Did you have to pay back the tax benefits when you got audited? I'm worried about having to repay deductions years later plus penalties if something goes wrong.

I didn't have to pay back the deductions since the investment was structured legally, but I did have to pay for a specialized tax attorney ($8,500) to help defend the deductions during the audit. The IRS scrutinizes these investments closely. The bigger issue was that the project produced almost no oil after the first year, so my "investment" was basically worthless while the promoters walked away with their fees. The tax savings were real but not worth the stress and overall financial loss. If I had just invested that money normally and paid my taxes, I'd have been much better off. Don't let tax avoidance drive your investment decisions - it's usually a recipe for disaster.

I tried using TurboTax for my oil & gas partnership last year and it was a disaster. The software isn't designed to handle these specialized deductions properly. Had to hire an accountant anyway who told me I would have done it completely wrong. These investments require specialized tax knowledge - don't try to DIY it.

Can Cash App Taxes handle home office deductions for self-employed people? That's been the main reason I've stuck with the expensive options in the past.

Cash App Taxes definitely handles home office deductions for self-employed people. I used it last year for exactly that situation with my freelance work. The interface walks you through calculating the percentage of your home used for business and all the related expenses. The only limitation I found was if you're using the simplified home office deduction, it's straightforward, but if you're doing the regular method with depreciation and proportional expenses, you might want a more robust option if you're not familiar with the calculations. But for most typical home office situations, it works perfectly fine.

Is that actually legit? I always figured the free options would be bare-bones and missing features or have hidden fees at the end.

My job location didn't change, and I don't have health issues that required a move. As for "unforeseen circumstances" - is a new relationship considered unforeseen? It wasn't planned when I bought the house, but I doubt the IRS cares about that.

Unfortunately, a new relationship isn't considered an unforeseen circumstance by IRS standards. Their definition typically includes things like death, divorce that occurs DURING ownership, natural disasters, multiple births from the same pregnancy, or becoming eligible for unemployment. Since none of these apply, focusing on properly calculating your cost basis is your best strategy now. Make sure you include all purchasing costs, capital improvements, and selling costs to minimize the taxable gain. Document everything meticulously - the burden of proof is on you if you're audited.

This is good advice. I live in Colorado and discovered our state treatment of capital gains is different than federal. Saved me about $2,400 on my state return even though I still had to pay the federal capital gains.

I use a 60/40 split (60% salary, 40% distribution) for my consulting S-corp based on what my CPA recommended. But I've heard of people going as low as 30% salary in some industries. It really depends on your specific business and what comparable employees make.

Is this really true? I've never heard of S-corp owners being subject to minimum wage laws. Wouldn't that defeat the purpose of being able to set a "reasonable" salary?

You're right that there's some confusion about this. The IRS's "reasonable compensation" standard is separate from minimum wage laws. However, as an employee of your corporation (even as the owner), you're still theoretically subject to FLSA minimum wage requirements. In practice, this rarely becomes an issue unless someone files a complaint. The bigger concern is that a very low salary compared to hours worked could trigger IRS scrutiny about whether your compensation is "reasonable." It's another data point they might use to challenge your salary if it's unusually low for your industry and workload.

Do you have to file special forms for the state disaster loss claim? My state tax form seems way simpler than federal and doesn't mention disaster losses anywhere.

You usually need to file an attachment or schedule with your state return specifically for casualty losses. Many states have their own version of the federal Form 4684. Check your state's department of revenue website - they often have specific instructions for disaster victims in federally declared disaster areas. Some states automatically conform to federal tax treatment, while others have their own rules. The good news is that several states are more generous than the federal government and don't apply the 10% AGI limitation.

You don't have to wait for FEMA to file your taxes, but you'll need to reduce your loss amount by any FEMA payments you expect to receive. If you file before getting FEMA money and then receive it later, you might need to report it as income on next year's return, depending on how much tax benefit you got from the deduction.