I messed this up on my taxes last year and only reported the net amount I received after the marketplace took their cut. My tax preparer caught it during a review and had me file an amended return. The correct way is definitely to report the FULL amount on Line 1 and then deduct the fees separately. The IRS computers match what the marketplace reports to them against what you report. If those numbers don't match, it could trigger a letter or even an audit. Don't make my mistake - it was a headache to fix!

This is such a common source of confusion for new Schedule C filers! Based on all the great advice here, I want to emphasize the key point: always report the GROSS amount customers actually paid on Line 1, then deduct ALL your business expenses on the appropriate lines. I made this same mistake my first year selling crafts online - I only reported what hit my bank account after fees were taken out. When I got that scary letter from the IRS asking about the discrepancy between what the marketplace reported and what I filed, I learned real quick that their computers cross-check everything! The way I think about it now: Line 1 is "what did customers pay for my products?" and then lines 8-27 are "what did it cost me to run this business?" Platform fees, payment processing, shipping supplies, materials - it all goes in the expense section. This actually works in your favor because you get to claim MORE deductions while staying compliant with what the marketplace reported to the IRS. Don't stress too much about getting it perfect on your first try - the important thing is being honest and consistent with your reporting!

My transcript been saying 'as of' date March 4th for like 2 months now... anyone else?

Looking at your transcript, that code 807 "Reduced or removed W-2 or 1099 withholding" is definitely concerning - it means the IRS removed your $10,557 in withholding credits, which is why you now owe $3,472 instead of getting a refund. This usually happens when they can't verify your W-2s or suspect there's an issue with the withholding reported. You'll need to contact them ASAP to find out why they removed it and provide documentation to get it reinstated. The 971 notices should explain what documentation they need from you.

Does anyone know if the SALT (State And Local Tax) deduction limitation of $10,000 includes foreign taxes paid? Or are foreign taxes completely separate from this limit?

One thing to keep in mind with your Germany situation is the timing of when you can claim the Foreign Tax Credit. Since Germany operates on a calendar year like the US, you should be able to claim the €8,500 you paid for 2024 on your 2024 US return. However, make sure you have proper documentation from the German tax authorities showing the exact amount paid and that it was indeed income tax (not social security or other types of taxes). The IRS can be very particular about this documentation, especially during audits. Also, since you mentioned using TurboTax, be aware that the software sometimes struggles with complex international situations. You might want to double-check its calculations manually or consider getting a consultation with a tax professional who specializes in expat taxes. The Foreign Tax Credit can get complicated when you factor in different tax rates, timing differences, and the interaction with potential state tax obligations. One last tip: keep detailed records of your days in Germany vs any time spent in California or other US states. This documentation could be crucial if California ever challenges your residency status.

Great discussion here! One additional thing to consider that I haven't seen mentioned - make sure you have solid documentation of your residency periods for both properties. The IRS can be pretty strict about proving the "use test" especially when there are overlapping ownership periods. I'd recommend gathering utility bills, voter registration records, driver's license addresses, and any other documentation that clearly shows which property was your primary residence during specific time periods. Since you both owned separate homes before marriage, you'll want to be extra careful about demonstrating continuous primary residence use. Also, if either property was ever rented out (even briefly), that could complicate the exclusion calculation. The IRS has specific rules about periods of "nonqualified use" that can reduce your exclusion amount. Worth double-checking your timeline to make sure there weren't any rental periods you might have forgotten about.

One thing that hasn't been mentioned yet is the timing consideration for your sales. Since you're married now, you'll want to be extra careful about which tax year each sale falls into, especially if you're considering filing separately. If you sell both properties in the same tax year and file separately, you'll each need to report your respective property sale on your individual return. However, if you can time the sales to fall in different tax years (one in December 2025, one in January 2026), you might have more flexibility in choosing your filing status each year based on what's most advantageous. Also, don't forget about depreciation recapture if either of you ever claimed a home office deduction on these properties. That portion of the gain isn't eligible for the Section 121 exclusion and will be taxed at a 25% rate regardless of your filing status. I'd strongly recommend running the numbers both ways (MFS vs MFJ) with a tax professional who can model different scenarios, including the timing of the sales. The capital gains exclusion benefit might be offset by other tax disadvantages of filing separately, depending on your overall financial picture.

Great question! I'm also a new landlord and went through this exact same confusion last year. Yes, all those utility expenses for your rental units are absolutely deductible business expenses - gas, electric, water, internet, and cable that you're paying for your tenants. One thing that really helped me was setting up a separate business bank account and credit card just for rental property expenses. It makes tracking everything so much easier come tax time. I pay all my rental utilities through that account, so there's a clear paper trail. For your home office situation, since you're using a room exclusively for property management, you can likely deduct the business portion of your home expenses including utilities. Just make sure you're only claiming the percentage that corresponds to your office space. The key thing to remember is these are deductions that reduce your taxable income, not dollar-for-dollar refunds. But they can still save you a significant amount depending on your tax bracket. I'd definitely recommend keeping detailed records of all your expenses and maybe consulting with a tax professional for your first year to make sure you're maximizing your deductions properly.

This is such a timely question! I just went through my first year as a rental property owner and had similar questions about utility deductions. Yes, absolutely deduct those utility expenses - they're legitimate business expenses for your rental operation. What surprised me was how much documentation the IRS expects, so start keeping detailed records now. I create a simple spreadsheet tracking each utility bill by property and month. One tip that saved me headaches: take photos of your utility bills when they arrive and store them digitally. I had a water bill go missing last year and trying to get a duplicate from the utility company during tax season was a nightmare. For your home office deduction, measure that room carefully and calculate the exact percentage of your home's square footage. The IRS can be picky about this, so precision helps if you ever get questioned. Also consider opening a separate business bank account if you haven't already - it makes tracking rental income and expenses so much cleaner. I wish someone had told me this from day one instead of trying to sort through mixed personal/business transactions later. Good luck with your first tax season as a landlord! It gets easier once you establish good record-keeping habits.