23 Is anyone else annoyed that tax software doesn't make it clearer when you're going to owe? Last year I filed through TaxSlayer and it wasn't until the very end that I realized I owed the state $1800. Wish there was a warning earlier in the process.

I've been through a similar situation with unpaid state taxes, and I'd strongly recommend not waiting until you file your 2024 return. Here's why: First, the penalties and interest compound daily, so every day you wait costs you more money. Second, your 2024 state refund won't automatically offset your 2023 debt - you'd have to manually apply it, and by then you could owe significantly more. My advice: Call your state tax agency immediately and request a payment plan. Most states are very reasonable about this, especially if you're proactive. You can often get plans for as low as $50-75/month depending on your financial situation. Some states will even waive penalties if it's your first time owing and you set up a plan quickly. Don't let this stress eat at you - the sooner you address it, the more options you'll have. I waited too long once and ended up paying almost double in penalties what I originally owed in taxes. Learn from my mistake!

Consider the long-term perspective too! C Corps require a lot more ongoing compliance - board meetings, minutes, separate accounting systems, etc. If you incorporate in Delaware or Nevada to save on state taxes, you'll still need a registered agent in those states ($100-200/yr). Our investment group started as a C Corp in 2019 thinking we'd benefit from the lower tax rate, but we ended up converting to an LLC last year because the administrative burden and costs were eating into our returns. Plus when we did want to take some profits out, the double taxation was painful.

Another important consideration that hasn't been mentioned yet is the state-level implications. Many states don't conform to federal tax rules for business entities. For example, some states impose minimum franchise taxes on C Corps regardless of income, while others have different tax rates for pass-through entities. Also, if you're planning to trade options or futures, there are special rules under Section 1256 contracts that might affect your decision. These are marked-to-market annually and get preferential tax treatment (60% long-term, 40% short-term regardless of holding period) which could change the math significantly. One more thing - if you do go the LLC route and your trading becomes substantial, you might want to consider making an S Corp election for the LLC. This gives you the pass-through taxation benefits while potentially reducing self-employment taxes on any profits you take as distributions rather than salary (though you'd still need to pay yourself reasonable compensation). The key is really modeling out your specific situation with realistic projections rather than making the decision based on tax rates alone.

I've used both over the years. My CPA handles my normal taxes, business filings, and helps with planning. Only needed a tax attorney once when I got hit with an incorrect $42k IRS bill for unreported income (was actually my ex-wife's but they came after me). Attorney cost more but had the expertise for that specific legal situation. If you're just trying to get your taxes done right and plan properly, start with a CPA. If the IRS is threatening liens, levies, or criminal charges, then you need an attorney. A good CPA will tell you when it's time to bring in legal help.

Having dealt with both CPAs and tax attorneys, I'd recommend starting with a CPA for your situation. Small business and rental income complications are exactly what CPAs handle daily - they'll help you structure your deductions properly and identify any potential audit red flags before they become problems. The key is finding a CPA who specializes in small business taxation rather than just individual returns. They can set up proper bookkeeping systems, advise on business structure (LLC vs S-Corp, etc.), and handle the rental property depreciation correctly. This proactive approach often prevents the issues that would require a tax attorney later. Tax attorneys are definitely worth their fees when you're facing IRS enforcement actions, potential criminal issues, or complex estate/trust matters. But for maximizing deductions and staying compliant with business/rental income, a good CPA will save you money and keep you out of trouble. If problems do arise later, your CPA can work with a tax attorney as needed.

Does anyone know if the rules are different for residential rental property vs commercial? I have both and it seems like there might be different thresholds or rules for each type.

Great discussion here! I'm dealing with a similar situation but with a twist - I have a duplex where I live in one unit and rent out the other. How does the personal vs business use percentage affect these decisions? If I do a $2,000 improvement that benefits both units equally, can I still use the de minimis safe harbor for the 50% business portion? Or does the mixed-use nature of the property complicate things? I've been going back and forth on whether to expense what I can immediately or add everything to basis for when I eventually move out and rent both units. Also wondering if anyone has experience with how this plays out when you convert a personal residence to rental property - do prior improvements suddenly become depreciable at that point?

Did you have any credits like EIC or CTC? Those usually take longer to process and get more scrutiny.

EIC claims definitely get extra scrutiny and can add weeks to processing time. The good news is once you see those 571/290/971 codes, it usually means they've finished their review and you're in the final stages. Based on your transcript showing movement on 12-10-2024 with the 570 code still there, I'd expect to see an 846 code (refund issued) within the next 1-2 weeks. The -$42 balance is actually your refund amount after interest calculations. Keep checking your transcript updates on Thursdays/Fridays - that's when they typically post new cycles.