Would this approach work in TurboTax too? I'm having almost the identical issue but with TT and a car my grandpa gave me that I donated to a local charity.

Yes, the approach works in TurboTax too. The key is the sequence of entering information. TurboTax tends to make assumptions if you immediately identify something as a gift. Enter the donation details first, then go back to modify the acquisition information. For TurboTax specifically, after entering the 1098-C information, look for the "Asset Information" section where you can edit the basis details. Enter what your grandfather originally paid for the car (estimate if needed) and when he purchased it originally. This establishes a proper basis instead of the $0 that TurboTax might default to.

That's not quite right. The basis absolutely matters with donated property, even vehicles. The deduction is limited to the LESSER of your basis or the gross proceeds reported on the 1098-C. So if your basis is $0 (which can happen with fully depreciated gifted property), your deduction would also be $0, even if the charity sold it for more.

I stand corrected! You're right about the "lesser of" rule. I checked Publication 526 and it does specify that for vehicle donations, your deduction is limited to the smaller of your basis or the gross proceeds from the charity's sale. This explains why the software is asking about the gift - it's trying to determine the basis. If the original owner had already fully depreciated the car (common for older vehicles), then the basis might indeed be $0, which would limit the deduction to $0 regardless of sale proceeds.

H&R Block's truly free version doesn't support Schedule C or self-employment income. You'd need their Self-Employed version which runs about $85 for federal filing plus another $37 per state. I switched from them to FreeTaxUSA last year and saved a ton of money. H&R Block isn't terrible, but they're almost as expensive as TurboTax for self-employment stuff.

Thanks for the info! That's disappointing but good to know before I waste time starting with them. Seems like FreeTaxUSA is the winner for most people in this thread.

I've thought about going the direct form route, but I'm a bit intimidated by figuring out depreciation schedules on my own. Did you find good resources for learning how to do that part correctly? I'm comfortable with the general Schedule C stuff but some of the more technical aspects make me nervous about doing it without software guidance.

I found Publication 946 from the IRS really helpful - it explains all the depreciation rules. There are also some free online depreciation calculators that can help you determine the right amounts. I created a spreadsheet that I update each year for tracking my business assets and depreciation. The first year was definitely the hardest, but now I just update my spreadsheet annually. I actually feel more confident now because I understand exactly what's happening rather than trusting software to make the right choices for me. If you're comfortable with spreadsheets, it's totally doable with a bit of research.

If I have multiple side businesses I run from the same home office, can I claim the deduction for each business or is it one deduction total? And does having a home office deduction affect selling your house later with the capital gains exclusion?

You can't double-dip by claiming the same home office space for multiple businesses. You need to allocate the space between your businesses based on usage, but the total can't exceed 100% of that space. For example, if you use your office 60% for Business A and 40% for Business B, you'd deduct those percentages of your eligible home office expenses on each business's Schedule C. Regarding capital gains, yes, there's an impact. If you've taken depreciation on your home through the regular method home office deduction, you'll need to recapture that depreciation when you sell. The simplified method doesn't include depreciation, so it doesn't affect your capital gains exclusion the same way. This is actually a big advantage of the simplified method that many people overlook.

I was audited two years ago. They mainly wanted to verify that my office was exclusively used for business. I provided photos, a diagram of my apartment showing the dedicated room, and my work calendar showing regular use. They also looked at my utility bills compared to what I deducted. Since I had most documentation, it went smoothly, but it was stressful. Now I keep way better records.

This is super important! If your parents claim you and claim the Lifetime Learning Credit for your education expenses, you cannot claim it too. Double check with your parents before filing.

Wait, could I still qualify for stimulus money from 2021? I thought those were all sent out automatically. I definitely never received anything back then.

Yes, you might still be able to claim the Recovery Rebate Credit on your 2021 return if you didn't receive the stimulus payments and were eligible! The third stimulus payment (Economic Impact Payment) of up to $1,400 was issued in 2021, and many people who were eligible didn't receive it for various reasons. If you file your 2021 return now, you can claim this as the Recovery Rebate Credit. There's a worksheet in the 2021 Form 1040 instructions to help you determine if you qualify and how much you can claim. This is exactly why filing a return even with zero income can be beneficial - you might have money waiting for you!

Also remember to sign and date the return! IRS will reject unsigned returns and that just delays everything further. Ask me how I know 😩