Quick question - does anyone know if you need to include the costs of improvements to the house when calculating the gain? We did about $30k in renovations before selling.

Don't panic! This is actually a very common situation and you're likely in good shape. Since you lived in the home as your primary residence for exactly 5 years, you definitely qualify for the Section 121 exclusion. With a $255,000 gain and assuming you're married filing jointly, you're well under the $500,000 exclusion limit, so you shouldn't owe any capital gains tax. The IRS letter is basically their automated system saying "we saw you sold property but didn't report it on your return." They're not accusing you of anything - they just want the paperwork to show why no tax is due on the sale. You can respond to the letter with the completed Schedule D and Form 8949 showing the sale and the exclusion. Make sure to include any improvement costs in your basis calculation (like that $30k in renovations mentioned by another poster) as this reduces your gain even further. The letter should have specific instructions on what forms to include and where to send them. This is much simpler than filing a full amended return, and once they receive your response showing the exclusion applies, they'll typically send a letter closing the matter with no additional tax due. I've seen this exact scenario dozens of times - it's routine correspondence, not a red flag for audits or anything to worry about long-term.

Don't forget about the business use percentage! If you're using your Santa Fe for both personal and business purposes, you can only depreciate the business portion. For example, if you use it 70% for business and 30% personal, you can only take depreciation on 70% of the cost. Also, have you considered just taking standard mileage for 2022 and 2023 instead of actual expenses with depreciation? With your low income, it might be simpler and possibly more beneficial.

Your situation is more common than you think! The good news is that filing late doesn't disqualify you from bonus depreciation - what matters is when you actually placed the vehicle in service for business use. Since you bought the Santa Fe in March 2022 and presumably started using it for business then, you can still claim 100% bonus depreciation for 2022. However, you'll face late filing penalties and interest on any taxes owed. Given your low income across 2022-2023, I'd strongly recommend running the numbers on a few different scenarios: 1. **100% bonus depreciation in 2022** - This will likely create a large NOL that carries forward 2. **Section 179 election** - You can choose exactly how much to deduct (maybe just enough to zero out your 2022 income) 3. **Standard mileage method** - Might be simpler and more beneficial given your income levels With three Schedule Cs and varying income levels, the optimal strategy isn't obvious. You'll need to track business use percentage carefully and allocate between your different businesses based on actual mileage. Consider getting professional help given the complexity - whether that's a tax software that can model different scenarios or speaking with a tax professional who can run the numbers for your specific situation.

Just went through this exact situation last year in Oregon (also unmarried couple, both on mortgage). What worked for us was creating a simple spreadsheet tracking each person's contributions to our joint account throughout the year, then using that percentage to split the mortgage interest deduction. Since you mentioned you contribute about 3x what your partner does, you'd probably end up with around 75% of the interest deduction. The IRS Publication 936 specifically addresses this - it says you can deduct mortgage interest you paid during the tax year, regardless of whose name is on the mortgage. Key documentation to keep: monthly bank statements showing deposits from each person, the mortgage payment records from your joint account, and maybe a simple signed agreement between you two stating how you're splitting it based on actual contributions. We kept it simple - just a one-page document saying "Partner A contributed 73% to joint account used for mortgage payments in 2024, therefore claims 73% of mortgage interest deduction per IRS Pub 936." Never had any issues and it allowed the higher earner to itemize while the other took standard deduction, maximizing our combined refund.

This is such a common issue for unmarried couples! I went through something very similar last year. Based on my research and experience, you absolutely can claim the mortgage interest based on what you actually paid rather than just splitting it 50/50 by ownership. Since you're paying most of the mortgage from your joint account and contributing most of the funds, you can claim the corresponding percentage of the $19,800 interest. The IRS cares about who actually paid the interest, not just whose name is on the deed. Here's what I'd recommend: Start tracking your contributions to that joint account if you haven't already. If you can show you contributed, say, 75% of the funds used for mortgage payments, you can claim 75% of the mortgage interest deduction. This would give you about $14,850 in interest to deduct, which should easily put you over the standard deduction threshold for itemizing. Make sure to keep good records - bank statements showing your deposits to the joint account, mortgage payment records, etc. You might also want to create a simple written agreement with your partner documenting the arrangement, just in case. The key is being able to demonstrate your actual financial contribution if the IRS ever asks. Since you're earning 3x more and paying most of the bills, this approach should both be legitimate and give you the better tax outcome you're looking for.

I've been dealing with this exact same issue for months! What finally worked for me was requesting Form 4340 (Certificate of Assessments and Payments) directly from the IRS. This form explicitly shows your CSED dates for each tax year, unlike the regular transcripts that make you hunt for assessment dates and do the math yourself. You can request it by calling the IRS or by submitting Form 4506-T and specifically asking for Form 4340 in the remarks section. It takes about 10 business days to receive, but it's worth it because it removes all the guesswork. The form clearly lists "Collection Statute Expiration Date" for each liability, so there's no confusion about calculating 10 years from various transaction codes. Just be aware that if you've had any collection suspensions (bankruptcy, OIC, CDP hearings, etc.), those will extend your CSED beyond the basic 10-year period. But at least with Form 4340, you'll have the baseline dates to work from.

I've been in your exact situation and found that the key is understanding that the CSED information is there on your transcripts, but it's not labeled as such. You need to look for specific transaction codes and dates, then do some calculation. On your Account Transcript, look for these key codes: - TC 150: This shows when your original return was processed - TC 290/300 series: Additional assessments - TC 530: Shows if there were any collection holds The tricky part is that various events can pause or extend the 10-year collection period. I had a similar experience where I thought my CSED was one date, but it turned out I had missed a collection suspension that added several months. If you're still struggling after checking for these codes, I'd recommend either requesting Form 4340 (as mentioned in another comment) or calling the IRS directly. Form 4340 explicitly shows CSED dates without requiring you to interpret transaction codes, which eliminates the guesswork entirely. It's been a lifesaver for people dealing with complex collection histories.

I went through something very similar last year with a $12,000 escrow holdback on my home sale. Here's what I learned from working with my CPA: You definitely want to treat this as an installment sale using Form 6252. The key is that you'll receive two separate 1099-S forms - one in 2024 for the main sale proceeds and another in 2025 when the escrow is released. If you report everything in 2024, you'll have a mismatch when that second 1099-S shows up. For your situation with $540k sale price and $14,500 holdback, you'd report about 97.3% of both your proceeds AND cost basis in 2024, then the remaining 2.7% in 2025. The $250k capital gains exclusion can be applied proportionally across both years. One thing to watch out for - make sure you keep detailed records of the actual repair costs. If they come in under the $14,500 escrow amount, the difference gets added back to your 2025 proceeds. If they exceed the escrow and you have to pay extra (and it was required by the sale agreement), that reduces your 2025 reportable amount. The Form 6252 calculations might look complicated at first, but it's much cleaner than trying to explain discrepancies to the IRS later. Better to do it right the first time!

Based on my experience handling escrow holdbacks, I'd strongly recommend using the installment sale approach with Form 6252 rather than trying to report everything in 2024. The tax code is pretty clear that when you receive sale proceeds in different tax years, you should report them proportionally. Here's a practical tip that saved me headaches: contact your title company or escrow agent NOW to confirm they understand the 1099-S reporting requirements for your situation. Ask them specifically whether they'll issue one 1099-S in 2024 for the full sale amount, or separate forms for each tax year. Getting this clarified upfront will help you plan your tax reporting strategy correctly. Also, start a dedicated file for all escrow-related documentation - the original sale agreement showing the holdback terms, repair estimates, actual repair invoices when completed, and any correspondence about the escrow release. If the IRS ever questions the timing or amounts, having everything organized will make your life much easier. The proportional allocation math isn't too complex once you get the hang of it, but don't hesitate to work with a tax professional if you're not comfortable with Form 6252. Getting it right the first time is worth the investment, especially with the capital gains amounts you're dealing with.