The property is in Arizona. I hadn't even thought about state-specific taxes, though. Do they handle the basis calculation differently there?

Arizona doesn't have a state inheritance tax or estate tax, so you're in luck there! You'll only need to worry about federal taxes on any gain above your stepped-up basis. Arizona follows the federal rules for stepped-up basis, so whatever fair market value you establish for federal tax purposes will also work for your Arizona state tax return. Just make sure you keep thorough documentation of how you determined the property's value at the time of inheritance.

That's terrible advice and could get OP audited. The IRS specifically looks for people claiming no gain on inherited property sales. The stepped-up basis has to be established at date of death, not date of sale. If there was significant appreciation between those dates (like a developer suddenly becoming interested), claiming no gain would raise red flags.

Do you know if there's a way to see just the reassessed properties? When I look at the county website, I can't tell which ones have been recently reassessed vs ones that haven't changed hands in years.

Most county websites allow you to filter or sort by "sale date" or "transfer date." Once you find properties with recent sales, you can look at their assessment history to see both the before and after values. The assessment records typically show the date of assessment changes as well. If your county site doesn't have good filtering options, you can usually still see the last sale date on each property record. Just look for ones that sold recently, then check if their assessed value changed after that sale date.

This happened to me too! I got a random $1,200 bill about 5 months after moving in. My mortgage company didn't handle it because it was outside the normal property tax schedule.

That's reassuring to hear! Did you keep detailed mileage logs or just estimates? I have a general record of client visits but didn't track the exact odometer readings for every trip.

I keep a simple spreadsheet with the date, starting odometer, ending odometer, and purpose of trip. Nothing fancy. I also save my gas receipts and maintenance records as backup evidence of how much I'm actually driving. Even if your records aren't perfect, having something is better than nothing. The IRS knows most people aren't keeping NASA-level precise records. If you can show you made a good faith effort to track your business miles and that the total claimed is reasonable for your line of work, you should be fine.

This makes a lot of sense. I've always heard that claiming more than 80% business use is a red flag, but I guess it really depends on what you do for work. A traveling salesperson or consultant might legitimately use their car almost exclusively for business.

Thank you for these specifics! Quick question - if she files with the "someone can claim me" box checked, does that impact MY return at all? Or are we good since I already filed claiming her? I'm worried about triggering audits or having to amend something.

Your return isn't impacted at all. You've already claimed her correctly as your dependent, so you're all set. Her checking that box on her return simply aligns with what you've already done, preventing conflicts in the system. No need to amend anything on your end. This happens millions of times every tax season with parents and their working college students. The IRS expects this situation and has a clear process for it. Once she files correctly with that box checked, everything should process smoothly without raising any audit flags.

This is such good advice. I sat down with my daughter and showed her that me claiming her education credits saved our family over $2,500 in taxes, while her filing independently would've only gotten her an extra $400. Made it a lot easier for her to accept the dependent status when she saw the bigger financial picture!

Would he need to hire a lawyer to deal with this if the company insists on the W-9? That could get expensive real quick.

Not necessarily. There are several free options before considering a lawyer. He can file Form SS-8 with the IRS to request a determination of worker status, which costs nothing. He can also contact his state's labor department, which typically offers free assistance with worker classification issues. If he's misclassified and files the SS-8, the company may receive a notice from the IRS about proper classification. Many companies will correct the issue at that point to avoid penalties. Legal help is usually a last resort after exhausting these administrative remedies.

This is a really good point! My cousin's small construction business did something similar - gave 1099s to everyone because that's what the previous owner had done. When an employee pointed out the error, they were actually grateful and fixed it right away. Not every misclassification is malicious - sometimes it's just ignorance.