What kind of expenses did they disallow for you? I'm trying to get a sense of how strict they are about the national standards vs. actual expenses.

They disallowed part of my housing expense because it exceeded their local standard for my county, even though I provided actual bills. They also questioned my car payment since it was higher than their transportation standard. They allowed my medical expenses but required documentation for every single claim. The most frustrating part was they calculated my "potential income" based on previous years when I made more, even though my current situation had changed. This is where having a professional really helped - they knew how to document the change in circumstances properly.

Exactly this! And they'll also reject your offer if you miss ANY payments or filing deadlines during the time they're considering your offer. Friend of mine had her offer rejected 7 months into the process because she filed her current year return a week late.

Do you know if these exceptions apply automatically, or do you have to fill out a special form? I used some of my withdrawal for medical expenses but I'm not sure how to claim that exception.

The exceptions don't apply automatically - you need to report them correctly on your tax return. For medical expenses, you'll need to file Form 5329 along with your tax return. On that form, you'll enter the early distribution amount, then enter the portion that qualifies for the medical expense exception using the appropriate exception code. Keep in mind that only unreimbursed medical expenses exceeding 7.5% of your adjusted gross income qualify. So if your AGI is $50,000, only medical expenses above $3,750 would potentially qualify for the exception. Make sure to keep all documentation of your medical expenses in case of an audit - receipts, insurance statements, anything showing these were legitimate medical costs.

I got mine from Fidelity in late January, but Vanguard didn't send mine until February 10th. They're required to mail them by January 31st, but that doesn't mean they'll arrive right away. You could check if yours is available electronically - might be faster than waiting for mail.

Does this education exclusion work if the bonds were originally purchased by my parents but in my name? I just cashed some to pay for my masters program.

Yes, it can work in your situation! What matters is who the owner of the bond is (whose name is on it) when it's redeemed, not who purchased it. If the bonds are in your name and you're using them for your qualified education expenses, you can claim the exclusion. Just make sure you're meeting all the requirements: the bonds must have been issued after 1989, you must be at least 24 years old when the bonds were issued, and the bonds must be redeemed in the same tax year you pay the education expenses. Also, your income needs to be below certain thresholds to get the full benefit. Form 8815 will walk you through all of this.

You can definitely set up an installment plan with the IRS using Form 9465. They're pretty reasonable about it as long as you file your return on time. I did this last year when I cashed out some old bonds. Just be aware there's a small setup fee and you'll pay interest on the unpaid balance.

Thanks for bringing up the prorating - I converted in September, so that's really helpful. For the startup expenses, is there a limit to how much I can deduct in the first year? And what about the lawn mower and tools I bought specifically for maintaining the rental?

You can deduct up to $5,000 in startup expenses in your first year, with amounts above that amortized over 15 years. But these are specifically business startup costs like advertising, not equipment. For the lawn mower and tools, those are considered assets used for your rental activity. You can either depreciate them over their useful life (usually 5-7 years) OR you might qualify for Section 179 expensing or bonus depreciation to deduct them immediately. It depends on your specific situation and the total amount spent. Small tools under $200 each can generally be expensed immediately regardless.

You might qualify for the $25,000 special allowance for rental losses if your modified adjusted gross income is under $100,000 and you "actively participate" in rental management. This phases out entirely once your MAGI hits $150,000. If your income is higher, your losses are suspended until you either have passive income or sell the property.

I had no idea this was even an option! Do you just set these up yourself or do you need an employer to do it? And is there a deadline to open one?

You set it up yourself! Since you're self-employed, you're both the employer and employee for retirement purposes. For a SEP IRA, you can open one online through places like Vanguard, Fidelity, or Schwab in about 15 minutes. For the deadline, you can actually open and fund a SEP IRA up until your tax filing deadline - including extensions. So for 2024 taxes, you have until April 15, 2025, or if you file an extension, all the way until October 15, 2025. This is super helpful because you can calculate your exact tax situation before deciding how much to contribute. The Solo 401k has slightly different rules and deadlines, but the SEP is probably simplest for your situation.

I use QuickBooks Self-Employed and it's been a lifesaver. It connects to your bank accounts and PayPal, automatically categorizes expenses, tracks mileage, and calculates quarterly taxes. Costs like $15/month but worth every penny for the headache it saves at tax time.