I'm confused cause my accountant told me I should ALWAYS send 1099s to attorneys regardless of payment method? Is she wrong??

This is such a common confusion point! I run a small consulting business and dealt with this exact same question last year. The key thing to remember is that when you use ANY third-party payment processor (credit cards, PayPal business, Venmo business, etc.), THEY become responsible for the 1099-K reporting, not you. The special attorney reporting rule that requires reporting regardless of amount only applies to direct payments - checks, cash, wire transfers, ACH payments, etc. Credit card payments are specifically exempt from this requirement because the payment network handles the reporting. I made the mistake of double-reporting one attorney payment two years ago (sent both a 1099-NEC for a credit card payment), and it created a huge headache for my lawyer during tax season. They had to file additional paperwork to reconcile the duplicate income reporting with the IRS. Lesson learned! The safest approach: If money flows through a third-party processor, let them handle the 1099 reporting. If you pay directly, then you're responsible for the 1099-NEC.

i moved from illinois to texas last year but still own a rental property in illinois. illinois department of revenue keeps sending me questionnaires about my residency status even tho i changed my drivers license, voter registration, everything to texas. so annoying!!

From my experience working with clients on residency issues, I'd add that state tax agencies also increasingly use third-party data services that aggregate information from multiple sources. They can cross-reference things like: - Hotel and travel bookings showing patterns of where you stay - Professional license renewals and continuing education locations - Medical appointments and prescription fills - Even Amazon delivery addresses and subscription services The key thing to understand is that residency determination isn't just about one factor - it's about the totality of your connections to a state. They're looking for your "center of vital interests" - where your most important personal and economic ties are located. If you're legitimately trying to establish residency in a new state, be thorough about severing ties with your old state. Don't just change the obvious things like your driver's license. Update everything - bank accounts, investment accounts, insurance policies, professional memberships, magazine subscriptions, even your Amazon Prime address. The more consistent your paper trail, the stronger your residency claim will be. And always keep detailed records of your physical presence. A simple calendar noting where you sleep each night can be invaluable if you're ever audited.

i'm confused about our preschool situation... they're constantly fundraising and saying stuff is "tax deductible" but then I noticed their paperwork says "LLC" at the end of their name?? isn't that a regular business? can an LLC be a 501c3???? the director keeps avoiding my questions about it.

This is such an important topic that more parents need to understand! I went through this exact confusion last year when choosing between three different preschools in our area. What really helped me was creating a simple checklist to evaluate each school's tax status: - Ask directly for their EIN (Employer Identification Number) - Request a copy of their IRS determination letter if they claim 501(c)3 status - Look up their EIN on the IRS Tax Exempt Organization Search tool - Get written receipts for any contributions that specify whether they're tax-deductible - Ask them to explain in writing what portions of fees are tuition vs. donations One thing I learned is that some schools will use phrases like "suggested donation" or "voluntary contribution" for what are actually required fees - these aren't tax-deductible even if the school is a legitimate nonprofit. The key is getting proper documentation upfront rather than trying to figure it out at tax time. Also worth noting: if a preschool IS a legitimate 501(c)3, they should be filing annual Form 990s with the IRS, which are public documents you can request to see their financials and governance structure. Any reluctance to provide transparency about their tax status should be a red flag.

Thanks everyone for this incredibly helpful discussion! As someone who's been paralyzed by this decision for weeks, reading through all these experiences has been a huge relief. I'm in a very similar situation to the original poster - used standard mileage for my first three years, and this year had some major repairs that would make actual expenses more beneficial. I was terrified that I'd be "locked in" to whatever method I chose, but it's clear now that since I started with standard mileage, I have the flexibility to optimize each year. The key insight about tracking the "deemed depreciation" from standard mileage years is something I never would have thought of on my own. I'm definitely going to create a spreadsheet to track my vehicle's adjusted basis going forward so I don't run into problems later. One follow-up question - for those who have switched methods multiple times, do you find that tax software handles the basis calculations automatically, or do you have to manually input the adjustments? I'm using TurboTax and want to make sure I'm doing this correctly.

I've been following this discussion closely as I'm in almost the exact same boat as the OP. Used standard mileage for my consulting business for the past two years, and this year I had a $3,200 engine repair that would make actual expenses much more advantageous. What really helped clarify things for me was finding the specific IRS Revenue Procedure that addresses this - Rev. Proc. 2010-51. It explicitly states that if you use the standard mileage rate in the first year you place the vehicle in service for business use, you can choose to use either the standard mileage rate or actual expenses in any subsequent year. The key calculation everyone's mentioning about "deemed depreciation" is found in the annual IRS notices that update the standard mileage rates. For example, for 2023 the depreciation component was 28 cents per mile, 2022 was 27 cents per mile, etc. You multiply your business miles for each year by that year's depreciation component to get your total deemed depreciation. One thing I learned from my tax preparer is to document your reasoning for switching methods each year. While not required, having a brief note in your files explaining why actual expenses were more beneficial (major repairs, lower mileage year, etc.) can be helpful if the IRS ever questions the frequent method changes. Thanks to everyone who shared their experiences - it's made this decision much less stressful!

This thread has been incredibly educational - I had no idea how sophisticated the IRS tracking systems have become or how much the "protest" framing could backfire legally. What really stands out to me is how many people here have shared stories about the IRS actually being reasonable when approached proactively, versus absolutely ruthless when they have to chase someone down. It seems like your cousin is choosing the worst possible path when better options are still available. The bank levy story from QuantumQuester really drives home what "getting caught" actually looks like in practice - not some dramatic arrest, but waking up to find your entire checking account emptied with no warning. That's probably a more effective wake-up call than abstract warnings about jail time. If I were in your shoes, I'd print out this entire thread and sit down with him. Sometimes seeing multiple strangers all telling the same story carries more weight than family advice. The tax attorney's point about voluntary disclosure programs and the stories about services like taxr.ai and Claimyr might give him concrete next steps instead of just feeling overwhelmed by the whole situation. The window for handling this the "easy way" is closing. Every day he waits, those penalties are compounding and he's losing negotiating power. His anti-system protest is ironically just going to make the system come down harder on him.

Reading through all these responses has been really eye-opening. As someone who works in financial services, I see the aftermath of IRS collection actions regularly, and everything shared here aligns with what I witness professionally. The most important point that keeps coming up is timing - your cousin still has options right now that disappear once the IRS initiates collection proceedings. I've seen clients who owed $5,000 in back taxes end up paying $15,000+ after penalties, interest, and collection fees because they waited too long to address the situation. What's particularly concerning about the "protest" framing is that it eliminates the most common defenses people use in tax cases - reasonable cause, lack of willful intent, financial hardship, etc. He's essentially creating documentation of deliberate non-compliance, which prosecutors love to see in criminal referral cases. The IRS data matching capabilities mentioned here are no joke. They receive copies of every W-2, 1099, bank interest statement, and dozens of other income documents. Cross-referencing this information to find non-filers is largely automated now. Moving apartments won't help when his SSN is tied to employment and banking records. I'd strongly encourage showing him this thread, especially the real experiences people have shared. Sometimes peer stories are more convincing than professional warnings. The voluntary disclosure window won't stay open indefinitely, and every month he waits, those penalties compound.