Make sure to check if you get an escrow refund when you pay off your mortgage! When I paid mine off, they had collected extra money in my escrow account for future property taxes, and they sent me a refund check about 3 weeks later. This refund is NOT taxable income, but it can complicate your property tax deduction. If part of that refund was for property taxes they collected but hadn't paid yet, you can only deduct property taxes actually paid during the year (either by you or your mortgage company). I made the mistake of deducting the full year's property taxes when part of it was actually refunded to me in that escrow refund. My accountant caught it, thankfully, but it's something to watch out for.

One thing to keep in mind is timing - if you're planning to pay off your mortgage this year, consider the timing strategically for tax purposes. If you pay off in early 2025 before your July property tax payment, you'll be responsible for both property tax payments directly, which means more paperwork but also ensures you have clear documentation for everything you paid. Also, don't forget to save ALL your closing documents when you pay off the mortgage. Your final settlement statement will show any property tax prorations, escrow account balances, and other details that might affect your tax filing. I learned this the hard way when I needed to reference mine months later and had to dig through a pile of paperwork! Your mortgage company should provide you with a final escrow statement showing exactly what property taxes they paid on your behalf during 2025, which will match what appears on your 1098. This makes it easier to reconcile everything when tax time comes.

This thread has been incredibly helpful! I'm in a similar situation with a 2020 Subaru Outback that I use about 60% for my consulting business. My accountant has been pushing the LLC transfer route, but after reading everyone's real experiences here, I'm having serious second thoughts. The insurance premium increases that multiple people mentioned are particularly concerning - an extra $85-100+ per month would definitely eat into any potential tax benefits. And it sounds like the loan complications can be a real headache depending on your lender. What I'm taking away from this discussion is that meticulous mileage tracking and proper documentation of business use is really the key, regardless of ownership structure. The IRS seems to focus on legitimate business use rather than who holds the title. I'm planning to have a follow-up conversation with my accountant armed with the insights from this thread. Sometimes CPAs can get tunnel vision on tax strategies without fully considering the practical implementation costs and complications. Has anyone here had success pushing back on their CPA's advice when the real-world math didn't add up? I want to approach this diplomatically but also make sure I'm making the right decision for my specific situation.

I've been following this discussion closely as someone who went through this exact decision process last year. After reading all the real-world experiences shared here, I'm really glad I chose to keep my vehicle in personal ownership rather than transfer to my LLC. What really sealed the decision for me was doing a comprehensive cost-benefit analysis beyond just the tax implications. When I factored in the insurance premium increase (quoted at 42% higher for commercial coverage), potential refinancing costs due to my lender's policies, and the state transfer tax in my jurisdiction, the financial benefits completely evaporated. The turning point was realizing that the IRS documentation requirements are identical regardless of ownership structure. Whether your LLC owns the car or you personally own it while using it for business, you still need to maintain detailed logs of business vs. personal use. The percentage deduction calculation remains exactly the same. I've been using a digital mileage tracking app for 14 months now and have had zero issues with the IRS accepting my business use deductions. My tax filings have been smooth, and I've avoided all the complications that come with business vehicle ownership. For anyone still on the fence about this decision, I'd strongly recommend getting actual quotes for commercial insurance and checking with your lender about their transfer policies before making the jump. Sometimes the simplest approach really is the most cost-effective one.

Don't forget about your state tax ID too! Depending on your state, you might need a separate sales tax permit for selling baked goods, even if you're using the same federal EIN. In my state, food items have different tax rules than retail goods.

Great question! I went through something similar when I switched from freelance graphic design to running a small catering business. You can definitely reuse your existing EIN since it's tied to your business entity, not the specific type of business activity. The key things you'll want to do: 1) File Form 8822-B to update the IRS about your business activity change, 2) Make sure you understand the cottage food laws in your state (they vary a lot!), and 3) Look into whether you need any local business licenses or health department permits for food preparation. Since you never actually operated the original business or filed any returns, you shouldn't have any compliance issues. Just treat this as reactivating your EIN for a new venture. The IRS cares more about proper reporting going forward than what you originally intended to do with the number.

I work as a tax preparer and see these situations fairly often. Based on what you've described, you should be able to claim your partner as a dependent. The key tests you need to meet are: 1. **Support Test**: You provided more than half of his total support for the year (sounds like you clearly meet this) 2. **Gross Income Test**: His income must be less than $4,700 for 2024 (you mentioned zero income, so ✓) 3. **Member of Household Test**: This is where the incarceration question comes in For the member of household test, the IRS considers temporary absences - including incarceration, hospitalization, education, military service, etc. - as time the person is still living with you, provided it's reasonable to assume they'll return to your household. Since your partner lived with you for 7 months and returned after his release, the 5-month incarceration would be considered a temporary absence. Make sure to keep documentation of the financial support you provided (rent, utilities, groceries, etc.) and proof of your shared residence before and after the incarceration period. You don't need to submit anything with your return, but having records ready is always smart in case of questions later. Also double-check that no one else (like his parents) will be claiming him as a dependent to avoid any conflicts with the IRS.

Just wanted to add my experience from a similar situation last year. My boyfriend was incarcerated for 4 months in 2023, and I was nervous about claiming him as a dependent even though I clearly met all the support requirements. I ended up consulting with a CPA who confirmed that the temporary absence rule definitely applies to incarceration periods. One thing that really helped was creating a simple spreadsheet tracking all the support I provided throughout the year - rent, utilities, food, medical expenses, etc. Even though he wasn't physically present for those 4 months, I was still covering his portion of rent and keeping up with expenses that would resume when he returned. The CPA said this kind of documentation clearly demonstrates the ongoing financial relationship and intent for him to return to the household. Also, don't forget to consider any expenses you might have incurred related to his incarceration - commissary money, phone calls, transportation to visit - these all count as support you provided during that period. I claimed him successfully and had no issues with the IRS. Sometimes the tax code actually works in favor of people in difficult situations!

OK but a serious question - does this classification actually matter that much tax-wise? I've been both a W2 employee and a 1099 contractor and yeah I pay more in taxes as 1099 but I can also deduct a ton of stuff like my home office, equipment, etc. Sometimes I actually come out ahead as a 1099.

This is a classic case of employee misclassification, and you're absolutely right to be concerned. The IRS uses a three-factor test to determine worker classification: behavioral control, financial control, and relationship type. Based on your description, you clearly fall into the employee category. Key red flags in your situation: - They control your schedule and hours (behavioral control) - You filled out a W-4 instead of a W-9 (indicates employee relationship) - They're now withholding taxes while still calling you "1099" (major inconsistency) - You're not operating as an independent business The "fully onboarded" excuse is complete nonsense - there's no legal provision for temporary misclassification based on administrative convenience. Your employment status should be determined by the actual work relationship from day one. I'd recommend taking immediate action: 1. File Form SS-8 with the IRS to request an official determination of your worker status 2. Keep detailed records of all communications and pay stubs 3. Contact your state labor department about the overtime pay you're owed 4. Consider filing Form 8919 to recover excess self-employment taxes you may have paid Don't let them string you along with vague promises about future "onboarding." You deserve proper classification and all the protections that come with employee status right now.