One important consideration that hasn't been fully addressed is the record-keeping burden. Whether you form an LLC or stay as a sole proprietor, the IRS requires meticulous documentation for vehicle expenses, especially when claiming 100% business use. You'll need to maintain a detailed mileage log showing business vs. personal use, keep all receipts for maintenance and repairs, and document that the vehicle is truly used exclusively for rideshare. The IRS is particularly scrutinous of 100% business use claims for vehicles, so you'd need to have another car for personal use to support this position. Also, while everyone's discussing tax implications, don't forget about your state's requirements. Many states have annual LLC fees (California charges $800/year minimum regardless of income), publication requirements, or other ongoing compliance costs that could easily outweigh any tax benefits. Given your income level of $3,800-4,200 monthly, you're likely already eligible for the QBI deduction as a sole proprietor, can deduct vehicle expenses, and avoid the administrative overhead of an LLC. The liability protection aspect is minimal since you'd still need proper rideshare insurance coverage regardless of your business structure.

I've been researching this exact question for months and want to share what I've learned from both my CPA and actual experience. The short answer is that for most rideshare drivers, an LLC doesn't provide meaningful tax advantages over operating as a sole proprietor. Here's the reality: as a sole proprietor, you're already eligible for the same vehicle deductions (standard mileage or actual expenses), the QBI deduction (up to 20% of net business income), and all other legitimate business expense deductions. A single-member LLC is treated as a "disregarded entity" for tax purposes, meaning your income still flows to Schedule C on your personal return. The key factors that actually matter for your tax situation are: 1) Maintaining detailed records of business vs personal vehicle use, 2) Choosing between standard mileage (65.5¢/mile for 2023) vs actual expenses method, 3) Taking advantage of the QBI deduction, and 4) Making quarterly estimated payments to avoid penalties. At your income level ($45k-50k annually), you're likely saving more money through proper tax planning as a sole proprietor than you would by adding the complexity and costs of an LLC. Focus on maximizing your legitimate deductions and consider consulting with a tax professional who understands rideshare taxation rather than forming an entity that won't fundamentally change your tax obligations.

I opened my Tax Court packet after missing the deadline and it was a "Notice of No Jurisdiction" basically saying they couldn't hear my case. So i ended up calling a tax advocate who told me to just pay what i owed then file an amended return asking for a refund. Took like 9 months but i got about half back cuz they agreed with some of my deductions. Persistence pays off!

I'm really sorry to hear about your situation - missing that Tax Court deadline is incredibly stressful, but you're not completely out of options. First, definitely open that packet from the Tax Court. It's likely a "Notice of No Jurisdiction" as others mentioned, but you need to know for sure what it says. Since you mentioned this involved unreported Robinhood transactions, there's a good chance the IRS made some calculation errors or didn't properly account for your cost basis. Investment income reporting can be really complex, especially with apps like Robinhood where the 1099s don't always tell the full story. Here's what I'd recommend: 1) If you can afford it, pay the assessment and then file for a refund with Form 1040X - this gives you a fresh shot at contesting it, 2) Look into requesting an audit reconsideration if you have documentation the IRS didn't previously consider, 3) Consider the Collection Due Process hearing option which can provide another avenue to dispute the assessment. Also, make sure you have all your Robinhood statements and any documentation showing your actual cost basis for those transactions. The IRS often assumes zero cost basis when they don't have complete information, which can significantly inflate what you actually owe.

Has anyone successfully e-filed with a Form 3115 attachment using TurboTax? I'm getting conflicting info about whether it's possible or if you have to paper file the entire return when using Form 3115.

I went through a similar Form 3115 situation last year for incorrect depreciation on my rental property, and I can confirm you're handling it correctly! The key things that tripped me up initially were the timing and making sure all the pieces fit together properly. Your approach of adding the overclaimed depreciation as miscellaneous expenses is spot on - that's your Section 481(a) adjustment. And yes, overriding TurboTax's depreciation calculation is necessary since you need to use the correct basis going forward. One thing to double-check: make sure your Form 3115 statement clearly shows the calculation of how you arrived at the adjustment amount. The IRS wants to see the math - like original purchase price vs. what was used for depreciation, years affected, and the total overclaimed amount. The $65 refund reduction sounds reasonable for a depreciation correction. That's essentially the tax impact of "catching up" the excess depreciation you claimed in previous years. For the filing process, you're correct about mailing Form 8453 and the 3115 copy with your e-filed return, plus sending the original 3115 to Covington. Just make sure to send the Covington copy no later than when you e-file - I sent mine certified mail the same day I e-filed for peace of mind. The good news is once this is filed, your depreciation will be on the right track going forward. It's always better to correct these things proactively rather than having the IRS catch it later!

I just want to echo what everyone else is saying - your parents' concerns are totally normal, but they're worrying unnecessarily! I'm a tax professional and see this confusion all the time. The simplest way I explain it to clients is this: Think of gift tax like a credit card with a $13+ million limit. The annual exclusion ($18k per person in 2024) is like paying with cash - no tracking needed. Anything above that is like putting it on the "credit card" (lifetime exemption) - you need to report it with Form 709, but you don't actually "pay the bill" (owe gift tax) until you max out that enormous credit limit. For your $200k situation: Your parents could give $72k total with zero paperwork ($18k from each parent to both you and your spouse). The remaining $128k would just need to be reported on Form 709 - no tax owed. One thing that might help convince them: have them look up their state's gift tax rules too. Most states (including the big ones like California, Texas, Florida) don't even have their own gift taxes, so this is purely a federal issue with those generous federal exemptions. The bottom line: unless your parents are secretly millionaires planning to give away over $27 million as a couple during their lifetimes, they'll never pay gift tax on helping with your house!

I'm dealing with almost the exact same situation right now! My parents want to help with a $185k down payment but they've been reading scary articles online about gift taxes and are convinced they'll owe thousands in penalties. What's been most helpful in our discussions is pointing out that the IRS designed these rules specifically to handle wealthy families transferring millions - not middle-class parents helping their kids buy homes. The $13.61 million lifetime exemption is intentionally huge because it's meant to catch people with serious wealth, not parents contributing to down payments. I've been trying to find simple ways to explain this to them, and honestly the analogies people have shared here (like the credit card example) are so much clearer than anything I found in official IRS publications. Sometimes you need to translate the tax code into everyday language! One thing that helped move the needle with my parents was showing them that even if they give us the full amount this year AND decide to help my sister with her house next year, they'd still only use up maybe 3% of their lifetime exemption. When they realized how much cushion they actually have, it made the whole thing feel much less risky. Has anyone found success with specific IRS resources that are particularly parent-friendly? I'm still working on convincing mine, and having some official documentation that's written in plain English would be really helpful.

Anyone know how the amortization works for the amounts above $5,000? My startup costs were about $8,200 and organizational were about $2,800. I understand I can deduct $5k of startup costs immediately, but how do I handle amortizing the remaining $3,200?

This is such a helpful thread! I'm in a similar situation with my new single-member LLC and had been stressing about these deductions. One thing I want to add - make sure you keep really detailed records of what you spent and when. I created a spreadsheet categorizing each expense as either startup or organizational from day one, which made tax prep so much easier. Also, for anyone wondering about timing - the IRS considers your business to have "begun" when you start offering goods/services to customers, not when you filed your LLC paperwork. So expenses before that date are typically startup/organizational, while expenses after are regular business deductions. This distinction was crucial for me since I had some overlap expenses right around my launch date. The election statement requirement that @Manny mentioned is super important - I almost forgot to include it and caught it at the last minute. Better to be safe than sorry with the IRS!