Another thing to consider is state tax treatment of these expenses. Some states follow federal rules for deductibility while others have their own rules. In California, for example, there are certain expenses that are fully deductible for state tax purposes but limited for federal. Since you mentioned meals being 50% deductible federally, you should check if your state has different rules. Some states allow 100% deduction for business meals in certain circumstances. This adds another layer of complexity to tracking non-deductible vs. deductible expenses!

Great question about state vs federal differences! You don't necessarily need separate books, but you do need to track the differences for tax purposes. Most accounting software can handle this with tax adjustments or separate tax categories. For partnerships, the state-specific differences typically get handled at the partner level when they file their individual returns, since partnerships are pass-through entities. The partnership return (1065) reports the federal treatment, and then each partner makes state adjustments on their personal returns if needed. However, you should definitely track these differences in your records so you can provide accurate K-1s to your partners. They'll need to know about any state-specific adjustments when they prepare their individual returns. A good CPA familiar with your state's rules can help set up a system that captures both federal and state treatment without duplicating your entire bookkeeping system.

The photography business loss might raise some red flags since the expenses are much higher than the income. Make sure you can prove you're trying to make a profit. Take classes to improve skills, have a business plan showing projected path to profitability, advertise your services, maintain separate business accounts, etc. I've been running a photography business for years and had losses the first two years. As long as you treat it like a serious business and not a hobby, you should be fine claiming the losses.

Great question! Yes, you'll definitely need separate Schedule C forms for each business. The IRS considers these distinct activities - your jewelry business, delivery work, and photography are all different types of operations with different income streams and expense categories. For your photography business showing a loss, you can absolutely deduct those losses against your other income as long as you're operating it as a legitimate business (not a hobby). The key is demonstrating profit motive - keep records of your business plan, marketing efforts, time invested, and steps you're taking to improve profitability. One thing to watch out for: with $19k in equipment expenses against $6.8k income, make sure you're properly depreciating larger equipment purchases rather than deducting them all in one year. Camera gear, lighting equipment, etc. typically need to be depreciated over several years unless you elect Section 179 or bonus depreciation. Also consider whether some of those equipment purchases might qualify for the Section 179 deduction, which could let you deduct up to $1,160,000 in qualifying business equipment in the year you placed it in service (for 2024). This could be beneficial for your photography business if the equipment qualifies.

Great question about the UTMA/UGMA tax implications! One important detail that hasn't been fully addressed yet is the interaction between the custodian's role and tax reporting responsibilities. As the custodian, you're required to file tax returns for your nephew if his unearned income exceeds certain thresholds, but the taxes are paid from his funds, not yours. For 2025, if his unearned income is over $1,250, you'll need to file Form 1040 for him. If it's between $1,250-$2,500, it's taxed at his rate (likely 0% or 10%). Above $2,500, the kiddie tax kicks in at your marginal rate. One strategy many families use is to focus on tax-loss harvesting within the UTMA account in the years leading up to college. If you have any losing positions, realizing those losses can offset gains and reduce the overall tax burden when you do need to liquidate assets for education expenses. Also worth noting - while you mentioned your state's age of majority is 21, make sure you understand exactly when control transfers. Some states have different rules for different types of accounts, and knowing the precise timeline helps with planning both the education funding and the eventual transition of control to your nephew.

This is such a comprehensive discussion! As someone who went through a similar situation with my daughter's UTMA account, I want to add one more perspective that might be helpful. One thing that really caught me off guard was how the UTMA withdrawals affected our state tax situation differently than federal. Our state has its own version of the kiddie tax with slightly different thresholds, and it also treats custodial account withdrawals differently for state college savings tax credits. I ended up owing more in state taxes than I had planned for because I only calculated the federal impact. Also, regarding the financial aid timing strategies mentioned earlier - while spending down UTMA assets before filing FAFSA can help, be careful about the verification process. Some schools require additional documentation during financial aid verification, and if there are large unexplained changes in asset levels between FAFSA filings, they may ask for detailed explanations of where the money went. My recommendation would be to model out several scenarios: keeping money in UTMA vs. transferring to 529 vs. spending down strategically, and factor in both the tax implications AND the financial aid impact. The "best" choice really depends on your family's specific tax bracket, the timeline until college, and whether you're likely to qualify for need-based aid. Don't forget to also consider your nephew's potential earnings from summer jobs, as that can push him into higher tax brackets sooner than expected.

Anyone know if TurboTax handles K-1 amendments easily? I'm in a similar situation as OP but I used TurboTax to file originally.

Hey Nathan! Don't stress too much about this - it's actually a pretty common scenario, especially with ETFs like $USO that are structured as partnerships. Just to add to what others have said: when you originally reported $USO on Form 8949, you were treating it like a regular stock sale. But since $USO is actually a partnership, you need to report your share of the partnership's activities via the K-1 instead. The good news is that for most people with small positions in $USO, the K-1 amounts are usually minimal. Look at the dollar amounts in the boxes - if they're small (like under $50 total), the impact on your taxes will be very small. One thing to keep in mind: when you file your amended return, you'll want to remove the $USO transactions from your original Form 8949 and instead report the K-1 information on the appropriate lines of your 1040. The K-1 will show the "correct" way to report your $USO investment. You're being responsible by wanting to handle this properly - many people just ignore K-1s for small amounts, but it sounds like you want to do things right!

Has anyone just tried using an online tax portal that automatically imports your 1099 data? I've been using TurboTax Self-Employed and it pulls a lot of my 1099 info directly from the IRS database before I even receive the physical forms from clients.

I'm dealing with a similar situation with one of my clients. What I've found helpful is being proactive about it - I send them a gentle reminder email in mid-December that includes my current W9 form (even though they should already have it) and a note about the January 31st deadline. I phrase it as "helping them stay compliant" rather than demanding something from them. I also keep detailed records of all payments throughout the year using a simple spreadsheet, so I can file my taxes with or without their 1099. But you're absolutely right that they have a legal obligation to send it without you having to ask. The fact that you have to chase them down every year suggests their accounting processes need improvement. If the gentle reminder approach doesn't work this year, you might consider mentioning the potential penalties they face for late filing - sometimes small organizations just aren't aware of the consequences.