If you're going to do this, be SUPER careful with documentation. My friend tried this with his lawn care business and got audited. The IRS disallowed all the deductions for his kids because he couldn't prove they actually did the work or that the pay was reasonable. Keep a timesheet for each kid with dates, hours worked, and duties performed. Pay them regularly (biweekly or monthly) not just one big payment at year end. Take pictures of them working if possible. And pay them a reasonable wage for their age and the work they're doing - don't pay your 10-year-old $50/hour for stuffing envelopes!

Just a heads up for anyone considering this - make sure you understand the state requirements too! I implemented this strategy with my home-based marketing consulting business last year, paying my 16 and 14-year-old kids for legitimate work (social media management, data entry, client research). While the federal tax benefits worked exactly as described, I learned the hard way that some states have additional requirements for employing minors, even in family businesses. In my state, I needed to get work permits for both kids and follow specific hour restrictions during school months. Also, don't forget about workers' compensation insurance requirements - some states require it even for family employees in certain business types. I had to adjust my business insurance policy to cover them. The tax savings were definitely worth it (saved about $3,200 in taxes last year), but factor in these additional compliance costs when you're calculating the benefit. Still came out way ahead, but wished I'd known about the extra requirements upfront!

12 One thing nobody's mentioned - make sure you keep a complete copy of everything you send! I filed a paper return in 2023 and the IRS somehow lost parts of it. Having my own copies saved me a huge headache. Also take pictures of the signed forms before you mail them just to be extra safe.

Pro tip from someone who's been through this exact situation - when you do mail in your paper return, include Form 4506-T (Request for Transcript) along with it. This way you can get a transcript of your return once it's processed, which serves as official proof that the IRS received and processed your filing. Also, since you mentioned you're expecting a refund, be aware that paper returns are processed in the order they're received, and the IRS is still working through a backlog from previous years. Don't panic if it takes 12-16 weeks instead of the usual 6-8. The refund will come eventually, and like others mentioned, there's no penalty since you're getting money back rather than owing. One last thing - if your refund is over $1,500, consider having it direct deposited into your bank account rather than getting a paper check. Even with paper filing, you can still provide your banking info for direct deposit, and it's much faster and more secure than waiting for a check in the mail.

Has anyone else noticed that this seems to be happening more often lately? I returned something to HomeGoods last week and they tried to keep the tax too. When I questioned it, they suddenly "found a way" to refund the full amount. I think some retailers are trying this as a sneaky profit tactic hoping people don't notice or complain.

This is really concerning if retailers are systematically doing this. I work in tax compliance and can tell you that what BigTech Store told you is absolutely incorrect. Sales tax refunds on returned merchandise are governed by state law, not store policy. When you return an item, the original transaction is essentially being reversed. The store collected that tax as an agent of the state - they don't get to keep it when the underlying sale is canceled. Most states have specific provisions requiring retailers to refund sales tax on returned items, and failure to do so can result in penalties for the retailer. I'd recommend going back with your receipt and asking to speak with a manager. If they refuse, you can file a complaint with your state's department of revenue. They take sales tax compliance seriously and will investigate retailers who aren't following proper refund procedures. The fact that some commenters are seeing this happen more frequently suggests this might be a deliberate policy at some chains, which is even more problematic from a regulatory standpoint.

One thing to keep in mind - make sure you're keeping VERY detailed records of your poker/sports betting activities if you're reporting them as business income and setting up a SEP-IRA. The IRS scrutinizes gambling income closely, especially when it's used to establish retirement accounts. Daily logs of play time, tournaments entered, buy-ins, cash-outs, locations, witnesses, etc. - document everything. I learned this the hard way when I got audited in 2023 for my 2022 returns.

Just want to add another perspective here - I went through this exact same situation last year when setting up my SEP-IRA with poker tournament winnings. The confusion around that gambling business question is totally understandable because the wording is misleading. What helped me was thinking about it this way: the IRS is trying to identify businesses that are in the gambling INDUSTRY (casinos, bookmakers, lottery operators) versus people who gamble professionally. You're a customer of gambling establishments, not operating one yourself. I selected "NO" on that question and had zero issues with my EIN approval or SEP-IRA setup. My CPA confirmed this was correct - the distinction is crucial for tax purposes but won't affect your ability to report poker/betting income as self-employment income on Schedule C. Just make sure you have solid documentation of your gambling activities as others have mentioned. The combination of professional gambling income + retirement account contributions does tend to get extra scrutiny, so having your records organized is essential.

Has anyone actually looked at the new 2023 Schedule A? I just downloaded it and Box 8a specifically says "Home mortgage interest and points reported to you on Form 1098." Wouldn't that mean you just put the full amount from your 1098 forms regardless of these limits? The forms from my lenders show about $65k in combined interest.

This is such a complex area of tax law! I've been dealing with a similar situation where I have properties purchased on different sides of the 2017 cutoff. One thing that helped me was creating a simple spreadsheet to track each property separately. For your situation, I'd recommend documenting everything clearly: - Primary residence: $700K mortgage (pre-12/15/2017) = 100% of interest deductible - Second home: $1.1M mortgage (post-12/15/2017) = interest on first $750K deductible The key insight from all these responses is that you DON'T combine the limits - each property stands alone based on its purchase date. So you're not limited to some combined $1.75M cap. Also worth noting - since you mentioned renovations on the second home, make sure any loan proceeds used for substantial improvements still count as acquisition debt. The IRS considers improvements that add value, prolong the home's life, or adapt it for new uses as qualifying for the mortgage interest deduction. Keep detailed records of how loan proceeds were used, especially if you did any cash-out refinancing. The documentation will be crucial if you ever face questions about your deductions.