So these improvements would increase my basis in the home and therefore reduce the calculated gain? I've done quite a bit to the house over the years - replaced all windows, completely renovated the kitchen, added a bathroom, and put in a new HVAC system. I didn't realize those would factor into the capital gains calculation.

Exactly right! All those improvements you mentioned increase your cost basis, which means less taxable gain when you sell. The formula is basically: Sale price - (Purchase price + Improvements + Selling costs) = Capital gain. Those renovations you mentioned are perfect examples of what qualifies. The new windows, kitchen renovation, additional bathroom, and HVAC replacement all increase your basis. Make sure you have documentation for these expenses if possible. Even if you don't have every receipt, estimates with supporting evidence (like before/after photos, contractor statements, etc.) can help if you're ever audited. This could potentially save you thousands in taxes!

The safe harbor rule usually applies to whether something qualifies as a repair vs. capital improvement, not to capital gains exclusions on home sales. I think you might be mixing up concepts?

Are there any free alternatives to MileIQ? I'm trying to keep expenses down while starting my business.

Stride is a good free alternative that many of my clients use. It doesn't have all the premium features of MileIQ, but it covers the basics the IRS requires. Some people just use Google Maps to calculate distances and keep a simple spreadsheet with dates and purposes. That works too as long as you're consistent and record everything promptly.

Wait what?? I've been filing self-employed for 3 years and never heard of this. Is this something new?

My accountant mentioned this last year. It's not new, been around since 2018 but many self-employed people miss it. Definitely worth looking into if you're filing a 1099.

That's super helpful. I never really thought about how much the standard mileage rate might add up to. We've been tracking every little receipt but maybe we're making it harder than it needs to be! Do you have a recommendation for a good mileage tracking app?

We use Stride, but there are tons of good ones like MileIQ, Everlance, or even Quickbooks Self-Employed. Most have free versions that work fine. The key is finding one that automatically detects drives so you don't forget to log them. Also make sure it lets you classify trips as business or personal, and export reports at tax time. Some even estimate your tax savings as you go which is really motivating!

Dash cams are deductible?! I bought a really nice one last year for $230 and didn't deduct it. Can I still claim that on this year's taxes or add it to last year somehow?

Do you withhold taxes from their paychecks or is there some exemption since they probably don't make enough to owe taxes anyway?

We do withhold federal income tax as normal, but they both typically get it all refunded when they file their returns since they earn under the standard deduction. For FICA taxes (Social Security and Medicare), there's an exemption for children under 18 working in a parent's business if it's a sole proprietorship or a partnership owned only by the parents. Since our restaurant is set up that way, we don't have to withhold FICA taxes from their wages, which saves everyone money. If your business is incorporated, different rules apply and you would need to withhold FICA.

There's no minimum age requirement in federal law for working in a parent's business (though state laws may vary). But what matters is whether the work and pay are reasonable. A 9-year-old stuffing envelopes occasionally should be paid what you'd pay any kid that age for that task - not an adult wage.

That's such a good point I hadn't considered. My neighbor already feels so much shame about this situation that having someone make them feel worse would be terrible. Do you have any specific questions you'd recommend asking during consultations to gauge their communication style?

I'd suggest asking these questions during consultations: "Can you explain how you typically handle communication throughout a complex resolution case like this?" This reveals their process and how frequently they update clients. "What's your approach when working with clients who have limited English proficiency?" Their answer will show if they've dealt with similar situations and what accommodations they might offer. "How do you explain complex tax concepts to clients who aren't familiar with tax terminology?" This tests their ability to translate complicated ideas into plain language. Also, pay attention to how they react when hearing about the 15 years of unfiled returns. Do they seem judgmental or solution-focused? The right professional will skip the lecture and move straight to creating a plan. Trust your gut feeling about whether they seem patient and understanding.

This is incorrect information. The statute of limitations for assessment doesn't begin until a return is filed. For unfiled returns, the IRS can go back indefinitely. Please don't spread misinformation that could get people in serious trouble.