That's a really good point - I hadn't even thought about the eventual sale. How exactly does that work? Do I need to track the depreciation separately for each unit or for the building as a whole?

You need to track depreciation separately for the personal portion and the rental portions. When you sell, you'll need to allocate the sale price between the units based on fair market value at the time of sale. For your personal unit, you can potentially use the Section 121 exclusion ($250k single/$500k married) if you've lived there for 2 of the last 5 years. The rental units will be subject to capital gains tax, plus depreciation recapture at 25% for all the depreciation you've claimed (or were required to claim even if you didn't). Keep detailed records of all improvements to establish your cost basis for each unit.

I switched to TaxSlayer and it handles rental properties much better than TurboTax did. Has specific sections for multi-unit properties and asks all the right questions about personal vs rental use.

Where exactly do you find prior year forms? I've been looking all over the IRS website and can't figure out where to get 2020 forms specifically.

You can find prior year forms on the IRS website by going to https://www.irs.gov/forms-instructions and then clicking on "Find Prior Year Forms & Instructions" in the left sidebar. From there, you can select "2020" from the dropdown menu to access all forms from that tax year. For the basic 1040 form from 2020, you can directly go to: https://www.irs.gov/pub/irs-prior/f1040--2020.pdf. Make sure you also download any other schedules you might need like Schedule 1, Schedule C (for self-employment), etc. from that same prior year section. The instructions for each form are also available there, which can be helpful since the rules may have changed since 2020.

Yes! The IRS actually does pay interest on refunds that are issued more than 45 days after the filing deadline or the date you file, whichever is later. For a 2020 return filed in 2024, you'd likely get interest calculated from the date you file. The interest rate changes quarterly but has been around 5-7% recently (compounded daily).

Thanks for suggesting that! I hadn't thought to look at the Census Bureau site. Did you end up using the same code on your Schedule C as the NAICS code you found? Did you have any issues with matching it to the IRS list?

Yes, I used the same code I found through the NAICS search for my Schedule C. The IRS business codes are actually based on the NAICS system, though sometimes they're slightly condensed. I did have to cross-reference what I found with the IRS list in the Schedule C instructions, but it was pretty straightforward. For my conservation work, I found code 711510 (Independent artists, writers & performers) through NAICS, and it matched perfectly with the Schedule C list. Just make sure you're looking at the most current list since they update them periodically.

But I thought 712110 was only if you're operating a museum? Can you use that if you're just working for one as a contractor? I've been using 541900 (Other professional services) for my museum consulting work and now I'm worried I've been doing it wrong.

Did you file electronically or paper forms for the corrections? I'm wondering which method is better for ensuring they connect the corrected forms to the originals.

I filed the corrections electronically through the same service I used for the originals (in my case, Tax1099). Electronic filing is generally better because it processes faster and has fewer chances for manual errors. The system is designed to connect the corrected 1099-MISC forms to the originals automatically through the TIN (tax ID) matching and the "corrected" checkbox. For the new 1099-NEC forms, make sure you're using the same payer and recipient information exactly as it appeared on your incorrect 1099-MISC forms to help their systems match everything up correctly. Consistency in how names and TINs are formatted between all forms is crucial.

Yes! I received a penalty notice for a similar situation and successfully got it waived. Write a penalty abatement letter citing "reasonable cause" and explaining the confusion with the new form requirements. Include timeline details showing you acted in good faith and corrected promptly once you discovered the error. Reference IRS's First Time Abatement policy if this is your first penalty. In my case, they waived 100% of the penalties after review. Don't pay until you've gone through the abatement process - it works more often than people realize, especially for this specific 1099-NEC transition issue.

Thanks for breaking this down! So how do I figure out exactly how much of my scholarships went to qualified expenses vs. living expenses? My 1098-T shows I received $18,500 in scholarships/grants, but tuition and fees were only $12,700. Does that mean I should have reported $5,800 as income?

Yes, based on those numbers, you should have reported $5,800 as taxable income. The calculation is pretty straightforward: total scholarships/grants ($18,500) minus qualified educational expenses ($12,700) equals taxable portion ($5,800). If you also purchased required books and supplies for your courses, keep those receipts as they can reduce your taxable amount. But things like laptop purchases, general school supplies, and dorm furnishings don't count as qualified expenses unless specifically required for a course.

The 1098-T can actually be misleading too! Box 1 only shows tuition and fees paid, not books and required supplies, which are also qualified expenses. So keep those receipts!

That's an excellent point! The 1098-T doesn't tell the whole story, and you're absolutely right that required books and supplies count as qualified expenses even though they don't show up in Box 1. This is why it's so important for students to keep detailed records of all their education-related expenses. Even things like lab fees or art supplies that are required for specific courses can count as qualified expenses that reduce the taxable portion of scholarships.