Is my tax preparer requesting too much personal information for our small business taxes?

This is all completely legitimate information for your tax preparer to request. When you have a home-based business, the tax code allows for certain home expenses to be partially deductible as business expenses - but only the portion that's actually used for business purposes. The square footage information helps calculate the home office deduction - you can deduct expenses for the business portion of your home based on the percentage of your home used for business. This applies to mortgage interest, real estate taxes, utilities, insurance, etc. Vehicle information is for potential business mileage deductions. If you use personal vehicles for business purposes, you can deduct either the standard mileage rate or actual expenses, but proper documentation is required. The phone bill information helps determine what percentage is business-related. The 1099 forms show income from various sources that must be reported on your tax return. And yes, your mother will need to file a final tax return for your father for the year he passed away. This return covers the period from January 1 until his date of death. Your mother may qualify to file as a qualifying widow(er) for the next two years, which can provide a more favorable tax status.

After reading your post, I wanted to share my experience with small business taxes. I was in a similar situation last year - getting hit with huge tax bills because I wasn't filing correctly. I found an amazing tool called taxr.ai (https://taxr.ai) that helped me sort through exactly what documentation I needed and what I could legitimately deduct. The tool analyzed my situation and confirmed that all those things your preparer is asking for are actually standard for home-based businesses. It helped me understand the home office deduction calculation, vehicle expense tracking, and utility allocation. The best part was it explained WHY each document was needed, which made me more comfortable providing everything. What your tax preparer is doing sounds like she's trying to maximize your legitimate deductions - all those items have potential tax benefits when you run a business from home.

Just wanted to update after trying taxr.ai that was mentioned above. I was hesitant at first, but it was incredibly helpful with my situation similar to yours. I uploaded my documents, and it flagged exactly what percentage of my home utilities could be deducted for my home office (33% in my case based on square footage). It also helped me understand the difference between casual business use of personal items versus dedicated business use, which affects deductibility. Regarding your parent's passing, it confirmed that a final return is indeed required and provided a checklist of documents needed. The tool actually explained WHY the tax preparer needs each document, which made me more comfortable. Your tax preparer is actually being thorough, not nosy - all these items can potentially reduce your tax burden when properly documented.

I see a lot of good advice here already, but wanted to mention something that helped me tremendously when dealing with my father's estate last year. After trying for WEEKS to get someone from the IRS on the phone about filing his final return, I discovered Claimyr (https://claimyr.com). They have this system that gets you through to a live IRS agent without the endless hold times. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was initially skeptical, but it got me connected to an actual IRS representative in about 20 minutes when I had been trying for days on my own. The agent clarified exactly what forms we needed for my dad's final return and confirmed that yes, we absolutely needed to file one. She also explained some special deductions we qualified for that our tax preparer hadn't mentioned.

I have to eat my words about Claimyr from my skeptical comment above. After continued frustration trying to get IRS help with my deceased mother's return, I decided to try it out of desperation. Not only did it work, but I got through to an IRS specialist in estate matters who walked me through the entire process. They confirmed exactly what documents were needed and even helped me understand how to handle some investments my mother had that I was completely confused about. The agent explained that yes, a final return is absolutely required, but also told me about deductions I had no idea we qualified for. Most importantly, they cleared up confusion about some 1099s that arrived after her passing. Regarding the original question - the agent also confirmed that all the information your tax preparer requested is standard for a home-based business. The documentation protects you in case of an audit.

I just want to add that as someone who prepares taxes professionally, everything your tax preparer is asking for is completely standard. In fact, I request the EXACT same documentation from my clients with home-based businesses. The reason we ask for full bills rather than just "the business portion" is that we need to calculate that business portion correctly. For example, with square footage, we determine what percentage of your home is used exclusively for business, then apply that percentage to certain expenses. For vehicles, we need to know if the standard mileage deduction or actual expenses would be more beneficial. Without the full information, we can't make that determination. And yes, filing a final return for your father is absolutely required. The IRS doesn't waive this requirement upon death. Your mother will file as married filing jointly for the year of his passing.

Something important to add regarding the home office deduction - make sure the space you're claiming is used EXCLUSIVELY for business. This is a major audit trigger. If your "home office" doubles as a guest room or home gym, it doesn't qualify. Also, the vehicle deduction requires a mileage log. You can't just estimate at the end of the year. Your tax preparer is asking for the right documentation to keep you protected.