Dont overthink this. If the water main was working before, broke, and you fixed it, its a repair. Period. Ive owned rentals for 20 years and have expensed way bigger repairs than 12k. The IRS isnt looking at every property owners water line repairs.

Based on the details you've provided, this should qualify as a repair expense that you can deduct fully this year. The key factors working in your favor are: 1) You're restoring the property to its previous functional state (working water supply), 2) The water line already existed - you didn't add new infrastructure, and 3) The expensive drilling method was necessitated by the location, not because you were upgrading the system. The IRS regulations focus on the purpose and result of the work, not the cost or complexity. Since you're dealing with a failed component that needed replacement to restore normal operations, this falls under repair rather than improvement. Just make sure your documentation clearly describes it as replacing a failed water line to restore water service to the property. That said, given the significant dollar amount, you might want to get a second opinion from a tax professional who can review your specific situation and local precedents.

Kinda late to this thread but something nobody has mentioned - if your spouse isn't actively involved in running the business and just lets you use their referral links, the IRS might see this as assignment of income which is a no-no. You can't just move income between people even if you're married. Make sure your spouse is actually doing something in the business if you're going to claim their 1099-MISC income as business income on either your Schedule C or theirs.

Great question! I'm dealing with something similar in my consulting business. Based on what I've learned from my accountant and research, you can definitely include those personal 1099-MISCs on your Schedule C if they're legitimately part of your business operations - which they clearly are since credit card referrals are a core part of your rewards business. The key is documentation. Keep records showing how all these income streams are interconnected parts of the same business activity. For your wife's 1099-MISCs, I'd be more cautious. The safest approach is probably having her file her own Schedule C for her portion, especially if she's actively participating in generating those referrals (not just passively letting you use her links). One thing to consider: even though separate Schedule Cs means you'll each pay SE tax on your respective portions, you'll both be building up Social Security credits and can each potentially contribute to your own SEP-IRAs based on your individual business income. Sometimes that actually works out better tax-wise than trying to consolidate everything under one person's return. Document everything well - the IRS likes to see clear business purpose and actual involvement when income appears under different names but gets reported as business income.

Has anyone used the IRS Tax Withholding Estimator tool? It's supposed to help figure this stuff out but I found it super confusing.

For what it's worth, I was in a very similar situation - single, no dependents, making about the same amount as you. I was getting almost no federal withholding and ended up owing taxes last year, which was a shock. What worked for me was using the IRS withholding estimator that someone mentioned, but I also cross-referenced it with one of those AI tools (taxr.ai) to make sure I understood what I was doing. Both pointed me toward putting about $30-40 in section 4c for additional withholding. The key thing I learned is that if you're currently having almost nothing withheld, there's definitely something wrong with your current W4. Even without extra withholding in 4c, you should see some federal taxes coming out of each paycheck. I'd suggest filling out a completely new W4 form rather than trying to modify your existing one - sometimes it's easier to start fresh. Also, don't forget that you can always adjust it later if the withholding amount doesn't feel right after a few paychecks. The W4 isn't set in stone!

Has anyone looked into whether EV charging stations qualify for accelerated depreciation? With all the tax incentives through the Inflation Reduction Act, I was wondering if adding those to a car wash or other business property might give additional tax benefits.

Thanks for all the detailed insights everyone! As someone who's been researching similar investments, I'm curious about the practical side of documenting material participation. @Landon Morgan mentioned keeping detailed logs - what specific activities count toward the hours requirement? For example, if I'm researching potential ATM locations online or reviewing financial statements at home, does that count? Or does it need to be more hands-on involvement like physically visiting sites or meeting with vendors? Also, has anyone dealt with the IRS questioning their material participation claims? I want to make sure I'm building a defensible record from day one rather than scrambling to document everything after the fact. The car wash example is really helpful - 10-12 hours per week seems very manageable while still clearly meeting the 500+ hour threshold. I'm leaning toward that type of business over ATM routes based on the discussion here about purchase price allocation challenges.

For the original question about shredding vs recycling - absolutely shred anything with personal information! Tax returns contain your SSN, full address, income details, and dependent information. Even if you tear them up before recycling, determined identity thieves can piece documents back together. Regarding retention periods, the standard 3-year rule applies to most situations, but I'd recommend keeping them for 6 years minimum. Here's why: if you underreport income by more than 25%, the IRS has 6 years to audit. Also, some state tax agencies have longer audit periods than the federal IRS. One thing I haven't seen mentioned yet - if you have any carryforward losses (like capital losses that exceeded the annual limit), keep those returns until you've used up all the carryforwards, which could be many years. Same goes for any NOL (Net Operating Loss) carryforwards if you have business income. For your specific situation with returns from 2014-2018, you're probably safe to dispose of 2014-2016, but I'd personally keep 2017-2018 for another year or two just to be conservative. And definitely invest in a good crosscut shredder - it's worth the $50 to protect your identity!

Just to add another perspective on the digital storage question that several people have asked about - I've been using a hybrid approach that's worked really well. I scan everything to PDF, but then store the files on an encrypted external hard drive that I keep in a fireproof safe at home, plus upload encrypted copies to two different cloud services (Google Drive and Dropbox) as backup. For encryption, I use 7-Zip to create password-protected archives of each year's tax documents before uploading anywhere. The password is something only I know, so even if someone hacked my cloud accounts, they'd just get encrypted files they can't open. One thing I learned from my CPA: definitely keep records related to any Roth IRA conversions indefinitely. Those basis records are crucial for avoiding double taxation when you eventually withdraw from your Roth in retirement. Same goes for any backdoor Roth conversions if you do those. Also, if anyone is dealing with tax documents from a deceased spouse or parent, keep those records much longer - the IRS can audit estates for up to 3 years after the estate tax return is filed, and some estate-related issues can come up years later during probate or property transfers.