Careful with the home office deduction! I thought I could claim this too, but my accountant said if you're a W-2 employee (not self-employed), you can't take the home office deduction anymore after the 2017 tax law changes. Only applies if you're self-employed now.

You're absolutely right, and I should have been clearer. The home office deduction is only available if you're self-employed, an independent contractor, or gig worker. W-2 employees can't claim it anymore even if you work from home all the time. This was changed with the Tax Cuts and Jobs Act back in 2017. I'm self-employed so I still get to take advantage of it, but I shouldn't have assumed everyone's situation was the same. Thanks for the correction!

How do you know if they're separated correctly? My 1098 has a box for mortgage interest and another box for property taxes. Is that what you mean?

19 As far as I know, if the payment was processed through Paypal's goods and services option, Paypal will issue a 1099-K to the recipient if they meet the threshold requirements. However, this doesn't eliminate your requirement to issue a 1099-NEC if you paid them $600+ for services as a business expense. The rules changed recently though, so double-check the current requirements for the filing year.

16 Thanks for the clarification! So basically I still need to issue the 1099-NEC even if Paypal issues a 1099-K. That makes sense - one reports the payment processor's perspective and the other reports from my business perspective.

18 Do you track the fees individually for each transaction or just do a lump sum at the end of the year? I've been trying to figure out the easiest way to handle this.

7 I track them individually for each transaction. Most accounting software can be set up to automatically split Paypal transactions into the payment amount and the fee amount. If you're using something like QuickBooks or Xero, you can create a bank rule that recognizes Paypal transactions and automatically splits them - the main amount goes to your contractor expense account and the fee portion goes to a "Payment Processing Fees" expense account. Makes tax time much easier when everything is already categorized properly.

Good point! I made this exact mistake. Tracked hundreds of volunteer miles and then my tax software showed it made zero difference to my return because I was taking the standard deduction anyway. Wish someone had told me sooner!

That's unfortunately very common! Many people don't realize that charitable deductions (including mileage) only benefit you tax-wise if you itemize. With the higher standard deduction after tax reform, fewer people benefit from itemizing unless they have substantial mortgage interest, state taxes, or other major deductions. For those who are close to the threshold where itemizing makes sense, tracking charitable mileage could potentially push you over that line. But if you're not near that threshold, it won't impact your tax return.

I haven't been audited specifically for that, but my accountant told me charitable mileage is rarely the trigger for an audit by itself. The key is having good documentation - a log with dates, starting/ending mileage, and the charitable purpose. Most audit flags come from unusual patterns or large deductions relative to income, not from reasonable volunteer expenses.

Is there any benefit to doing estimated payments vs just adjusting the W-4? Seems like more work for the same result?

For most W-2 employees, adjusting the W-4 is definitely simpler. The main benefit of estimated payments comes in if you have significant income outside your regular job (like investments, side gigs, rental property) or if your income varies a lot throughout the year. Estimated payments give you more control over exactly when you pay, which can help with cash flow management. Some people also like to keep more cash on hand during the year and then make larger payments close to the quarterly deadlines. But if you just have regular employment income, adjusting your W-4 is usually the easier route.

Claiming exempt is only legal if you had no tax liability last year AND expect to have no tax liability this year. Based on your $72k income, you definitely don't qualify. Your brother is likely setting himself up for penalties and a massive tax bill. The IRS doesn't mess around with people who don't withhold properly.

That's a good point about documentation. Do you recommend any specific apps for tracking mileage? And how detailed do I need to be with the log - just start/end odometer readings or do I need to note every stop?

I've had good luck with MileIQ and Everlance for tracking business mileage. Both automatically detect trips and let you classify them as business or personal. For audit protection, you'll want to record the starting and ending odometer readings, date, business purpose, and destination for each trip. You don't need to document every single stop if they're all part of the same business purpose, but you should note the overall trip details. The IRS loves to target vehicle deductions during audits, so good documentation is essential. Take photos of the odometer readings periodically as additional backup.

Leasing isn't always better for tax purposes though. With a lease, you can only deduct the actual payments made each year. When purchasing, even if you can't use Section 179, bonus depreciation might still give a larger first-year deduction. Plus owning builds equity.