One strategy that worked for me in a similar situation was filing Form 8857 (Request for Innocent Spouse Relief) again, but with significantly more documentation. I was denied the first time like your friend, but on my second attempt I included much more detailed evidence of my ex's financial concealment and control. The key was getting very specific about which tax items on the return were attributable solely to my ex-spouse. I went line by line through our joint returns and documented with bank statements, emails, and other records showing which income items were completely unknown to me and which deductions were fraudulent. Has your friend considered this route? The appeal being exhausted doesn't necessarily mean she can't file again with new, more compelling evidence.

Your friend's situation is unfortunately very common, and I've seen several people in similar circumstances successfully resolve their tax debt despite having a non-cooperative ex-spouse. The key is understanding that the IRS treats joint filers as "jointly and severally liable" - meaning they can collect from either spouse regardless of who actually earned the income. For the OIC process, your friend can absolutely proceed without her ex's participation. The IRS will evaluate her current financial situation independently. Given her $110K income, she'll need to demonstrate that paying the full amount would create genuine economic hardship, especially considering her ongoing expenses for her college-age children. One important point about potential civil recovery: if her OIC is accepted and she pays a reduced amount, she could potentially sue her ex for his proportional share of what she paid (not the original debt). This would be handled in state court as a contribution claim, but she'd need to prove his share of the original tax liability. I'd strongly recommend she work with a tax professional who specializes in OIC cases involving divorced couples. They can help structure the offer to highlight the hardship created by her ex's deliberate asset concealment and non-cooperation.

I'm dealing with a similar AMT credit situation from 2022 and this thread has been incredibly helpful! Just wanted to add that if you're working with a tax professional, make sure they're experienced with AMT credits specifically. I learned the hard way that not all CPAs are equally familiar with the mechanics. My first accountant completely missed that I had AMT credits available and I ended up paying way more in taxes than I should have. When I switched to someone who specializes in stock compensation and AMT issues, they caught the error and helped me file amended returns to claim the credits I was entitled to. For anyone in a similar boat - don't be afraid to ask your tax preparer directly about their experience with AMT credit carryforwards. It's a specialized area and you want someone who really knows the rules inside and out, especially when you're dealing with larger amounts like $50k.

This is such a helpful thread! I'm in a similar situation with about $35k in AMT credits from 2023 option exercises. One thing I wanted to add that hasn't been mentioned yet - make sure you understand how state taxes interact with federal AMT credits if you're in a high-tax state. I found out the hard way that California (where I live) has its own separate AMT system, so you can end up with both federal and state AMT credits to track. The recovery mechanics work similarly but they're completely separate - you can't use federal AMT credits against state taxes or vice versa. Also, if you're planning to move to a different state in the coming years, that could affect your recovery timeline since different states have different tax rates and AMT rules. Something to factor into your financial planning if you're trying to optimize when you'll see that money back.

Has anyone tried using a energy usage monitor like a Kill-A-Watt to track exactly how much electricity your work equipment uses? I bought one for about $25 and plugged all my work stuff (computer, monitors, etc.) into a power strip that connects to the monitor. After tracking for a month, I was able to document exactly how many kWh my work equipment used vs my total electric bill. Made it super easy to calculate a precise percentage rather than guessing!

Great question! I'm also a freelance graphic designer working mostly from home without a dedicated office space. After going through this exact situation last year, here's what I learned: You absolutely CAN deduct utilities as business expenses even without the home office deduction, but the key is having solid documentation of your business usage percentage. Since you're working 20-25 hours from home each week, that's substantial business use. For your situation, I'd recommend: 1. **Internet**: Track your work hours vs. total usage time. If you work 25 hours/week from home and are awake/home about 100 hours/week, a 25% business deduction is totally reasonable. 2. **Electricity**: This requires more precision. Consider getting a Kill-A-Watt meter (about $25) to measure exactly how much power your work equipment uses. Plug your computer, monitors, printer, etc. into a power strip connected to the meter and track usage for a month. This gives you actual data rather than estimates. 3. **Documentation**: Keep detailed logs showing your calculation method, work hours, and equipment usage. The IRS wants to see you made a good faith effort to determine accurate percentages. The biggest mistake I see freelancers make is thinking they need a dedicated office to claim ANY business expenses. That's not true! You just need to be able to document the business portion of mixed-use expenses. With your 20-25 hours of weekly home-based work, you definitely have legitimate business expenses to claim.

This entire discussion has been incredibly valuable - thank you all for sharing your expertise! As someone who's been struggling with these exact issues, I wanted to add a perspective from the small business side. I run a small consulting firm and offer HSAs to my employees. The confusion around OTC medication eligibility has been a constant source of questions from my team. What's particularly challenging is that employees often assume if something is HSA-eligible, it should also be deductible on Schedule A, which creates a lot of misconceptions during tax season. After reading through this thread, I'm definitely going to share the historical context about the ACA and CARES Act changes with my team. Understanding that these aren't just arbitrary inconsistencies but the result of different legislative priorities at different times really helps frame the complexity. I'm also planning to implement that three-column tracking spreadsheet approach as a recommendation for our employees. The clarity of "HSA Eligible," "Schedule A Eligible," and "Expense" columns should help eliminate a lot of the confusion we see each year. One question for the tax professionals here - do you think it would be worthwhile to provide annual HSA education sessions for employees, particularly focusing on these kinds of rule differences? Or would that just add to the confusion? I want to be helpful without overwhelming people with tax complexity they don't need to fully understand to make good decisions.

As a newcomer to this community, I'm blown away by how informative this discussion has been! I just opened my first HSA this year and had no clue about the complexity behind what seemed like straightforward rules. The historical context everyone shared about the ACA removing OTC eligibility and the CARES Act restoring it really clicked for me. Before reading this, I was also scratching my head about why I could use HSA funds for Tylenol but couldn't deduct the same purchase on Schedule A if I paid out of pocket. I'm definitely going to implement that three-column spreadsheet approach that was mentioned - "Expense," "HSA Eligible," "Schedule A Eligible." It seems like such a clean way to track everything without getting bogged down in the apparent inconsistencies. One quick question for the group: I see mentions of keeping receipts for potential future HSA reimbursement if you pay out of pocket now. Is there a recommended system for organizing and storing these? I want to make sure I don't lose track of eligible expenses over the years, especially if I'm planning to let my HSA grow for decades before tapping into it. Thanks to everyone who shared their knowledge and tools - this thread should be required reading for anyone starting out with HSAs!

As a newcomer to this community, I'm finding this discussion incredibly valuable! I'm dealing with my first Section 751 situation and was feeling overwhelmed by the complexity, but reading through everyone's responses has really clarified the process. I particularly appreciate the consensus that emerged - trust the partnership's Section 751 calculation on the K-1 and let the ordinary income flow through to Schedule E naturally. The practical tips about documentation, client communication, and estimated tax planning considerations have been especially helpful. One question I have as someone new to this: are there any red flags I should watch for on K-1s that might indicate the partnership made an error in their Section 751 calculation? I want to make sure I'm not just blindly accepting the partnership's work without doing my due diligence as the individual return preparer. Also, does anyone have recommendations for continuing education resources specifically focused on partnership taxation? This thread has shown me how much more I need to learn about these complex interactions between partnership and individual reporting. Thanks to everyone who shared their expertise here - this community is an incredible resource for practitioners at all levels!

As a newcomer to this community, I'm really impressed by the depth and quality of this discussion! I'm currently studying for the EA exam and partnership taxation has been one of my most challenging areas, so reading through this thread has been incredibly educational. I wanted to ask about one aspect that hasn't been covered yet - when dealing with Section 751 gain from PTP sales, are there any special considerations for state tax reporting? I know some states have different treatment for partnership income, and I'm wondering if the Section 751 ordinary income characterization always flows through consistently at the state level, or if there might be state-specific adjustments needed. Also, for those who mentioned using various software solutions and services like taxr.ai and Claimyr, do you find that state tax complications are something these tools help with, or do you typically need to research state-specific partnership rules separately? The consensus here about trusting the partnership's K-1 characterization and letting it flow to Schedule E makes perfect sense for federal purposes, but I want to make sure I'm not missing any state-level nuances that could affect the overall tax picture for partners. Thanks to everyone who has contributed to this thread - it's been an amazing learning experience!