Do you need to include closets and bathrooms in the total square footage calculation? My apartment is about 800 sq ft total, but my office is 100 sq ft. But there's also 80 sq ft of closet space and a 70 sq ft bathroom. Not sure if those count toward the total or not.

You should include the entire square footage of your apartment when calculating the percentage. This includes closets, bathrooms, hallways - everything. So in your case, you would use the full 800 sq ft as your denominator in the calculation. So if your office is 100 sq ft of an 800 sq ft apartment, your business use percentage would be 12.5% (100 ÷ 800), not the higher percentage you'd get if you excluded some areas. The IRS wants you to use the total square footage of your home, not just the "livable" areas. Make sure you document your measurements carefully!

happened to me too! claimed about 25% of my townhouse for my consulting business and got a letter from the irs 8 months later. such a headache even tho everything was legit. they wanted bank statements, photos, client invoices from my home address, everything!!! took like 3 months to resolve.

Thanks! Do you know if Guidestar shows smaller local nonprofits too? Like if there's a local community development corporation that owns buildings in my town, would they show up there?

Yes, Guidestar/Candid includes even small local nonprofits as long as they've filed their Form 990s with the IRS. Community Development Corporations (CDCs) are typically registered nonprofits that must file, so you should find them there. The basic search is free, though they have tiered subscriptions for more detailed info. Even the free level should show you basic financial data and confirm if a local CDC owns specific properties. Just search by the organization name or EIN if you have it.

This is super helpful! I just tried my county's GIS and was surprised how much info is there. Question though - I found an LLC that owns several properties, but when I looked it up on my state's business search, it just shows another LLC as the owner. Is there a way to break through this LLC nesting doll situation?

Thanks for the suggestion! I haven't sold any extended warranties that I know of, but I did have a couple customers who got gap insurance. Do you know how long that cancellation window typically is? And would they typically tell me if a customer cancelled, or does it just show up as a deduction?

The cancellation window varies by product and state, but typically ranges from 30-90 days for most F&I products like gap insurance. Some states allow cancellations up to a year in certain circumstances. Unfortunately, most dealerships don't proactively inform salespeople about cancellations. The F&I department processes the cancellation, accounting adjusts the commission structure, and payroll just applies the deduction. It's a terrible system that leaves salespeople confused. This is definitely something to ask your finance manager about - they should be able to link that specific deduction to a customer's canceled product.

I second this! My dealer takes $25 out every time we get a low survey score from a customer. Shows up as "customer satisfaction adjustment" tho. Ask your sales manager for real.

I've considered leasing, but I typically keep vehicles 5-6 years and put on high mileage (30K+ per year) managing rental properties across a wide area. Doesn't leasing usually end up more expensive with mileage penalties for heavy use like mine? I'm curious how you handle that with your rental business. Does the tax simplification outweigh the potential higher costs?

You're right that high mileage can make leasing less attractive. I typically negotiate high-mileage leases (25K miles/year) upfront, which increases the monthly payment but eliminates surprise penalties later. For my situation with 3 rental properties all within 50 miles, it works out financially. With your usage pattern and keeping vehicles 5-6 years, purchasing probably makes more financial sense despite the tax complications. The tax simplification doesn't outweigh the cost difference in your high-mileage scenario. If you're putting 30K+ miles annually while managing properties "across a wide area," the mileage penalties would likely erase any tax-related benefits from leasing.

I use Everlance and it's been awesome. Automatically tracks my trips to rental properties vs personal driving. At tax time, I just export a report showing my business percentage for the year. My accountant said this kind of documentation is exactly what you need if you ever get audited about vehicle expenses with varying business use.

Thanks for the recommendation! Does Everlance let you categorize trips to different properties separately? I need to track which trips go to which rental for our internal accounting, not just the overall business percentage. My current app only tracks business vs personal but doesn't let me sub-categorize the business trips.

3 I thought the Substantial Presence Test only applies to determining if someone is a resident alien or not? Doesn't having a green card automatically make you a resident alien regardless of physical presence?

5 You're absolutely right - I should have been more precise. Green card holders are automatically considered resident aliens for tax purposes regardless of physical presence, so the Substantial Presence Test isn't relevant in this case. My main point about the Foreign Earned Income Exclusion still applies though. Even without a specific tax treaty, there are provisions that could help reduce his US tax liability on foreign income. However, you're correct that retirement income typically doesn't qualify as "earned income" for the FEIE since it wasn't actively earned during the tax year.

1 He does have a small apartment that he rents out occasionally and some local investment funds through his bank there. I had no idea about these PFIC rules - that sounds really complicated. Is there a value threshold for when you need to report these foreign investments?