I'm really sorry for your losses - losing puppies is heartbreaking, and I can only imagine how difficult it must be to deal with the financial implications on top of the emotional toll. As a small business owner (not in breeding, but I've dealt with similar inventory loss situations), I wanted to confirm what others have said here. Those puppy losses don't require any special reporting or deductions on your Schedule C. Your business expenses remained the same, but your income was lower than projected - that's exactly how business losses naturally get reflected in your tax filing. What impressed me reading your post is how professionally you're approaching this. You've been tracking expenses meticulously, you understand the investment phase vs. income-generating phase of your business, and you're asking the right questions. This kind of documentation and business-like approach is exactly what protects you if the IRS ever questions whether you're running a legitimate business versus an expensive hobby. The advice about keeping detailed records of the losses (vet records, documentation of what the puppies would have sold for, etc.) is spot-on. You don't need it for a specific tax deduction, but it's great supporting documentation for your overall business records. Keep up the professional approach - it sounds like you're building something sustainable despite this setback. Wishing you better luck with future litters!

I'm so sorry for your puppy losses - that's always devastating, both emotionally and financially. As a tax professional who works with several breeding operations, I can confirm what others have said here about how to handle these losses. The puppy losses you experienced are considered ordinary business losses, not something that requires special reporting. Your Schedule C will naturally reflect this situation - you incurred all the breeding expenses (stud fees, whelping supplies, initial puppy care, etc.) but had fewer puppies to sell than anticipated. This automatically results in a lower profit margin or potentially an overall business loss for the year. What's most important is maintaining excellent documentation. Keep detailed records of all puppies born, veterinary records related to the losses, projected versus actual sales, and all associated expenses. While you don't report these losses as a separate line item, having this documentation is crucial if you're ever audited. Given that you mentioned this was your first year generating significant income after 3 years of investment, make sure you're prepared to demonstrate business intent versus hobby activity. The IRS scrutinizes breeding operations closely, especially those with multiple years of losses. Keep a written business plan, maintain separate business accounts, and document any operational changes you make to improve profitability going forward. Your meticulous expense tracking shows you're already approaching this professionally - that's exactly what you need to continue doing.

Honestly this tax preparer pricing makes me so mad! They're just putting numbers into glorified TurboTax! I used to pay $350+ but switched to doing them myself. Takes an afternoon but saves hundreds.

I'm a tax preparer and wanted to give some insight on the pricing you're seeing. Those quotes ($375-525) are actually very reasonable for your situation. Here's what goes into that cost beyond just "entering numbers": 1. **Business income analysis** - We review all your business expenses, categorize them properly, calculate home office deductions if applicable, and ensure you're taking all legitimate deductions while staying audit-compliant. 2. **Investment transaction complexity** - Long-term stock holdings often involve basis adjustments, dividend reinvestments, or corporate actions that affect your tax liability. Getting this wrong can be costly. 3. **First-time homeowner benefits** - There are several deductions and credits you might qualify for that software doesn't always catch. 4. **Professional liability** - Most preparers carry E&O insurance and will represent you if there are issues with your return. That said, if you're detail-oriented and have time to research, tax software has gotten quite good. Just make sure you understand the implications of each decision, especially around business deductions. A mistake there can trigger an audit or cost you thousands in missed savings.

You're absolutely right to be concerned, but you can still claim this deduction with proper documentation. The IRS doesn't automatically disallow legitimate business expenses just because you failed to file a 1099 - these are two separate issues. Here's what you need to do: 1. **Document everything thoroughly**: Keep the canceled check, contract, photos of completed work, any text messages or emails about the project, and write a detailed memo explaining the circumstances (including his refusal to provide W9 info). 2. **Report the expense correctly**: Include it on Schedule C line 11 (Contract labor) when you file your return. The expense is deductible regardless of 1099 filing status. 3. **Be prepared for potential penalties**: You may face a $280 penalty for each missing 1099, but this is often less than the tax savings from claiming the legitimate deduction. 4. **Consider backup withholding**: For future reference, if a contractor refuses to provide their TIN, you're supposed to withhold 24% of payments and send it to the IRS. Obviously too late for this situation, but good to know going forward. The key is that you genuinely attempted to get the required information and have solid proof this was a legitimate business expense. Keep excellent records and consider consulting a tax professional if you're audited, but don't let fear of the 1099 issue cost you a valid deduction.

I've been following this thread and wanted to add a perspective from someone who went through an IRS audit over a similar situation. About two years ago, I got audited and one of the items they questioned was a $6,200 payment to a contractor where I couldn't produce a 1099. The auditor was actually pretty reasonable about it. What saved me was having excellent documentation - I had the contract, photos of the work (before/during/after), the canceled check, and most importantly, a written record of my attempts to get the contractor's information. I even had screenshots of text messages where he refused to provide his SSN. The auditor told me that the IRS sees this situation more often than you'd think, especially in construction and home services. They're mainly looking for two things: 1) Was this a legitimate business expense? and 2) Did you make good faith efforts to comply with reporting requirements? I ended up paying the $280 penalty for the missing 1099, but I got to keep the full deduction. The tax savings from the deduction were about $1,500, so it was still a net positive. The auditor even gave me some tips for better record-keeping going forward. Bottom line: Don't let fear of the penalty stop you from claiming a legitimate business expense. Just make sure your documentation is rock solid.

Just FYI, I claimed my kid living in Japan with my ex and got audited last year. Had to prove I provided more than 50% of his total support. Make sure you have: - Receipts for all money transfers - School tuition receipts if you pay them - A signed statement from the other parent about what they contribute (if possible) - Bills you pay directly (medical, etc) Without good records it's really hard to defend your claim when the IRS comes asking!

This is such a helpful thread! I'm in a similar situation with my son who lives with his grandmother in the Philippines. From what I'm reading here, it sounds like the key is proving I provide more than half his total support as a "qualifying relative" rather than trying to meet the residency test for "qualifying child." I've been sending money monthly for his school, food, and clothing, but I never thought to document everything properly. After reading about Sofia's audit experience, I'm definitely going to start keeping better records of all my transfers and any direct payments I make. Does anyone know if there's a specific dollar threshold for the support test, or is it purely based on the percentage of total expenses? Also, has anyone dealt with getting documentation from family members overseas about what they contribute? My son's grandmother helps with some expenses but I'm not sure how to account for that in the calculation.

Has anyone looked into coworking spaces as an alternative? I'm in the same boat (W-2 remote worker) and my company gives us a $250/month stipend that I use for a local coworking space 2-3 days a week. The membership is 100% tax free since my company pays it directly, and I get out of the house which helps with my sanity lol.

I've been in a similar situation and wanted to share what worked for me. While it's true that W-2 employees can't claim the home office deduction right now, I found a few workarounds that helped: 1. **Equipment purchases**: If you buy office equipment that your employer doesn't provide (monitor, ergonomic chair, etc.), keep receipts. Some employers will reimburse these after the fact if you make a good case. 2. **State tax differences**: Depending on your state, there might still be some remote work deductions available at the state level even if federal doesn't allow them. Worth checking your state's tax code. 3. **Document everything anyway**: Start keeping detailed records of your home office expenses now. If the tax laws change after 2025 (when current restrictions expire), you'll be ready. Plus if you ever do freelance work on the side, those records become valuable. The employer reimbursement route that others mentioned is definitely the best current option. Frame it as a business expense for them rather than asking for a "favor" - most companies save money on office space when employees work remote, so a home office stipend is still cheaper for them than maintaining physical office space.