Your TAXES

[Bunion 2020]

Mother fucking 1099s. 25% of my clients now send me their 1099s via different services. Everyone fucking one requires that I set up an account with a PW and furnish different information including my e-mail and phone number so the bastards can spam me.

[neufox47]

Anyone here used active STR losses to offset W2 income? Seems like it exponentially increases your chances of getting audited. Frankly it seems like a bullshit loophole, but the allure is intriguing.

For anyone curious the summary is you use cost segregation studies and bonus depreciation to rapidly depreciate a property, the depreciation drives a significant net loss of income and you use that against W2 wages.

I know there are some key factors like you need to document 500+ hours of time spent actively managing them and you cant use / stay in the rental more than 14 days a year or 10% of the amount of rental days.

Wondering if it is worth the trouble / commitment.

[Conundrum]

Financially probably worth trying. Not sure what to tell you about your soul.

[old goat]

Mother fucking 1099s. 25% of my clients now send me their 1099s via different services. Everyone fucking one requires that I set up an account with a PW and furnish different information including my e-mail and phone number so the bastards can spam me.

That's pretty rude.
It was the flip side of that with our accountant. Every year he used different software, sometimes two different programs only one of which he actually used to do the taxes and he didn't say which one, and the last year his program didn't work at all so I fired him and used TurboTax.

[skaredshtles]

Mother fucking 1099s. 25% of my clients now send me their 1099s via different services. Everyone fucking one requires that I set up an account with a PW and furnish different information including my e-mail and phone number so the bastards can spam me.

Have you considered a "honey-pot" email address and a Google Number?

[Cisco Kid]

Anyone here used active STR losses to offset W2 income? Seems like it exponentially increases your chances of getting audited. Frankly it seems like a bullshit loophole, but the allure is intriguing.

For anyone curious the summary is you use cost segregation studies and bonus depreciation to rapidly depreciate a property, the depreciation drives a significant net loss of income and you use that against W2 wages.

I know there are some key factors like you need to document 500+ hours of time spent actively managing them and you cant use / stay in the rental more than 14 days a year or 10% of the amount of rental days.

Wondering if it is worth the trouble / commitment.

If it's legit I'd do it to save $1000 but not for $100. And don't spend the savings so you have it to give back if an audit goes against you. One caution. I wouldn't have done it when I was self employed as I was playing other tax games to stick it to the man. Pigs get slaughtered.

[old goat]

One of the dumbest things I ever did was a 1031 exchange--we sold the house my wife had before we got married and put the proceeds into our house in Truckee, which we then had to treat as a full rental for 18 months I think. The fees for the exchange were more than we saved on the minimal profit my wife made on the house and we couldn't use the house until the 18 months were up.

That wasn't as dumb as my partner/boss in Sacramento investing in a cattle tax shelter. The IRS disallowed the shelter and he wound up owing them a bunch, plus the guy sold the same cattle to a lot of different people so he lost the investment too. I told him you shouldn't invest in cattle unless you can rope them and throw your brand on them.

[Bunion 2020]

And broil and eat them. With garlic, salt & pepper mix.

[old goat]

And broil and eat them. With garlic, salt & pepper mix.

I've heard you can boil them.

[RootSkier]

One of the dumbest things I ever did was a 1031 exchange

I have seen so many stupid decisions made in the context of 1031 exchanges just to defer a few thousand dollars in taxes. Baffling.

[TahoeJ]

On the flip side a 1031 was one of the smartest things I’ve ever done. Saved soooooo much money. Context matters, right?

Old goat - mine was also in Truckee but this was 2016 so it didn’t have to be a full time rental (laws have probably changed in recent years). STR for 2 years for a minimum of X nights, which was a pain, but all clear after that and no more Airbnb nonsense. Saved 6 figures.

[old goat]

On the flip side a 1031 was one of the smartest things I’ve ever done. Saved soooooo much money. Context matters, right?

Old goat - mine was also in Truckee but this was 2016 so it didn’t have to be a full time rental (laws have probably changed in recent years). STR for 2 years for a minimum of X nights, which was a pain, but all clear after that and no more Airbnb nonsense. Saved 6 figures.

Yeah, it makes sense to save 6 figures. The Tucson market when my wife sold was in the toilet, we were looking at more like 6 dollars. We were naive and this was before information about stuff like that was easily available on the internet. We got bad advixe from real estate people.

The principle is still widely applicable--a lot of people lose money trying to avoid taxes.

[slcdawg]

Anyone with a rental property switch from a tax preparer to TurboTax? I used TurboTax for years and switched to an accountant when we purchased a rental property and I didn't know much about depreciation. I'm thinking about switching back as our accountant sucks (timeliness and mistakes) and it takes just as much time to fill out their questionaire as to enter it in TurboTax myself.

My main concern is depreciation. Will TT let me manually update the depreciation schedule? Any pitfalls to be aware of?

[406]

Pretty sure it did, might have had to purchase the higher level. Also think it kept track when I sold rental for tax on depreciation.

[Iowagriz]

When my wife first started as a contracted employee (medical transcription), I used a tax accountant and prepared with TurboTax at the same time. When I compared, I had missed one deduction. I used TurboTax after that.

It was a very easy return, so keep that in mind with the comparison.

[slcdawg]

Not sure if anyone know the answer to this, in regard to depreciation of a Rental Property also used for personal use. Schedule E Line 2 asks for the "Fair Rental Days". Is this the number of Days RENTED or number of Days AVAILABLE to Rent?

Context: My Tax Preparer made a mistake with depreciation on our 2022 taxes. For prior years they used Days Available and for 2022 used Days Rented. This resulted in a big difference in the amount depreciated. They are planning to update 2022 using Days Available. However, in researching this I think it should be based on Days RENTED and that they need to correct the years prior to 2022. IRS Schedule E instructions seem to indicate days Rented:



This came up because I am moving on from the Tax Preparer and hoping to go to TurboTax. I posted in the TT forum to see if it could handle a correction to 2022 depreciation. As I provided more details, they indicated I had been claiming too much in deprecation and that my accountant should have used Days Rented. My accountant insists its Days Available. As much as I don't want to, I may need to use a different accountant this year. Anyone know who is correct?

[Master of Energy]

Number of days rented/number of days occupied for mixed use property, assuming you occupied it for more than 14 days or 10% of rental days. (rules are different if personal use was less)

that formula is applicable to all expenses. You aren't able to assume rental activity when its vacant unless its a full time rental.

[slcdawg]

Number of days rented/number of days occupied for mixed use property, assuming you occupied it for more than 14 days or 10% of rental days. (rules are different if personal use was less)

that formula is applicable to all expenses. You aren't able to assume rental activity when its vacant unless its a full time rental.

Does that apply to depreciation as well. Depreciation is where the error is.

[Master of Energy]

Does that apply to depreciation as well. Depreciation is where the error is.

the formula is applicable to all expenses.

Since depreciation is an expense, then yes.

[slcdawg]

the formula is applicable to all expenses.

Since depreciation is an expense, then yes.

Thank you. That is in agreement with what I am finding online. My accountant is insistent that its the other way around. Pretty frustrating.

[old goat]

We used to have an accountant who was very aggressive with depreciation, mileage, etc. We were having dinner with friends and the guy said they owed the IRS 100K. Turns out they had the same accountant. We switched.

[neufox47]

Thank you. That is in agreement with what I am finding online. My accountant is insistent that its the other way around. Pretty frustrating.

I agree with Master of Energy. You should not rely on this agreement and should seek the advice of a qualified tax professional.

You should get your accountants opinion in writing on this if possible…

[Core Shot]

Does that apply to depreciation as well. Depreciation is where the error is.

Depreciation is an expense that reduces basis. More cap gain later. Less ordinary income now.
Filing an amended return could be a flag. Depends on how much of a difference it makes. I would let it slide.
Switching to TT. Your return should have a depreciation schedule. Before you fire your accountant get a copy. Keep using that.

[slcdawg]

Depreciation is an expense that reduces basis. More cap gain later. Less ordinary income now.
Filing an amended return could be a flag. Depends on how much of a difference it makes. I would let it slide.

We are above the income threshold, cannot take a rental loss - and are not benefitting from the depreciation. How much does it really matter if its incorrect? It looks to be off by a factor of 6:1.

I'm reluctantly realizing I need to find a new acct to review the prior returns.

[406]

Working on 2023 taxes and trying to figure out why we are owing so much. No major changes for my job. Good amount of INT income as expected, but was already very much negative prior to entering that income. Wife started a new job end of 2022, that was less total income for 2023. Only thing I can figure is she had to use the new W-4 form when starting new job and that isn't withholding the correct amount. Anyone else seen issues with new w-4?