This thread has been incredibly helpful! As someone who's been researching this exact scenario for months, I want to add one practical consideration that might influence your decision timing. With current interest rates, the financing cost for your construction loan could significantly impact the overall economics. If you're planning to claim business interest deductions, make sure you understand how the IRS treats interest during the construction period versus after the building is placed in service. During construction, the interest typically needs to be capitalized (added to the building's cost basis) rather than deducted immediately. Only after you start using the garage for business can you begin deducting the ongoing loan interest. This could affect your cash flow projections, especially if construction takes several months. Also, given all the great advice about cost segregation and documentation, consider hiring a tax professional who specializes in this area BEFORE you start construction. They can help you structure the project and invoicing in a way that maximizes your depreciation benefits from day one. It's much harder (and sometimes impossible) to go back and restructure things after the fact. The point about potential zoning issues is crucial too. I'd recommend getting written confirmation from your local zoning office that your planned business use is permitted. Some areas have restrictions on the types or volume of commercial deliveries to residential properties, which could impact your importing business model.

As someone who went through a similar garage conversion project for my home-based business, I wanted to share a few additional insights that might help with your decision. One thing that really caught my attention in your post is that you're planning to use the space for TWO distinct purposes - moving your existing office AND storing inventory for a completely new business. This actually creates some interesting opportunities for tax optimization that haven't been fully explored in the thread. Since your existing sole proprietorship already qualifies for home office deductions, you have an established business use pattern that strengthens your position with the IRS. When you move that office to the garage, you're not creating a new business expense - you're relocating an existing one. This continuity can be helpful if the IRS ever questions your business use claims. For the importing business storage portion, consider starting small and documenting your growth. Even if you build the full garage now, you could initially designate a smaller storage area and expand the business use percentage as your inventory grows. This creates a clear paper trail showing legitimate business expansion rather than speculative space allocation. One practical tip: install a separate electrical meter for the garage if possible. This makes it much easier to track and deduct utilities, and it provides clear documentation of business versus personal use. The additional upfront cost often pays for itself in cleaner record-keeping and stronger audit defense. The key is treating this as a business investment decision, not just a tax strategy. Make sure the numbers work even without the tax benefits, then view the depreciation and deductions as a bonus rather than the primary justification.

Has anyone used TurboTax or H&R Block for filing estate tax returns? I'm wondering if the software can handle Form 1041 or if I should just hire a professional.

I went through this exact situation when my mother passed away last year. Based on what you've described, you'll definitely need to file Form 1041 since the estate had income from the house sale and the CD interest that exceeded $600. A few important points to remember: 1. The house sale will likely qualify for stepped-up basis, meaning the estate's "cost" for tax purposes is the fair market value on the date of your dad's death, not what he originally paid. This could significantly reduce or eliminate the taxable gain. 2. Make sure to get a professional appraisal of the house as of the date of death if you don't already have one - you'll need this to establish the stepped-up basis. 3. The estate's first tax year can end on December 31st of the year of death, or you can choose a fiscal year ending up to 12 months after the date of death. This gives you flexibility on when the first return is due. 4. Don't forget that if you distribute any income to beneficiaries during the tax year, you'll need to prepare Schedule K-1s for them. The good news is that with the stepped-up basis, you may owe very little or no tax on the house sale. I'd recommend consulting with a CPA who has estate experience, especially for the first year - the peace of mind is worth it.

Don't forget to check if the bond still earns interest! Some EE bonds continue earning interest for 30 years from issue date, but after maturity (which usually happens at 20 years), they might still earn interest for another 10 years. If your bond was from the 1990s and matured in 2018, it might still be earning some interest even now, which could affect your decision about when to cash it.

Just wanted to add something important that might affect your tax situation - since you inherited the bond, you may be eligible for a "stepped-up basis" depending on how your grandmother's estate was handled. For inherited EE bonds, the IRS generally allows you to choose between reporting all the accrued interest yourself when you cash it, OR having the estate's final tax return report the interest that accumulated up to your grandmother's date of death. If you go with the second option, you'd only be responsible for any interest earned after her death. This could potentially put you in a lower tax bracket if your grandmother was in a higher bracket than you are. You'll want to compare the tax implications of both approaches. The bank will issue a 1099-INT for the full interest amount, but you can allocate it properly between the estate and yourself with proper documentation. Also worth noting - if the bond was held in joint ownership with rights of survivorship, the tax treatment might be different. Check the bond registration carefully to see exactly how it was titled.

I completely understand the confusion and stress you're both feeling! As someone who went through this exact same situation during college, I can confirm that your dad is mixing up different tax rules, which happens to SO many families. The bottom line is this: as a full-time student under 24, there is absolutely NO income limit that would prevent your parents from claiming you as a dependent. You could make $20K, $30K, or even more - it doesn't matter at all for dependency purposes. Your dad is likely thinking of either the $4,300 limit that applies to "qualifying relative" dependents (like elderly parents) or the standard deduction threshold where you'd start owing income tax yourself. Neither of these affects whether your parents can claim you as a qualifying child dependent. The only test that matters is whether your parents provide more than 50% of your total support. With them paying $18,000 for tuition alone, plus presumably covering things like your health insurance, phone bill, car insurance, and housing when you're home, they're almost certainly providing way more than half your support even with your $13,200 in earnings. I'd recommend checking out the IRS Interactive Tax Assistant tool (search "ITA dependency" on irs.gov) - it's free and will give you an official answer in about 5 minutes that you can show your dad. Also look up IRS Publication 501, Table 5, which clearly shows "No limit" for the income test for qualifying child dependents. Go ahead and pick up those holiday shifts without worry! Your parents will still be able to claim you, and you won't mess up anyone's tax situation. In fact, earning more money helps reduce the financial burden on your family while building your work experience. Win-win!

I just went through this exact same situation with my parents last month! Your dad is definitely mixing up the tax rules - as a full-time student under 24, there's absolutely NO income limit that would disqualify you from being claimed as a dependent. The confusion usually comes from people seeing the $4,300 limit that applies to "qualifying relative" dependents (like elderly parents or non-student relatives), but that doesn't apply to you as a student. You're classified as a "qualifying child" dependent, which has completely different rules. What actually matters for your parents to claim you: 1. You're under 24 and a full-time student ✓ 2. You live with them more than half the year (dorms count as temporary absence) ✓ 3. They provide more than half your total support With your parents paying $18,000 for tuition alone, they're almost certainly providing more than 50% of your total support even with your $13,200 in earnings. When you add up tuition, housing, food, medical expenses, insurance, etc., that tuition payment probably covers the majority right there. The $14,500 figure your dad mentioned is just the standard deduction threshold - that's when YOU would start owing federal income tax on your earnings, but it has zero impact on whether your parents can claim you as a dependent. I'd recommend showing your dad IRS Publication 501, specifically Table 5, which clearly shows "No limit" for the gross income test for qualifying child dependents. That official documentation from the IRS should put his mind at ease immediately. Go ahead and pick up those holiday shifts guilt-free! Your earning more money won't affect your dependency status at all, and it'll actually help reduce the financial burden on your family while giving you valuable work experience.

Has anyone tried negotiating a stipend with their employer for home office expenses since the tax deduction isn't available? My company gives us $150/month tax-free for internet, utilities, etc because they don't have to pay for office space for remote workers.

Great advice about negotiating a stipend! I'm definitely going to bring this up with my employer. Since they're saving money on office space, it seems like a win-win situation. One other thing I've found helpful as a remote W2 employee is keeping detailed records of any work-related expenses throughout the year, even if you can't deduct them federally. You never know when tax laws might change, and having good documentation is always valuable. Plus, if you do switch to 1099 status in the future, you'll already have a system in place. Also worth mentioning - if you're taking any online courses or certifications to improve your job skills, those educational expenses might still be deductible as a Lifetime Learning Credit, depending on your income level. It's not the same as a home office deduction, but every bit helps!