Wait I'm still confused. If I have $50k in regular income and $200k in long term capital gains, does that mean my regular income gets taxed at the rates for someone making $250k? Or does it get taxed at the rates for someone making $50k?

This is such a common source of confusion! I went through the exact same thing when I first started investing. The key insight that helped me was thinking of it like two separate "buckets" - your ordinary income bucket and your capital gains bucket. Your $13k in wages gets taxed exactly like it would if that was your only income - it doesn't matter that you have $125k in capital gains sitting alongside it. The capital gains are in their own separate calculation. But here's the part that trips people up: while your ordinary income doesn't get pushed into higher brackets by capital gains, your TOTAL income ($138k) does determine what rate you pay on those capital gains. So you'd likely pay 15% on your long-term gains, but your $13k in wages would still be taxed at the regular income rates for someone making $13k. Think of it as your ordinary income "filling up" the tax brackets first, then your capital gains get stacked on top using their own separate rate table. The IRS basically runs two parallel calculations and adds them together.

I went through this exact same situation with my parents two years ago when they helped with our $180k down payment. They were absolutely convinced they'd get hit with a massive tax bill and kept saying "we can only give $15k each" (this was back in 2022). What finally worked was sitting them down with actual IRS documentation and walking through a real example with numbers. I showed them that between the four of them (mom and dad each giving to me and my spouse), they could give $60k that year with zero paperwork. Then for the remaining $120k, they'd just file Form 709 to report it - but wouldn't pay a single dollar in tax because it just counted against their $12+ million lifetime exemption. The breakthrough moment was when I explained it like this: "You know how you get that $12,000 standard deduction on your tax return each year? The gift tax works similarly - you get a huge 'deduction' for gifts ($13+ million), you just have to keep track of how much you've used." My dad actually called the IRS using that Claimyr service someone mentioned earlier (after waiting on hold for hours multiple times), and the agent confirmed everything. That official confirmation was what sealed the deal. Two years later, they've had zero issues. They filed the forms, didn't pay any gift tax, and we got our house. The only "consequence" was that their tax preparer charged them an extra $200 to handle Form 709, which was totally worth it for their peace of mind.

I just want to echo what everyone else is saying - your parents' concerns are totally normal, but they're worrying unnecessarily! I'm a tax professional and see this confusion all the time. The simplest way I explain it to clients is this: Think of gift tax like a credit card with a $13+ million limit. The annual exclusion ($18k per person in 2024) is like paying with cash - no tracking needed. Anything above that is like putting it on the "credit card" (lifetime exemption) - you need to report it with Form 709, but you don't actually "pay the bill" (owe gift tax) until you max out that enormous credit limit. For your $200k situation: Your parents could give $72k total with zero paperwork ($18k from each parent to both you and your spouse). The remaining $128k would just need to be reported on Form 709 - no tax owed. One thing that might help convince them: have them look up their state's gift tax rules too. Most states (including the big ones like California, Texas, Florida) don't even have their own gift taxes, so this is purely a federal issue with those generous federal exemptions. The bottom line: unless your parents are secretly millionaires planning to give away over $27 million as a couple during their lifetimes, they'll never pay gift tax on helping with your house!

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.

Have you asked your employer about this? Some companies with commission-based employees will provide a letter stating that you're a "statutory non-employee" which helps clarify your tax status. My company does this for all sales reps to make tax filing easier. You might also check if your company offers any reimbursement program. Mine initially didn't, but enough of us complained that they started a partial mileage reimbursement program that covers about 60% of my driving expenses.

This is exactly the kind of confusing tax situation that trips up a lot of commission-based sales people. From what you've described, you're likely dealing with a classification issue that could significantly impact your tax liability. The key question is whether you're truly a "non-statutory employee" or if you might actually qualify as a statutory non-employee (which would let you file Schedule C) or if you're misclassified entirely. Given that you're using your own vehicle, working from home, and covering all your own expenses while working 100% commission, there's a good chance you have more deduction options than you think. I'd strongly recommend getting a definitive answer on your worker classification before filing. You could either file Form SS-8 with the IRS for an official determination (though it takes months) or consult with a tax professional who specializes in worker classification. Some of the tools mentioned in other comments might also help analyze your specific situation. The difference between being able to deduct your 24,000 miles and home office expenses directly against your income (Schedule C) versus not being able to deduct them at all (due to TCJA suspension of unreimbursed employee expenses) could be thousands of dollars in tax savings. Don't leave that money on the table!

Has anybody successfully deducted more than the $750k limit by putting part of the property into an LLC or some other tax structure? I heard someone at work talking about this as a loophole but it sounds complicated and potentially sketchy.

I'm dealing with a similar situation and want to clarify something that might help others here. The key distinction everyone should understand is between "acquisition debt" and "home equity debt" - this changed significantly with the Tax Cuts and Jobs Act. For acquisition debt (money used to buy, build, or substantially improve your home), the $750k limit applies to the combined total across ALL loans on that property. This includes your original mortgage AND any HELOC/second mortgage used for qualifying home improvements. However, if you used any portion of a HELOC for non-qualifying purposes (like paying off credit cards, buying a car, or investing), that portion doesn't count toward your deductible mortgage interest at all - regardless of whether you're under the $750k limit. So in your case with $1.9M total debt, you'll need to: 1. Determine how much of your HELOC was used for qualifying home improvements 2. Add that to your primary mortgage amount 3. Apply the $750k cap to that combined "acquisition debt" total 4. Calculate your deductible interest proportionally Keep detailed records showing exactly how HELOC funds were used. Bank statements showing direct payments to contractors, receipts for materials, and photos of the improvements are all valuable documentation. The burden of proof is on you to show the money went toward qualifying home improvements.