Friday Weekly Q&A Call - 10/09/2026 · 🏠 Lower Taxes w/ Ryan

Friday Weekly Q&A Call - 10/09/2026

Key Takeaways:

1. Deducting expenses as a 1099 contractor or sole proprietor

You don't need an LLC to deduct business expenses. A 1099 earner is automatically a sole proprietor and can deduct ordinary and necessary expenses against that income.
Unreimbursed out-of-pocket costs tied to the work (seminars, training, travel) generally qualify.
Keep a paper trail. A bank statement, Zelle/Venmo record, or credit card statement is usually enough, so you don't need the vendor to invoice you. Categorize each expense in QuickBooks or Excel (e.g., professional development, conference, travel).
Deductions are limited to the income that activity produces.
Once self-employed, you can also deduct accounting and legal fees (not possible as a W-2 employee), a home office, and a business share of your phone and internet.
The School community has a Self-Employed Profit & Loss template that lists the deductible categories.

2. Business travel with a personal element

Be conservative. If a trip mixes business and personal, allocate a percentage you're comfortable defending (e.g., 60-70%) rather than deducting 100%.
For genuine business trips, document the agenda, meetings held, and purpose in case of an audit.
If you have more than one business activity, allocate shared costs like a phone across them, but never claim more than 100% in total.

3. Short-term rental (STR) mileage

Deductible miles include trips from your home office to the rental and to supply stores such as Home Depot.
Tracking options, from strongest to weakest:

Mason's DIY approach: an iOS shortcut triggered by CarPlay that sends a Google Form feeding a spreadsheet, which makes logging opt-in instead of opt-out.

4. Bookkeeping software and shared expenses

The CPAs advise against QuickBooks for most people, since clients often make a mess of it. They suggest REI Hub, Baselane, or Stessa. One attendee preferred REI Hub after duplicate-transaction problems with Stessa.
Shared costs across two LLCs (e.g., a business phone line) can be split by a reasonable allocation, such as 50/50, and recorded in your bookkeeping.
QUO (formerly OpenPhone) doesn't support two logins at once, and multi-number setups can cause texting glitches.

5. Home office deduction

Simplified method: $5 per square foot, up to 300 sq ft (max $1,500). Only the office's square footage matters.
Actual expense method: a percentage of utilities, taxes, and mortgage interest, but it triggers depreciation on your home. The CPAs generally advise against it unless the space is large, such as a garage.
You'll provide office and total home square footage on your tax organizer.

6. Cost segregation and renovations

Cost segregation studies need a breakdown of improvements, since different components fall into 5-, 7-, and 15-year classes.
If a designer gives only a lump sum, ask for an itemized breakout, or at minimum break it into categories (furniture, paint, lighting, etc.).
Preferred partners: CSSI (better for properties over roughly $750K) and RE Cost Seg.
Wait until renovations are finished and the property is live, then do the study in one pass. The deadline isn't until tax time.
15-year property (landscaping, septic) can be bonus depreciated.
A former primary residence converted to a rental can still qualify for bonus depreciation, and improvements made since purchase can be added to the basis. Don't double-count items already written off.
A rented basement in your own home usually yields little because of its small size. You'd generally want a separate unit with its own bathroom and entrance.

7. Material participation hours

Hours count from the time you're under contract. Qualifying activities include pre-service work, overseeing contractors, approving repairs, staging and decorating, HOA dealings, and bookkeeping.
Travel to the property, research, and education don't count.
Use the Sample Hours Tracker template on School and keep a rolling log as you go, not a reconstruction at year-end. Stick to its verbiage to stay audit-defensible.

8. Partnership LLC for a "board meeting" trip

A partnership return costs more and adds complexity, and the trip must be a genuine business expense.
The math: tax savings = expense x your tax bracket. A $4,000 trip saves about $960 at 24% or about $1,480 at 37%. Compare that to the extra cost of the return (the attendee quoted about $570), and weigh whether you'll repeat the trip every year.
Most people use a single-member LLC for simpler compliance.
In community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI), spouses can skip the partnership return for a spousal LLC. Florida, Ohio, and New York aren't on that list.

9. Logistics and deadlines

The extension deadline is Thursday, Oct 15, and the team is working through the weekend.
Upload draft returns to TaxDome and message the team for review. Kevin said he would flag one attendee's draft with the team.
Year-end planning calls should start in November.

General Mindset

Documentation is your defense. The system runs on honor, but you have to be able to back it up. Keep records consistently and as you go.
Deduct what's ordinary, necessary, and genuinely business. Be honest about personal use and allocate conservatively.
Do the math before the strategy. A deduction only saves your bracket percentage of the spend, so don't spend money just to save tax.
Weigh complexity and time, not just dollars. Simpler structures often win.
Plan early. Set up tracking, bookkeeping, and cost seg conversations before you need them, and plan year-end moves in November.
Use your CPA as a partner. Verify drafts, ask questions, and raise concerns before deadlines.