Does the accounting software actually submit the 1099s to the IRS or just help you prepare them? I'm currently using Excel to track everything and it's becoming a mess.

Most accounting software can either e-file directly or export the data in a format ready for e-filing. I use QuickBooks and it gives me both options - I can e-file directly through them for a small fee per form, or I can export the data and use the IRS filing system. Excel works when you're small, but once you have more than a handful of contractors, it becomes really error-prone. The biggest advantage of dedicated accounting software is that it tracks everything automatically throughout the year, so January isn't a mad scramble to figure out who you paid what.

Ugh thanks for mentioning this. I'm in NY and totally forgot about state filing requirements. Do you know if the deadline is the same as the federal one?

Thanks for the info about the retirement contributions - I hadn't thought about that! Did you have any issues with the IRS accepting your return when you used transcript information instead of the actual W2 details?

No problems with the IRS accepting the return at all. The wage and income transcript information comes directly from them, so it matches what they already have in their system. Just make sure if you're using tax software that you select the option to enter the information manually rather than importing a W2, since you won't have the actual form to scan or upload.

This is only partially true. TurboTax saves the INFORMATION you entered, but not necessarily the actual documents themselves. So if you uploaded a W2 image last year, you might not be able to get that exact image back. But you can see all the numbers you entered, which is almost as good!

That's a really good suggestion, thank you! I actually took out a loan for part of it, so I could probably find the loan documents too. I was just hoping to figure it out from the depreciation numbers since I had those handy. Would the calculation that Profile 12 provided make sense to you? The amounts don't quite match up with what I recorded, so I'm wondering if I used a different method than standard MACRS.

I think Profile 12's calculation is on the right track, but it seems like you might be using the 200% declining balance method rather than the standard MACRS percentages they provided. This would explain why your second year depreciation is higher than what their calculation suggests. Try this: if your original cost was around $39,500-$40,000, then a 5-year 200% declining balance method with half-year convention would give about $7,900 in year 1 and $15,100 in year 2. That's really close to your numbers of $7,564 and $15,128. For year 3, you'd be looking at about $7,600 depreciation. If these numbers sound right, I'd go with an original cost of $39,800, which would give you pretty much exactly what you reported for the first two years.

Great idea! I've been a dealer for food trucks for 10+ years and we keep ALL sales records. We get calls like this regularly and can provide copies of the original invoice. Most dealers should be able to do this for you.

I hadn't even thought of that! I bought it used from another food truck owner who was going out of business, so I don't have a dealer to call. But I just remembered I might have the original bill of sale somewhere in my home office. Going to dig through some files tonight. I did some calculations based on what everyone suggested here, and I'm pretty confident the original cost was around $39,800. That gives depreciation amounts that almost exactly match what I claimed in 2022 and 2023. This year's should be around $7,600. Thanks everyone for your help - I was really stuck on this!

There's also a Safe Harbor for Rental Real Estate that's different from the Small Taxpayer Safe Harbor. I mixed these up last year and it was a mess. FreeTaxUSA doesn't clearly distinguish between them in the interface.

Wait, really? I didn't know it was a permanent election! That changes things a lot for me. I was planning to do some major renovations next year that I'd want to depreciate normally. Is there any flexibility at all with this?

I should clarify - it's not permanently permanent. You're electing it annually, but you must apply it consistently to the same building+land. So you can stop using it if you no longer qualify (like if your gross receipts exceed $10,000 or your building's unadjusted basis exceeds the threshold). If you're planning major renovations next year, those would actually increase your unadjusted basis, which might make the Safe Harbor less valuable since your deduction is limited to 2% of that basis. But you could potentially still qualify and elect it again next year - it would just be calculated on the new higher basis.

This is really helpful, thank you! One more question - for the 3520-A Foreign Grantor Trust Owner Statement, it asks for the trust's income. Is that just my net capital gains/losses for the year, or do I need to include something else?

The trust's income would include your net capital gains/losses plus any other income the trust generated, such as interest, dividends, or other investment income. So don't just limit it to your trading activity - make sure to include any interest or dividends that the TFSA earned during the year as well.

YES! I tried using TurboTax and it was a disaster for these forms. I ended up having to fill them out manually. Even my accountant said most software isn't properly set up for foreign trust reporting because it's relatively uncommon.