Does anyone know if tax prep fees for the 1041 are deductible on the estate tax return? I paid an accountant last year to prepare my aunt's estate return and wasn't sure if I could deduct that cost from this year's estate income.

Yes, tax preparation fees for the 1041 are generally deductible as an estate administration expense on the estate's tax return. Since the fee is directly related to the administration of the estate and preparing the required tax filing, it qualifies as a deductible expense. You would include the tax prep fee as a deduction on the 1041 for the year it was paid, not necessarily the year the return was prepared for. So if you paid the accountant in 2024 for preparing the 2023 estate return, you'd deduct it on the 2024 Form 1041. Just make sure to keep good records of the payment and what it was for. The IRS allows reasonable and necessary expenses for estate administration, and professional tax preparation definitely falls into that category.

This is really helpful advice! I had no idea about the $250,000 capital gains exclusion for a primary residence - that could definitely apply in my dad's situation since he lived in the condo for over 10 years before he passed. The separate checking account idea is brilliant too. I've been mixing some of the estate expenses with regular estate funds and it's already getting confusing when I try to track what's deductible. I'm going to set that up right away. Quick question - do you know if things like utility bills that I paid to keep the condo maintained while it's on the market count as deductible estate administration expenses? I've been paying electric and water to keep everything in good condition for showings but wasn't sure if those qualify.

YES! This happened to me too. For crypto especially, they often don't track the cost basis if you transferred it in from another wallet. You have to keep your own records of what you originally paid. I use a spreadsheet now to track everything.

If this happens, don't panic. You'll need to fill out Form 8949 and check box "B" for transactions where the cost basis wasn't reported to the IRS. Then you'll need to enter the correct cost basis yourself using your own records. If you don't have perfect records, there are crypto tax services that can help reconstruct your transaction history by scanning the blockchain. Just whatever you do, don't leave the cost basis blank or the IRS will assume it's $0 and tax you on the entire amount!

Smart move. I did the calculation too and my $1200 in donations only affects my refund by about $130. I think I'll follow your approach and just file now. The peace of mind of getting the bigger portion of my refund faster is worth more than waiting for the extra hundred bucks.

Thanks for sharing your hybrid approach! That's really smart thinking. I'm curious about those new validation rules the IRS agent mentioned - did she give any specifics about what might trigger a review? I have some electronics and furniture donations that I'm worried might get flagged if I overestimate the values. Also, when you say "detailed records," does that mean we need photos of the items before donation or just the receipts from the charity?

This is really helpful clarification about the employee vs contractor distinction! I'm actually dealing with a similar gray area situation right now. The family I work for sets my general schedule (like "Tuesdays and Thursdays 3-7pm") but I have flexibility in what activities I do with the kids and I bring my own supplies sometimes. It sounds like there's a lot of nuance here - do you know if there are any official IRS guidelines or tests that help determine which category you fall into? I'd rather get this right from the start than have to deal with reclassifying later. And did you end up having any issues when you filed, or did everything go smoothly with FreeTaxUSA? Also appreciate the reminder about quarterly payments - I keep seeing this mentioned and it's definitely something I need to research more since I plan to keep doing this work next year.

Yes, the IRS does have specific guidelines! They use what's called the "common law test" which looks at three main categories: behavioral control, financial control, and relationship type. For behavioral control, they look at whether the employer has the right to direct how the work is done. Financial control considers who provides tools/supplies, how you're paid, and whether you can make a profit/loss. The relationship aspect looks at written contracts, benefits, and whether the work is a key part of the business. Your situation with set days but flexible activities sounds like it could go either way - the key is often the degree of control. If they're just saying "watch our kids these days" vs "follow this specific daily schedule and use these exact methods," that makes a difference. I didn't have any issues with FreeTaxUSA - it handled everything smoothly and the interview process helped me feel confident about my classification. The software actually asks detailed questions about your work arrangement that map pretty well to the IRS factors. For quarterly payments, Form 1040-ES has a worksheet that helps you calculate what to pay. Since you're starting mid-year, you might want to make a catch-up payment for the quarters you've missed to avoid penalties.

This is exactly the kind of comprehensive breakdown I needed to see! I'm in a very similar situation - part-time childcare work paid through digital payments with no formal tax structure. The $2,800+ calculation really puts it in perspective for how much I need to plan for. One quick follow-up question - you mentioned exporting Venmo transaction history, but I'm wondering about the descriptions. Some of my payments just say generic things like "childcare" or even just have emoji. Will the IRS need more detailed descriptions, or is having the date, amount, and basic category sufficient for reporting purposes? Also, that tip about categorizing as "child care services" instead of "other services" is gold - I probably would have missed that distinction and potentially lost out on relevant deductions. Thank you for such practical, actionable advice!

Yes! I deduct my home office, multiple monitors, trading computer, specialized software, market data subscriptions, and even partial internet costs. The key is that your S-Corp must have a legitimate business purpose beyond personal investment. Keep documentation showing you're operating a trading business (business plan, trading log, regular hours) rather than just managing personal investments. My S-Corp pays me rent for the home office space, which is a deductible expense for the corporation. Make sure you have proper documentation though - I have a written rental agreement between myself and my S-Corp with fair market value rent.

This is really helpful context! I've been struggling with exactly this distinction between investment activity vs trading business activity. My S-Corp makes probably 200+ trades per year and I spend about 3-4 hours daily on market research and executing trades, so it sounds like I might qualify as a trading business rather than just investment activity. The Section 475 mark-to-market election is intriguing - especially since I had some significant losses last year that I couldn't fully utilize due to the capital loss limitations. If I understand correctly, this would convert everything to ordinary income/loss treatment? Would this apply retroactively to prior year losses or only going forward? Also, regarding the reasonable salary question - if my S-Corp's only activity is trading (no consulting or other services), how do I determine what's "reasonable" for managing trading operations? Is there guidance on this specific scenario?