One thing that might help clarify the situation - check if your school considers "part-time" status in fall 2022 to still be "at least half-time" for federal financial aid purposes. Many schools have different definitions for part-time vs. half-time. For example, at some institutions, you could be taking 9 credit hours and be considered "part-time" by the school's standards, but still meet the federal "at least half-time" requirement (which is often 6+ credit hours for undergrads). This distinction matters because the 1098-T Box 8 reflects the federal half-time standard, not the school's internal classifications. If you're unsure about your fall enrollment status, you can contact your school's financial aid office - they can tell you definitively whether your fall credit load met the federal half-time requirement. If it did, then your 1098-T with Box 8 checked is accurate and should satisfy the IRS's request for proof. Also, keep in mind that the IRS verification letter might seem scary, but these are often routine compliance checks. They're not necessarily questioning the validity of your claim - they just need documentation to match their automated systems with what your mom reported on her tax return.

I've been following this thread closely because I'm dealing with a very similar situation with my own tax return. What's been most helpful to me is understanding that the IRS verification request doesn't necessarily mean there's a problem - it's often just their automated system doing a routine check. From everything I've read here and my own research, it sounds like your 1098-T with Box 8 checked should be the primary document you need. The fact that you were full-time in spring 2022 clearly meets the "at least half-time for one academic period" requirement for the American Opportunity Credit. One additional tip I'd add: when you respond to the IRS, make sure to include the notice number from their original letter and respond within the timeframe they specified. I've heard that timely responses help avoid any potential complications or additional follow-up requests. It's also worth noting that if your mom used tax preparation software or a tax professional, they might be able to help with the response since they would have the original Form 8863 and can verify that everything was reported correctly. The advice about getting an enrollment verification from your registrar's office is spot-on - it's usually a quick process and provides that extra layer of documentation that can put both you and the IRS at ease.

Watch out for state estimated taxes too!!! Everyone's talking about federal, but depending on your state, you might need to make a state estimated payment as well. I forgot this last year when I started my side business in November and got hit with a state underpayment penalty even though I was fine on the federal side.

Just wanted to add another perspective as someone who went through this exact situation two years ago with a graduate research assistantship that started in November. One thing that really helped me was documenting everything about the timing and nature of my income for when I filed my taxes. I kept records showing that the fellowship was unavailable to me until December (had the offer letter with start date), my previous quarters' minimal income from part-time work, and calculated what my "annualized income" would have been if I tried to project the December amount across the whole year (which would have been wildly inaccurate). When I filed my return, I used Form 2210 and was able to show the IRS that requiring estimated payments based on projected annual income from a single month would have been unreasonable. The annualized income installment method completely eliminated any underpayment penalty. The key is being able to demonstrate that your income pattern was genuinely unpredictable and that making estimated payments earlier in the year based on your actual income at that time wouldn't have captured this December windfall. Keep good records and you should be fine!

Has anyone used a CPA who specializes in rental property? That part of my taxes always confuses me with depreciation and repairs vs improvements.

I'm in a really similar situation - self-employed with rental income and my spouse has a side business too. After years of doing my own taxes and worrying I was missing things, I finally bit the bullet and hired a CPA who specializes in small business and real estate. One thing I'd definitely recommend is asking potential CPAs about their process for year-round planning, not just tax prep. The CPA I work with sends me quarterly reminders about estimated payments and checks in before major financial decisions to discuss tax implications. That proactive approach has been worth its weight in gold. Also, don't be afraid to interview a few different CPAs before choosing. Most will offer a brief consultation to discuss your situation and their services. I talked to three before finding the right fit - someone who explained things clearly and seemed genuinely interested in helping me optimize my tax strategy rather than just filling out forms. The investment has paid for itself through better organization, strategic planning, and peace of mind. Good luck with your search!

Great discussion here! I've been running a small fleet of Turo vehicles for about 18 months now and can share some real-world experience with Section 179. I used it for two of my vehicles (a Honda CR-V and a Toyota Highlander) and it definitely helped with the initial cash flow, though as others mentioned, the tax benefits weren't as straightforward as I initially hoped. A few practical points from my experience: 1) The business-use percentage documentation is CRITICAL - I use a simple mileage log app that tracks every trip automatically, because the IRS will want detailed records if they ever audit. 2) The passive loss rules mentioned by Natalia are real - my first year losses were suspended because of my day job income, but they rolled forward and I was able to use them in year two when I had more rental income. 3) Don't forget about depreciation recapture if you ever sell the vehicles - that Section 179 deduction will come back to bite you as ordinary income when you dispose of the asset. One thing I wish someone had told me upfront: factor in the additional complexity this adds to your tax returns. I ended up needing a CPA because managing the depreciation differences between federal and state (I'm in New York), the passive activity worksheets, and the business expense allocations got overwhelming pretty quickly. The tax savings are real, but make sure you budget for professional tax prep costs too.

This has been an incredibly thorough discussion! As someone who's been considering a similar Turo venture, I really appreciate all the detailed insights about Section 179, passive loss rules, and real-world implementation challenges. One aspect I haven't seen mentioned yet is the impact of the Tax Cuts and Jobs Act's bonus depreciation rules. For vehicles placed in service through 2023, you can potentially take 80% bonus depreciation on top of Section 179, which could allow you to deduct more than the Section 179 limits in some cases. However, this is subject to the same business-use percentage requirements and passive loss limitations that have been discussed. Also, for those considering this path, remember that if you're financing the vehicle, you can only claim Section 179 on the portion you actually paid for - not the financed amount. So if you put $10k down on a $40k vehicle, your maximum Section 179 deduction would be $10k in year one, with the rest potentially eligible as you make payments (though this gets complex with the business-use percentage calculations). The key takeaway from this thread seems to be that while Section 179 can provide significant tax benefits for a Turo business, the actual implementation is much more nuanced than it initially appears. Professional tax advice is definitely worth the investment to navigate the passive activity rules, state conformity issues, and proper documentation requirements.

An important point nobody's mentioned yet: the "active participation" status matters most if your adjusted gross income is under $100,000. The $25,000 allowance for rental losses starts phasing out at $100,000 AGI and completely disappears when your AGI hits $150,000. So if your income is over $150,000, the active participation doesn't actually provide you any benefit for deducting losses. This might be why your family member thought it was "simpler" to just check the box - because for many higher-income landlords, it ultimately doesn't change your tax situation either way.

Nobody's mentioned record keeping yet! If you're claiming active participation, it's smart to keep some basic documentation of your management activities. Even just a simple log noting when you communicate with your tenant, when you inspect the property, when you make decisions about repairs/improvements, etc. Doesn't need to be elaborate, but having something to show your involvement can be really helpful if you're ever questioned about it.