Quick question - does anyone know if there are penalties for the employer for not checking Box 13 correctly? My husband's W2 has the same issue and his company is being difficult about issuing a correction. I'm wondering if mentioning potential penalties might get them to take action.

I work in tax compliance and want to emphasize something important that hasn't been fully addressed here. While everyone's right that the IRS cares about actual participation over checkboxes, having mismatched documentation can absolutely trigger audit flags. If your W-2 shows Box 14 retirement contributions but Box 13 isn't checked, and then you report on your tax return that your wife IS covered by a retirement plan (which you should, since it's factually correct), that inconsistency could flag your return for review. The IRS systems do cross-reference these things. Beyond the IRA deduction implications, this could also affect other tax benefits like the Retirement Savings Credit if your income qualifies. Getting the W-2C isn't just about being technically correct - it's about having clean documentation that matches your tax filing. I'd strongly recommend being persistent with HR. Frame it as a compliance issue rather than a personal inconvenience. Most payroll departments understand compliance language better than tax impact language.

Does anyone know if trading losses from section 1256 contracts are considered investment income for the Net Investment Income Tax (3.8% tax)? My CPA says I can use these losses to offset other investment income subject to NIIT, but I'm not sure.

I went through a very similar situation last year with K-1s showing section 1256 losses, and I can share what I learned after consulting with a tax professional. The good news is that section 1256 contract losses from partnerships are generally NOT subject to the passive activity loss limitations, even if you're not actively involved in managing the partnership. This is because they're treated as investment/trading losses rather than passive business losses. For the basis limitation, if your combined capital accounts show $45k positive after the losses, you almost certainly have sufficient basis to claim the full $16k in losses. The key thing to watch for is whether you received any distributions during the year that might have reduced your basis below what's shown in the capital account. Here's what I'd recommend: 1. Report the 1256 losses on Form 6781 as you mentioned (60% long-term, 40% short-term) 2. Check if either partnership sent supplemental statements about distributions or basis adjustments 3. If you're still unsure about your exact basis calculation, consider keeping detailed records going forward since basis carries over year to year The partnership loss limitation rules are definitely confusing when you first encounter them, but for your specific situation with investment partnerships and 1256 contract losses, they're likely not going to be a major obstacle.

Congratulations on your new baby! Your situation is totally manageable. Since you completed your OIC in 2021, you're well within the 5-year compliance period, but that doesn't prevent you from setting up payment plans for new tax debts. The key thing is to act promptly - file your 2023 return on time (or request an extension) and set up the payment plan before the payment deadline. This actually helps demonstrate compliance with your OIC terms rather than hurting it. Given that you're on short-term disability with a newborn, I'd strongly recommend being conservative with your monthly payment amount. With a $9,500 balance, you could set up a plan for as low as $130-140/month and still pay it off within the IRS's 72-month maximum timeframe. You can always increase payments later when you're back to full income. The online payment agreement tool is probably your best bet for quick setup. Just keep in mind the current interest rate is around 8% annually, so if you have low-interest alternatives available, it might be worth comparing the total cost.

I'm in a very similar situation - had an OIC accepted in 2019 and now dealing with new tax debt while on reduced income. What really helped me was understanding that the IRS actually prefers you to proactively set up a payment plan rather than just letting the debt sit there. One thing I learned the hard way is to make sure you communicate with the IRS about your situation. When I called to set up my payment plan, I mentioned that I had a previous OIC and was currently on reduced income due to medical reasons. The representative noted this in my file and actually suggested a lower monthly payment than I had initially requested. Also, since you're on short-term disability, you might qualify for Currently Not Collectible (CNC) status if your financial situation is truly dire. But given that you have some savings and just want to preserve your emergency fund with a new baby, the payment plan sounds like the smarter approach. The peace of mind is worth it - especially when you're already dealing with the stress of a newborn and recovery from childbirth. You're being responsible by addressing this promptly rather than ignoring it.

Great question about S-Corp basis tracking! As someone who went through this same confusion a few years ago, I can share what I learned from my CPA. For your specific questions: 1. Yes, use the K-1 Part III, but don't just focus on Box 1. You need to look at ALL the boxes - income items (Boxes 1-10) generally increase basis, while deductions and losses (Boxes 11-13) decrease it. Also check Box 16 carefully for distributions and other adjustments. 2. Unfortunately no - there's no single summary box. The IRS expects shareholders to maintain their own basis calculations, which is honestly one of the more frustrating aspects of S-Corp ownership. 3. Since there's no official place this appears on returns, you'll need to reconstruct from Day 1. Start with your initial investment/contribution when you formed the S-Corp, then work through each year's K-1 systematically. One critical tip: Make sure you're handling the ORDER of adjustments correctly. Income and contributions increase basis first, then losses and deductions reduce it, and finally distributions come out last. This order matters because it affects how much loss you can deduct in any given year. Given your simple structure (sole owner, no loans, minimal complexity), your calculation should be straightforward once you get the methodology down. I'd strongly recommend setting up a tracking system now so you don't have to reconstruct again in the future!

I've been through this exact same struggle with my S-Corp basis tracking! One thing that really helped me was creating a running basis worksheet that I update quarterly instead of waiting until year-end. A few practical tips from my experience: 1. Don't forget about estimated tax payments - these don't directly affect your S-Corp basis, but they're important for cash flow planning alongside your basis calculations. 2. If you've made any equipment purchases through the S-Corp that you elected to expense under Section 179, make sure you're accounting for those properly in your basis calculation. The deduction flows through to your personal return but can affect basis. 3. Keep detailed records of ANY money you put into or take out of the business bank account. Even if something seems minor, it might be relevant for basis purposes. Since you mentioned you've always taken distributions less than your estimated basis, you're probably in good shape, but getting the exact numbers will give you peace of mind and help with future planning. The reconstruction is tedious but absolutely worth doing correctly!

Unpopular opinion maybe, but I tried tracking receipts for sales tax one year and it was SO not worth the hassle. Spent hours organizing receipts, entering them into spreadsheets, and in the end the standard deduction was still higher. Unless you make a truly massive purchase or live in a state with really high sales tax AND no income tax, the standard deduction is usually better for most average people since they doubled it a few years ago.

As someone who recently moved from New York to Texas, I can definitely confirm that the sales tax deduction becomes much more attractive when you don't have state income tax to deduct! In New York, my state income tax was always higher than what I paid in sales tax, so itemizing with income tax made more sense. But now in Texas with no state income tax, I'm planning to use the sales tax deduction for the first time this year. One thing I learned from my CPA is that you don't have to choose between keeping every single receipt OR using the IRS calculator - you can actually use a hybrid approach. Use the IRS sales tax tables for your regular purchases throughout the year, then add on the actual sales tax from major purchases where you do have receipts (like cars, appliances, etc.). This seems like the sweet spot between being thorough and not driving yourself crazy with paperwork. I kept receipts for anything over $500 this year and plan to use the calculator for everything else.