Just want to add some clarity on the timing aspect that might be helpful. Since you mentioned the sale occurred in February 2023 and you're still working on the 1041, make sure you're aware that the capital loss from the selling expenses will be reported on the 1041 for the tax year when the sale occurred (2023), not when you file the return. Also, if this is the final 1041 for the estate, any unused capital losses will pass through to the beneficiaries on their K-1s. But if the estate continues beyond 2023, the losses would first offset any capital gains the estate might have in future years before passing through. One practical tip: when you prepare the K-1s for beneficiaries, make sure to include a statement explaining the nature of the capital loss so they understand it came from selling expenses on the residence. This helps them (and their tax preparers) properly report it on their personal returns.

This is excellent advice from everyone here. I'm currently dealing with a similar situation as the executor of my grandmother's estate. One additional consideration that hasn't been mentioned - if the estate has other capital gains from stock sales or other assets, those gains can offset the capital loss from the property sale before the loss passes through to beneficiaries. In my case, we had about $15K in capital gains from selling stocks and the $22K loss from selling the house (after commissions and legal fees). The net $7K capital loss will pass through to the beneficiaries on their K-1s rather than the full $22K loss. Also, make sure to keep detailed records of all selling expenses - not just the obvious ones like realtor commissions. Title insurance, transfer taxes, repairs needed for sale, staging costs, and even utilities during the marketing period can all be legitimate selling expenses that reduce your proceeds and increase the deductible loss. The timing Sofia mentioned is crucial too. Since your sale was in February 2023, that loss needs to be reported on the 2023 estate return, even if you're filing it now in 2024.

I'm sorry you're going through this difficult situation! Unfortunately, everyone here is correct - you cannot claim your ex-wife as a dependent even though you provided most of her financial support. The IRS specifically excludes former spouses from qualifying as dependents, regardless of the support amount or income thresholds. Since you don't have any qualifying dependents (like children or other relatives living with you), you'll need to file as single rather than head of household. I know this doesn't reflect the financial reality of your situation, but the tax code is quite rigid on these points. A few suggestions to help minimize your tax burden: maximize any retirement account contributions you can still make for the tax year, ensure you're taking the standard deduction ($13,850 for single filers in 2023), and look into any other legitimate deductions like charitable contributions or state/local taxes if you itemize. Since you're preparing both returns, be extra careful to avoid any conflicts or duplicate claims that could trigger IRS scrutiny. Consider having a tax professional review both returns before filing, especially given the coordination required and your unique post-divorce support arrangement. It's really commendable that you're continuing to support your ex-wife during her transition, even without tax benefits!

I've been following this thread and wanted to add one more perspective that might be helpful. While everyone is absolutely correct about the ex-spouse dependency rules, I went through a similar post-divorce financial situation and found that keeping detailed records of all the support I provided was actually valuable for other reasons beyond taxes. Even though you can't claim your ex-wife as a dependent this year, if your support arrangement continues and circumstances change (like if she moves in with you permanently or if there are future legal considerations), having documented proof of the financial support could be important. Courts sometimes consider ongoing support patterns in modification hearings, and it demonstrates good faith if any disputes arise later. Also, since you mentioned she only made $4,800 for the year, make sure when you prepare her return that you're not missing any credits she might qualify for as a low-income taxpayer - things like the Earned Income Tax Credit could be valuable for her individual situation, even if it doesn't help your return. It really sounds like you're handling a difficult situation with a lot of care and responsibility, even though the tax code isn't giving you the recognition you deserve for supporting her transition.

The timing confusion you're experiencing is really common! Since you spent the money in 2023 but didn't start generating income until 2024, you'll want to take the startup cost deduction on your 2024 tax return. The IRS considers your business to have "begun operations" when you first started providing services and earning income, not when you incurred the expenses. So you can deduct up to $5,000 of your startup costs directly on your 2024 return, and the remaining $2,200 would need to be amortized over 15 years starting in 2024. Don't amend your 2023 return - that would actually be incorrect since your business wasn't considered "active" yet according to IRS definitions. Make sure to keep all your receipts from 2023 as documentation for these startup expenses, even though you're claiming them in 2024. The key is when your business began operating, not when you paid for the expenses.

This is such a great question and the answers here are really solid! I went through the exact same confusion with my consulting business last year. One thing that might help clarify - the IRS Publication 535 has a section specifically on startup costs that breaks down the timing rules pretty clearly once you know what to look for. The key phrase is "begins business operations" which they define as when you start the activities for which your business was organized - so in your case, when you first started doing paid photography work in 2024. Even though you spent the money preparing in 2023, the deduction goes on your 2024 return. Also worth noting - keep excellent records of all those 2023 expenses because if you ever get audited, you'll need to prove both the amount and that they were legitimate startup costs. The IRS can be pretty strict about what qualifies versus what they consider personal expenses or regular business costs.

Has anyone successfully received payments through PayPal after submitting the W-8BEN-E? I submitted mine 3 weeks ago and my account is still limited. Customer service just keeps telling me "it's being reviewed" but I'm getting worried because I have clients trying to pay me.

I went through this exact same nightmare a few months ago! PayPal's system seems to have a bug where it automatically requests W-8BEN-E forms from anyone who has ever selected "business" during account setup, even if you're just a freelancer. Here's what worked for me: First, check if your PayPal account is set to "business" type. If it is, you'll need the W-8BEN-E regardless of whether you think you should use W-8BEN. Don't try to fight the system on this - just fill out what they're asking for. For the W-8BEN-E form as a sole proprietor with no US connections: - Part I: Use your legal name and address - Line 4 (Entity type): Select "Disregarded entity" if you file business taxes, or "Individual" if you don't - Part II: Skip most of this unless you have specific US tax situations - Part III: Only fill out if your country has a tax treaty with the US (most do) - Certification: Sign as yourself The key is being consistent with how you're registered locally for tax purposes. Don't overthink it - most sections won't apply to your situation as a simple freelancer. PayPal's review process typically takes 2-3 weeks, but your account should work normally once approved.

Has anyone used TurboTax to do this amendment? Their interface keeps confusing me when I try to switch methods.

Yes, you can definitely amend your 2023 return to switch from actual expenses to standard mileage! This is actually a smart strategic move that many business owners don't realize they can make. The key rule is that you must use standard mileage in the FIRST year you place the vehicle in service for business to maintain flexibility between methods in future years. Since 2023 was your first year using this car for business, amending that return to use standard mileage will "reset" your election and give you the flexibility to choose either method going forward. You'll need to file Form 1040-X along with a revised Schedule C. Remove any depreciation, actual expenses, and Section 179 deductions you claimed for the vehicle, and replace them with the standard mileage deduction (65.5 cents per mile for 2023). Make sure you have solid documentation of your business miles for 2023 - mileage logs, calendar appointments, receipts showing business locations, etc. One important note: if you claimed any depreciation or Section 179 deductions on the vehicle, you may need to deal with depreciation recapture when switching to standard mileage. The calculation can get complex, so consider using tax software that handles amendments or consulting with a tax professional to make sure you get it right. You have until April 2027 to amend your 2023 return (three years from the original filing date), so you have plenty of time. But I'd recommend doing it sooner rather than later so you can plan your 2024 and future tax strategies accordingly.