22 One thing nobody's mentioned is using a dedicated credit card for your cash withdrawals. I have a business credit card that I ONLY use for ATM withdrawals for inventory purchases. Then in my records, I note which items were purchased with which withdrawal. Creates a clear paper trail from credit card statement → cash withdrawal → inventory purchase → sale. My accountant loves this system!

As someone who's dealt with similar documentation challenges, I'd strongly recommend also keeping a mileage log specifically for your business trips. The IRS allows you to deduct business mileage at the standard rate, and those pickup trips to Facebook Marketplace sellers definitely qualify. I use a simple app that tracks my location and lets me categorize trips as business or personal. For each pickup, I log the starting point, destination, and business purpose ("Inventory purchase - iPhone 12"). This adds up to significant deductions over time and creates another layer of legitimate business expense documentation. Also consider photographing the items with a timestamp when you first acquire them, then again when you list them for sale. This visual documentation helps establish the business nature of your purchases and can be valuable supporting evidence if questioned.

Not to complicate things, but don't forget about the "grouping election" under Section 469(c)(7)! If you own multiple properties, you can elect to treat all of them as one activity for the material participation test. This can be really helpful. I own 3 rental properties and without grouping them, I might not materially participate in each one individually. But by grouping them together, I easily exceed the participation requirements. Just make sure you file Form 8582 correctly and include a statement with your return about the grouping election the first year you do it.

Just wanted to add another perspective from someone who went through this exact situation. I was in a similar boat - working full-time in real estate but with less than 5% ownership, plus managing rental properties on the side. The harsh reality is that the Real Estate Professional status is designed to be difficult to achieve while maintaining other employment. Even if you bump your rental hours to 750+, you'd still need those hours to exceed your W2 job hours to meet the "more than half" test. Here's what I learned after consulting with a tax attorney: Focus on maximizing the deductions you CAN take rather than trying to force the Real Estate Professional qualification. You can still deduct up to $25,000 in rental losses against other income if your AGI is under $100,000 (phases out completely at $150,000). Also, make sure you're capturing all legitimate expenses - repairs, maintenance, depreciation, travel to properties, home office expenses if you have a dedicated space for property management, etc. The spouse strategy mentioned earlier is probably your best bet if that's feasible in your situation. Otherwise, you might be better off building your rental portfolio for long-term wealth building rather than trying to optimize for current tax benefits that may not be realistically achievable.

Don't forget to keep copies of EVERYTHING and proof of mailing! I made the mistake of not keeping good records when I mailed multiple returns last year. The IRS lost one of my returns, and I had to resend it. Now I scan all returns before mailing and get a certificate of mailing from the post office for each envelope (cheaper than certified mail but still gives you proof).

Adding to what everyone else has said about mailing separately - I work as a tax preparer and can confirm that separate envelopes is definitely the way to go. The IRS processing centers have different workflows for different tax years, and mixing them up can cause delays. One thing I haven't seen mentioned yet is to make sure you're using the correct mailing address for each tax year. The IRS sometimes changes processing center addresses between years, so double-check the instructions for 2022 vs 2023 returns. Also, if you owe money on both years, consider which one to prioritize if you can't pay both at once - generally you want to pay the older year first since penalties and interest accumulate longer on those. Good luck getting caught up! Don't stress too much - the IRS deals with late returns all the time.

I've been reading through all these responses and wanted to add one more important tip - document EVERYTHING during this process! Keep records of every phone call you make (date, time, who you spoke with, what was discussed), save copies of all paperwork you submit, and take photos of any documents you hand-deliver. I learned this the hard way when dealing with a similar assessment error a few years ago. The county "lost" my initial appeal paperwork, and because I didn't have proof of when I submitted it, I almost missed the deadline to refile. Now I always get receipt confirmations and keep a paper trail for anything involving government offices. Also, if you do end up needing to pay the full amount while appealing, make sure to note on your payment that it's "paid under protest" and keep a copy of that notation. This can be important if you need to pursue additional remedies later. Given that you've already found the square footage error, you're in a much better position than most people facing these sudden increases. That's concrete, measurable proof that should be pretty hard for them to dispute!

I just wanted to chime in as someone who works in local government (not in assessments, but I see these issues come up regularly). The square footage error you found is definitely your smoking gun! That's exactly the type of mistake that causes these dramatic assessment increases. A few additional things that might help speed up your appeal process: 1. When you call the assessor's office, ask specifically for the "assessment appeals coordinator" or "property data corrections department" rather than general customer service. These folks deal with errors like yours all day and can often fix obvious mistakes more quickly. 2. If your county has a "informal review" process before the formal appeal, definitely use it. Many counties will correct clear data errors at this stage without you having to go through a full hearing. 3. Consider reaching out to your city council member or county commissioner's office if you continue to hit roadblocks. They often have direct lines to department supervisors and can help cut through red tape for constituents. The fact that you caught this error early and have such clear documentation puts you in a really strong position. Most assessment appeals fail because people can't prove their property is overvalued, but you have concrete evidence of an objective error in the county's records. This should be a relatively straightforward fix once you get in front of the right person!

I've been dealing with K-1 forms for a few years now and this is such a common frustration! The issue you're running into is that FreeTaxUSA, while great for most standard tax situations, has limitations when it comes to the more complex aspects of partnership tax reporting that K-1s often involve. Since you mentioned this is from a rental property investment, there are likely passive activity rules at play that require additional forms like Form 8582. Even though your situation might seem straightforward, rental property partnerships often trigger these rules automatically, and FreeTaxUSA just doesn't have the capability to handle the calculations properly. I'd strongly recommend switching to software that can handle K-1s properly rather than trying to work around it. TaxAct Premium seems to be the most cost-effective option that people have had success with based on the other comments here. Yes, it's more expensive than FreeTaxUSA, but filing incorrectly because of software limitations could cost you way more in the long run if the IRS flags your return for review. Don't feel bad about having to switch - this happens to tons of people every year when their tax situation gets just a bit more complex than basic software can handle!

I've been through this exact frustration with FreeTaxUSA and K-1 forms! The issue usually comes down to specific reporting requirements that FreeTaxUSA simply can't handle. For rental property K-1s like yours, it's almost always related to passive activity loss rules or at-risk limitations that require additional forms. Here's what I'd recommend: First, check Box 20 on your K-1 for any letter codes - if you see codes A, B, C, or D, that's definitely what's causing the error. These codes indicate you need Form 8582 for passive activity limitations, which FreeTaxUSA doesn't support well. Based on everyone's experiences here, TaxAct Premium seems to be the sweet spot for handling K-1s without breaking the bank. It's more than FreeTaxUSA but way less than TurboTax Premier, and it actually knows how to properly process all the passive activity rules and generate the right supporting forms automatically. Don't try to manually enter K-1 info in other sections of FreeTaxUSA - that's asking for trouble with the IRS. K-1 income has to flow through specific schedules and forms to be reported correctly. Better to spend a bit more on proper software than deal with potential audit issues later!