Tip from personal experience: whatever you do, FILE YOUR RETURN on time for 2024 even if you can't pay what you owe!! The penalty for not filing is WAY worse than the penalty for not paying. The failure-to-file penalty is 5% of unpaid taxes each month while failure-to-pay is only 0.5% monthly.

I feel your pain on this one! I went through something similar a few years back and learned the hard way that the IRS treats each tax year completely separately. You'll definitely owe taxes on your 2024 income even though you're using it all to pay back 2023 taxes. Here's what I'd strongly recommend based on my experience: 1. Set up an installment agreement for your 2023 debt ASAP - this will give you breathing room to handle your 2024 taxes properly 2. File your 2024 return on time no matter what, even if you can't pay immediately (the failure-to-file penalties are brutal) 3. Consider making quarterly estimated payments for 2024 if possible to avoid underpayment penalties The good news is that any interest you pay on your tax debt is deductible on Schedule A (though penalties aren't). Also, the IRS is surprisingly reasonable about payment plans if you're proactive about reaching out to them. Don't let this become a snowball effect - deal with both years separately and you'll get through this!

Has anyone actually calculated how much tax difference this makes? I'm in a similar situation but wondering if it's worth the effort to figure all this out vs just using what's on the 1099-B.

This is such a common issue that catches so many people off guard! I went through the exact same thing last year with my RSU sales. The key thing to remember is that you've already paid taxes on the RSU income when it vested, so you definitely don't want to pay again. One thing that really helped me was creating a simple spreadsheet to track everything. I listed each RSU vest date, the number of shares, and the fair market value per share on that date (which becomes your cost basis). Most equity platforms like Schwab or Fidelity will show this information in your transaction history or under "Tax Lots." Also, don't forget that if you sold immediately after vesting, you might actually have a small capital LOSS due to market fluctuations between vesting and selling. This can actually reduce your overall tax burden slightly. The paperwork is tedious but totally worth it - I saved about $8,500 in taxes by properly reporting my cost basis instead of accepting the $0 basis on my 1099-B. Form 8949 is your friend here, and make sure to use the correct codes for non-covered securities.

Has anyone used TurboTax to handle a situation like this? I have similar rental losses and wondering if the software can handle all these passive activity rules correctly.

I'm dealing with a very similar situation after inheriting my aunt's duplex last year. One thing I learned that might help - make sure you're calculating your depreciation correctly with the stepped-up basis. Since you inherited the property, you get to depreciate based on the fair market value at the time of inheritance ($1.6M in your case), not what your grandfather originally paid for it. This is actually beneficial because it likely gives you much higher annual depreciation deductions. Also, keep detailed records of any time you spend managing the property - even if it's just reviewing tenant applications, coordinating repairs, or doing research about rental rates. If you can document more than 100 hours of participation annually, you might qualify for that $25,000 active participation allowance that Dylan mentioned earlier. Every hour counts toward potentially being able to use those losses against your other income! The depreciation recapture when you eventually sell is something to consider long-term, but for now, maximizing your current deductions while following the rules is probably your best strategy.

I had this same question and ended up talking to my accountant. Here's the deal: regular commuting and parking at your main workplace = not deductible. But there's a workaround my company uses. Instead of giving me a $3k raise (which would be taxable), they give me a $3k annual parking allowance as a separate line item on my paystub. It's still taxable income, but it feels better psychologically to see it earmarked for parking! The pre-tax transit benefit others mentioned is even better if your employer offers it. If they don't, show them this IRS page: https://www.irs.gov/publications/p15b#en_US_2023_publink1000193740 - it explains qualified transportation benefits that can save both you AND your employer money.

I work as a tax preparer and can confirm what everyone's saying - regular commuting parking costs are NOT deductible for W-2 employees, even if they're expensive and necessary for work. The IRS is very clear that these are personal expenses. However, there are several legitimate alternatives worth exploring: 1. **Pre-tax transportation benefits** - This is your best option! Employers can offer up to $280/month (2025 limit) in pre-tax parking benefits. You save money equal to your tax bracket. 2. **Side gig deductions** - If you do any freelance/gig work, parking for those activities IS deductible. 3. **Employer reimbursement** - Some companies will add parking allowances to compensation packages. 4. **HSA/FSA commuter benefits** - Some employers offer these through third-party administrators. The key is working WITH the tax code rather than against it. I'd strongly recommend talking to your HR department about implementing pre-tax transportation benefits - it's a win-win since it also reduces the company's payroll taxes. Keep those receipts though, just in case your work situation changes to qualify for deductions later!

As someone who works in tax preparation, I see this confusion all the time during tax season! You're definitely not alone in feeling overwhelmed by the FIFO/LIFO/SpecID decision - most of my clients who've transitioned to active trading have the same questions. One thing I always tell people is to think about your overall tax situation, not just the individual trades. If you're in a higher tax bracket this year but expect to be in a lower one next year (maybe due to retirement, job change, etc.), you might want to defer gains by using specific identification to sell your highest cost basis shares first. Conversely, if you expect to be in a higher bracket next year, it might make sense to realize some gains now. Also, don't forget about the Net Investment Income Tax (3.8% additional tax on investment income for higher earners). If you're close to those thresholds, strategic lot selection can help manage not just your regular capital gains tax but also whether you trigger NIIT. The good news is that once you get the hang of this, it becomes second nature. And the tax savings really do add up over time - I've seen clients save thousands just by being more intentional about their cost basis elections. Keep asking these questions and learning!

This has been such an educational thread! I'm relatively new to active trading myself and had no idea there were so many strategic considerations around cost basis methods. One thing I'm wondering about that hasn't been covered much - how does this all work with dividend reinvestment plans (DRIPs)? I have several positions where I've been automatically reinvesting dividends for a couple years, which means I have tons of tiny lots at different prices. Does this make specific identification super complicated, or do most brokers handle this reasonably well in their interfaces? Also, for those using tax optimization tools like taxr.ai that were mentioned earlier - do they account for DRIP purchases when calculating the best lots to sell? I'm imagining that with dozens of small dividend reinvestment lots, the optimization becomes pretty complex. Appreciate everyone sharing their experiences here. This is exactly the kind of practical knowledge I wish someone had told me about when I first started investing more actively!