Quick question - I'm using TurboTax and wondering if it can handle Form 3115 for missed depreciation? Their support wasn't clear about it.

I went through this exact same situation with three rental properties I bought between 2020-2022. The stress was overwhelming until I realized how straightforward the fix actually is with Form 3115. A few practical tips that helped me: 1. Calculate your basis correctly - for residential rentals, you can only depreciate the building, not the land. Your purchase contract or property tax assessment should show the land vs building allocation. 2. Remember that depreciation starts when the property is "placed in service" for rental use, not necessarily when you bought it. If you spent time renovating before it was rentable, that affects your start date. 3. The Section 481(a) adjustment on Form 3115 will be substantial (mine was over $35k total), but don't worry - this is exactly what the form is designed for. The IRS expects large catch-up amounts. 4. File Form 3115 with your current year return, not as an amendment to prior years. This is key - it saves you from the hassle and potential issues of multiple amended returns. One last thing - make sure you continue depreciating correctly going forward! The mistake is fixable, but you don't want to repeat it. Good luck!

Just want to add something that hasn't been mentioned yet - make sure you consider workers' comp insurance regardless of which tax exemptions apply. Many states require it even for household employees, and the parent exemption for FUTA/FICA doesn't necessarily exempt you from state workers' comp requirements. We learned this the hard way when we hired my mom as a nanny. We correctly handled the federal tax exemptions but completely missed that our state still required workers' comp coverage. Had to pay some penalties to get that straightened out.

This is a really helpful thread! I'm dealing with a similar situation but with my husband's father potentially helping with our kids. Based on what everyone's shared, it sounds like the biological relationship is key for the parent exemption. One question I haven't seen addressed - does the exemption still apply if the parent is receiving Social Security benefits? I've heard conflicting information about whether that affects the FICA exemption for household employees. Want to make sure we're not missing anything before we set up the EIN and payroll. Also, @Debra Bai, your point about workers' comp is spot on. We almost missed that requirement too when researching this. Definitely worth checking your state's specific requirements since they can vary a lot from the federal tax rules.

I made a HUGE mistake on my 1031 calculation last year by confusing realized gain and recognized gain. They sound similar but are completely different concepts! REALIZED gain = the total economic gain on the exchange (what you WOULD pay tax on without Section 1031) RECOGNIZED gain = the portion you actually HAVE to pay tax on (usually the boot received) In your case: - Realized gain = $12,500 (the total economic benefit) - Recognized gain = $12,500 (because that's the lesser of boot received or realized gain) The IRS caught my mistake during an audit because my Form 8824 didn't match my reported gain. Cost me penalties plus interest. Triple check this stuff!

Great thread! I just went through a similar 1031 exchange and wanted to add one more verification step that helped me avoid errors. After calculating your basis using the formula (which you got right at $215,000), do a sanity check by working backwards: Your new property FMV: $215,000 Your calculated basis: $215,000 Difference: $0 This means you have no built-in gain or loss in the new property, which makes sense given your specific numbers. If you had ended up with a basis significantly different from the FMV, that would be a red flag to double-check your calculations. Also, keep detailed records of all the exchange documents - the qualified intermediary paperwork, closing statements, and Form 8824. The IRS loves to audit 1031 exchanges, and having everything organized from day one makes any future questions much easier to handle. One last tip: if your exchange involved any personal property mixed with real estate, make sure each component is properly segregated on your return. I've seen people get tripped up when they have equipment or fixtures that don't qualify for like-kind treatment.

Has anyone else been totally confused by the K-1 forms they get from partnerships? Mine never matches what our accountant says should be on it and I honestly have no idea if our partnership is filing correctly.

Just wanted to add another perspective here - I went through this exact same situation with my consulting LLC that had losses for the first few years. The key thing that helped me was keeping detailed records of all the steps I took to try to make the business profitable. I documented every marketing attempt, networking event, business plan revision, and operational change I made. When I eventually did get a notice from the IRS questioning the business vs. hobby status, having all that documentation made the process much smoother. They could clearly see I was operating with genuine profit intent despite the losses. One thing that really helped was keeping a business diary/log showing time spent on business activities each week. The IRS wants to see that you're treating it seriously and putting in real effort, not just using it as a tax write-off. Even though your losses are small, having that paper trail will give you peace of mind if questions ever come up. And definitely report the K-1 losses - like others said, they're already expecting to see that information match up with what your partnership reported.

I went through this exact same situation last year as a freelance photographer! The biggest game-changer for me was getting an "Income Verification Letter" from my CPA. Even though it cost me $150, it was totally worth it because it provided third-party professional validation of my 1099 income and business stability. The letter included my annual income totals, average monthly earnings, and a statement about the consistency of my freelance business over the past two years. When I presented this alongside my 1099s and bank statements, landlords immediately took my application more seriously. It's like having a professional vouch for your income stability. If you don't have a CPA, even a local tax preparer can often provide this kind of documentation. The key is having someone with credentials verify your income rather than just self-reporting it. Made all the difference in getting my applications approved quickly instead of constantly having to explain my employment situation.

As a fellow freelancer who just went through this process, I want to emphasize something that really helped me: don't just submit your documents and hope for the best - be proactive in scheduling a brief meeting or phone call with the leasing agent to walk them through your income documentation. I found that many property managers have never dealt with 1099 income before, so they default to "no" because it doesn't fit their standard checklist. But when I took 10 minutes to explain my business model, show them my income trends over the past year, and demonstrate how my freelance income actually provides more stability than some traditional jobs (since I have multiple clients rather than depending on one employer), they became much more comfortable with my application. I also created a simple one-page summary that showed: "Total 2023 Income from 1099s: $X", "Average Monthly Income: $Y", "Number of Regular Clients: Z", and "Years in Business: #". This made it super easy for them to see that I meet their income requirements without having to dig through multiple forms. The key is education and presentation - once they understand that 1099 income can be just as reliable as W-2 income, most reasonable landlords are happy to work with you. Don't get discouraged if the first place says no - keep looking for landlords who are willing to evaluate your actual financial situation rather than just checking boxes!