A lot of people think any income loss during COVID qualifies, when the form is specifically for days you couldn't work due to very specific reasons. The IRS has been flagging suspicious 7202 claims for audit, so you definitely want to make sure you qualify and have documentation.

Thanks for clarifying! That makes more sense why you're pursuing this. Given your situation, I'd definitely push for including Form 7202. The credits can be substantial. One option not mentioned yet - some tax software programs like TurboTax or H&R Block software allow you to complete Form 7202 yourself. You could potentially use the software just for that form, print it out, and give it to your accountant to incorporate into your return. That's what a friend of mine did when her accountant was being difficult about some rental property deductions.