This thread has been incredibly educational - thank you all for the detailed analysis! I work with several contractors who face this exact situation, and the SE tax implications that @Sofia Morales and @GalaxyGuardian highlighted are often the biggest surprise. One additional consideration for construction businesses specifically: if you're subject to the uniform capitalization rules (UNICAP) under Section 263A because your gross receipts exceed certain thresholds, some of your vehicle depreciation might need to be capitalized into the cost of your construction projects rather than deducted immediately. This can complicate both the recapture calculation and the timing of when you get the tax benefit from the new vehicle's depreciation. Also, since construction income can be quite variable year to year, it might be worth running projections to see if you can time major vehicle purchases during lower-income years to maximize the benefit of the depreciation deductions when you're in higher tax brackets, and minimize recapture exposure when your income is higher. The combination of regular income tax + SE tax + potential QBI impacts means this decision involves much more than just the simple depreciation math. For a $74K recapture, you could easily be looking at a total tax cost of $30K+ depending on your overall income situation.

Wow, this discussion has really evolved beyond what I expected when I first posted! Reading through all the detailed analysis has made me realize I was only looking at the surface level of this decision. The SE tax implications that @Sofia Morales and @GalaxyGuardian brought up are particularly eye-opening - I hadn't factored in that additional 15.3% on the $74,360 recapture. That's potentially another $11,000+ I wasn't accounting for, which significantly changes the math. Given all the factors discussed - SE tax, QBI impacts, the bonus depreciation phase-out, and the cyclical nature of the recapture problem - I think I need to reconsider my approach for the new truck. Instead of maximizing Section 179 and bonus depreciation again, I might take a more conservative depreciation strategy to avoid setting myself up for another massive recapture event in 2-3 years. @Logan Scott - your leasing suggestion is looking more appealing now that I understand the full tax implications. With my high mileage usage, I'll need to negotiate a custom lease, but the predictable expenses and avoiding the recapture cycle might be worth the extra cost. @Giovanni Moretti - thankfully my business is below the UNICAP thresholds for now, but it's something I'll need to monitor as we grow. This has been incredibly educational - thank you all for sharing your knowledge and experiences!

Reading through all these responses, I wanted to add something that might be helpful for future reference. Even though you'll need to file as Single this year due to your mom's income exceeding the $4,950 threshold, there's one scenario that hasn't been mentioned that could potentially change things down the line. If your mom ever becomes "permanently and totally disabled" (as defined by the IRS), the gross income test for claiming her as a dependent gets waived entirely. This means that even if she continues working and earning $25,000+, you could potentially claim her as a dependent and qualify for Head of Household status if you're still providing more than half her total support. The IRS defines this as being unable to engage in any substantial gainful activity due to a physical or mental condition that can be expected to result in death or has lasted/can be expected to last for at least 12 months. It requires documentation from a qualified physician. I mention this not because I hope your mom faces health issues, but because life circumstances can change in unexpected ways, and it's good to know all the rules. Many people don't realize this exception exists and miss out on legitimate tax benefits when caring for disabled family members. Keep maintaining those expense records everyone's recommended - they'll serve you well regardless of how your situation evolves!

This is such a comprehensive thread with really helpful advice! I've been in a similar situation with my uncle living with me, and one thing I learned from my tax preparer that might be worth mentioning is to also consider state-specific rules if you're in a state with income tax. While the federal rules are clear that you'll need to file as Single due to your mom's income, some states have different dependency rules or additional credits for family caregivers that might apply to your situation. For example, some states offer caregiver credits or deductions for unreimbursed expenses when caring for family members, even if you can't claim them as dependents federally. Also, since everyone's been talking about documentation, don't forget to photograph or scan important documents like lease agreements, utility account setup confirmations, and bank statements showing consistent payment patterns. Digital backups can be lifesavers if you ever need to prove residency and support during an audit. The tracking system everyone's recommending is spot-on - I wish I had started earlier! Even though the tax benefits aren't available this year, you're building a solid foundation for understanding your family's financial dynamics and being prepared for any future changes in circumstances.

Another option to consider is reaching out to local accounting students or recent graduates. Many colleges with accounting programs have students who need practical experience and might help with your 1120S filing for a reasonable fee (often much less than established CPAs charge). You could contact the accounting department at nearby universities - they sometimes have programs where students work on real tax returns under professor supervision. Also, don't overlook the IRS Free File program completely. While it doesn't cover business returns directly, some of the participating software companies offer discounted rates on their business products if you qualify for their personal tax free filing. It's worth checking with companies like FreeTaxUSA or TaxAct to see if they have any promotions running. One last tip: if your S-Corp is relatively simple (single owner, no complex transactions), you might be able to use the fillable PDF forms from the IRS website and file by mail. It's more work but completely free except for postage.

Good question about liability with student preparers! Generally, you as the taxpayer remain responsible for the accuracy of your return regardless of who prepares it. However, many university tax programs carry professional liability insurance and have licensed CPAs or EAs supervising the work, which provides some protection. Always ask about their oversight process and insurance coverage before proceeding. For the 1120S forms, here's what you typically need for a basic S-Corp: - Form 1120S (main return) - Schedule K-1 for each shareholder - Schedule K (summary of shareholders' shares) - Schedule L (balance sheet) if total receipts or assets ≥ $250k The IRS has a helpful "Instructions for Form 1120S" document that includes a filing checklist on page 1-2. Also check out IRS Publication 334 "Tax Guide for Small Business" - it breaks down business tax requirements in more digestible language than the form instructions. If your S-Corp is truly simple (one owner, basic income/expenses, no weird transactions), you might only need the core forms above. But definitely review that checklist first to make sure you're not missing anything required for your specific situation.

Keep in mind that the tax consequences change as the child gets older! My grandson's UTMA became a tax headache when he turned 18. Under the kiddie tax rules, if your grandchild is a full-time student under age 24 and doesn't provide more than half of their own support, the unearned income above $2,600 is still taxed at the parent's rate. But once they hit 24 or graduate, it's all taxed at their rate. Also, be aware that UTMA assets can affect college financial aid eligibility since they're considered the child's assets, which are assessed at a higher rate than parental assets. Something to consider if you're contributing significant amounts.

One thing to keep in mind that hasn't been mentioned yet is the potential for investment income to fluctuate significantly from year to year, which can affect your tax planning. My granddaughter's UTMA account had minimal taxable income for the first few years, but then had a large capital gain distribution from a mutual fund that pushed her well into kiddie tax territory unexpectedly. I'd recommend working with your tax preparer to project potential tax consequences based on the types of investments you're choosing for the accounts. Index funds and ETFs tend to be more tax-efficient than actively managed mutual funds, which can help minimize unexpected taxable distributions. Also, consider the timing of any large contributions. If you're planning to gift close to the $18,000 annual exclusion limit, spreading it across multiple months or even splitting between December and January can help with cash flow and investment timing, while staying within the annual limits.

As someone who went through a similar family home purchase situation, I'd recommend getting everything properly documented upfront rather than trying to fix issues later. We ended up using a real estate attorney who specialized in seller financing to draft our promissory note and ensure we met AFR requirements. One thing that really helped us was looking at the AFR rates for different loan terms. Since you mentioned affordability concerns, you might consider a longer-term loan (over 9 years) since the AFR for long-term loans is often the most favorable. The current long-term AFR is around 4.2%, which is still significantly better than conventional mortgage rates. Also, make sure your cousin understands they'll need to report the interest income on their tax return each year, even if you're making principal-only payments in some months. Having a clear payment schedule that shows both principal and interest portions will make tax reporting much easier for everyone involved. The peace of mind from knowing everything is compliant is worth the extra effort upfront, especially when family relationships are involved.

I've been through this exact situation as both a buyer and seller in family transactions, and I want to emphasize something that hasn't been mentioned enough: documentation is absolutely critical, but it doesn't have to break the bank. For finding the right attorney, I'd suggest contacting your state bar association - they often have referral services where you can specify "seller financing" or "owner financing" as your need. Real estate investment groups in your area are also great resources since their members frequently use these arrangements. Cost-wise, expect to pay $500-1500 for proper documentation depending on your area. Yes, it's an upfront expense on teacher salaries, but consider it insurance against much bigger problems later. A template might save money initially, but if the IRS questions your arrangement, the cost of fixing issues retroactively will be far higher. One practical tip: ask the attorney to structure the promissory note with monthly payments that include both principal and interest at exactly the current AFR rate. This makes tax reporting straightforward for your cousin and creates a clear paper trail showing legitimate loan activity rather than a disguised gift. Also, make sure you and your cousin both keep detailed records of all payments made and received. The IRS loves to see consistent payment history when reviewing family loans.