Just a practical tip - make sure to check if your employer reported this correctly on your W-2. Look at Box 1 (wages/tips/compensation) and compare it to Box 5 (Medicare wages). If there's a big difference, they might have messed up the reporting. My company did this wrong last year and included my entire tuition benefit as taxable income without applying the $5,250 exemption. I had to request a corrected W-2 (called a W-2c). Took a while but saved me over $1,100 in taxes.

This thread has been incredibly helpful! I'm in a similar situation with my employer-funded graduate program. One thing I'd add is that you should also check your December pay stub carefully to see if they withheld any federal or state taxes on that $24k tuition payment. When my employer added my tuition as taxable income, they initially forgot to withhold taxes on it, which meant I would have owed a huge amount at filing time. I caught it and asked payroll to adjust my withholding for the remaining pay periods to cover the additional tax liability. This way I avoided both underpayment penalties and a massive tax bill in April. If they didn't withhold enough taxes on that phantom income, you might want to make estimated tax payments for Q1 2025 to avoid penalties, especially if this pattern will continue with future semesters.

Another independent contractor here! Just want to add that you DEFINITELY need to file Schedule C regardless of LLC status. An LLC is just a liability protection layer, it doesn't change your tax filing. I've been filing Schedule C for 5 years with no LLC.

Great question! Yes, you definitely need to file Schedule C even without an LLC. As an independent contractor, you're automatically considered a sole proprietor for tax purposes, and Schedule C is how you report that business income and expenses. The good news is that since you have legitimate business losses, filing Schedule C will actually benefit you by allowing those losses to offset other income on your tax return. Just make sure to keep detailed records of all your business expenses - even though you're using personal accounts, you can still deduct legitimate business costs as long as you can document them properly. Don't worry about not having separate business accounts yet - many independent contractors start this way. The key is being able to distinguish between personal and business expenses. Consider getting a simple accounting app or spreadsheet to track everything going forward. You're on the right track planning to set up separate accounts once you form your LLC!

One important thing to keep in mind is the passive activity loss rules for rental properties. If you're not a real estate professional, rental losses are generally considered passive and can only offset passive income, not your regular W-2 income. However, there's an exception that allows up to $25,000 in rental losses to offset ordinary income if your adjusted gross income is under $100,000 (phases out completely at $150,000). This matters because while you can deduct all that mortgage interest on Schedule E, if your rental property shows a loss for the year (which is common due to depreciation), you might not be able to use all of that loss immediately against your other income. The unused losses carry forward to future years though. Also, since you mentioned both properties were purchased after the $750K limit change - make sure you're not missing out on any points or loan origination fees that might be deductible. For your primary residence, points are typically deductible in the year paid. For the rental property, they usually need to be amortized over the life of the loan.

Just wanted to add a practical tip about timing your expenses for maximum tax benefit. Since rental property expenses are deductible in the year paid (not when incurred), you have some flexibility with year-end planning. For example, if your rental property is showing a profit this year and you're hitting the passive activity loss limitations, consider prepaying some January expenses in December - things like insurance premiums, property management fees, or scheduled maintenance. This can help offset current year rental income. Conversely, if you're already maxed out on passive losses you can use this year, it might make sense to defer some discretionary expenses to next year when you might have more rental income to offset. Also, regarding the mortgage interest - keep copies of all your loan statements, not just the 1098 forms. Sometimes lenders make errors on the 1098s, and having your actual payment records makes it much easier to catch and correct these mistakes. I learned this the hard way when my lender undereported my rental property interest by almost $800 one year!

OK so I just checked my 1098-T from last year and now I'm even more confused lol. My tuition was $4,500, I got a $2,800 Pell Grant and took out a $1,700 student loan to cover the rest. My Box 1 showed $4,500 (total tuition paid) and Box 5 showed $2,800 (my Pell Grant). The loan amount ($1,700) didn't appear anywhere on the form! Is this right??? When I claimed my education credit, I subtracted the grant amount from my total tuition ($4,500 - $2,800 = $1,700) and claimed the credit on that amount. Did I do it correctly?

This is such a common confusion point for students! Let me break down what you're asking about: For your 1098-T specifically: - Box 1 will show the total amount your school received for qualified tuition and fees during the tax year - this includes payments made with loan funds - Box 5 will show only scholarships and grants (not loans) - So if you pay $6,500 tuition entirely with loans, Box 1 = $6,500, Box 5 = $0 Regarding loan coverage: FAFSA determines your aid eligibility, but you still need to actively accept loans through your school's financial aid portal. It's not automatic. If your costs exceed your aid package, you'll need to request additional loans or find other funding. Pro tip: Most schools have a "Net Price Calculator" on their website that estimates your total costs minus aid. Also, log into your student portal regularly and look for the "Account Summary" or "Billing" section - it should show your charges vs. credits in real time. To avoid surprise bills, I recommend checking your student account at least once a month, especially before each semester starts. Sometimes fees get added that weren't in the original estimate.

Does anyone know if TurboTax Business can handle LLC returns regardless of the classification? My LLC is set up as an S-Corp and I'm trying to decide if I need to hire an accountant or can DIY.

@Layla Mendes - I went through this exact same confusion when I first started my LLC! Here's what I learned: if you only have one member (just yourself), your LLC automatically defaults to "disregarded entity" status, which means you file taxes as a sole proprietor using Schedule C on your personal return. You don't need to file a separate business return. The easiest way to confirm is to look for any Form 8832 or Form 2553 in your records - these would show if you made a special election. If you can't find either of these forms, you're almost certainly under the default classification. Since you mentioned this is for a web design business you started last year, you'll likely be filing Schedule C with your 2025 personal tax return. Just make sure to track all your business expenses throughout the year - things like software subscriptions, equipment, home office expenses, etc. can really add up to significant deductions! If you want to double-check, the IRS business line at 800-829-4933 can tell you what's on file, though be prepared for potentially long wait times.