Another tip - make sure you know which of your grandma's investment accounts have automatic dividend reinvestment. This affects the cost basis on the 1099-B because reinvested dividends increase the basis. My dad's accounts had this feature and we were showing more gains than we should have been because the reinvested dividends weren't being properly tracked in the basis. Had to go through years of statements to correct it!

This is such a helpful thread! I'm dealing with something similar for my elderly aunt. One thing I learned the hard way - make sure to check if any of the 1099-INT forms show tax-exempt interest income in Box 8. My aunt had municipal bond funds across several accounts and we almost reported that income as taxable when it shouldn't have been. Also, when you're organizing everything for the accountant, I found it helpful to create a simple spreadsheet listing each 1099 form, which institution it's from, and the key amounts. It makes the appointment go much smoother when you can quickly reference which form has which information. The accountant will definitely appreciate having everything organized beforehand, especially with multiple investment accounts. Good luck with your appointment next week!

I learned the hard way that if you're self-employed, you're supposed to make estimated tax payments DURING the year (quarterly). If you didn't, then you're already late on those payments and that's why you'll owe penalties even if you pay "on time" by April 15. The deadlines for estimated payments were April, June, September 2024 and January 15, 2025.

Just to add some clarity to what others have mentioned - the key thing to understand is that there are actually two different types of penalties you might face: 1. **Failure to File penalty** - charged if you don't file by April 15 (5% per month) 2. **Underpayment penalty** - charged if you didn't pay enough taxes during 2024 through withholding or estimated payments For your situation with $7,800 owed, filing early vs. April 15 won't save you money on the underpayment penalty since that's already calculated based on what you should have paid quarterly during 2024. However, filing early does protect you from the failure-to-file penalty. One thing I don't see mentioned yet - if this is your first time owing significant penalties, definitely ask about **first-time penalty abatement** when you call the IRS. They can often waive the entire underpayment penalty if you have a clean compliance history for the past 3 years. This could potentially save you hundreds of dollars and is worth a phone call to request. Also, make sure to calculate whether you might qualify for any of the safe harbor rules mentioned earlier - sometimes people think they'll owe penalties when they actually won't!

You're absolutely not alone in feeling frustrated by this! The IRS tracking system is honestly pretty outdated - they get all the raw data but don't provide the calculations we actually need as taxpayers. For your situation with the lost documents, Gabriel's suggestion about requesting old tax returns is spot on. But here's another tip that might help: if you had the same financial institution for your IRA over those 8 years, try calling them first. Many brokerages can provide historical contribution summaries going back several years, which might be faster than waiting for IRS transcripts. Also, if you used tax software like TurboTax or H&R Block in previous years, they often store your old returns online. You might be able to log into your old account and download your Form 8606 from previous years to reconstruct your basis. The whole system definitely needs modernizing - other countries handle this much more efficiently by calculating taxes for their citizens instead of making everyone figure it out themselves!

This is such a helpful thread! I've been dealing with the same confusion about Form 5498 and non-deductible IRA contributions. What really clicked for me after reading everyone's responses is that the Form 5498 serves multiple purposes - it's not just about what I need to report on my current tax return, but also creates a paper trail for the IRS to track things like RMDs and conversions down the road. @Eli Wang - your original question really resonated with me because I had the exact same confusion about why the fair market value gets reported if we don't use it directly. Now I understand it's more about the IRS having complete records of account growth over time. One thing I'd add for anyone in a similar situation: make sure you're filing Form 8606 every single year you make non-deductible contributions, even if your tax software doesn't explicitly prompt you for it. I almost missed this one year because I was using a different tax program that didn't walk me through IRA basis tracking as clearly. That form is crucial for maintaining your basis records with the IRS, and it's what will protect you from double taxation when you eventually withdraw those contributions.

Just wanted to chime in as someone who's been running a mobile pet grooming business for 3 years - you're absolutely right to track all those miles from home to clients! The confusion often comes from CPAs who deal mainly with traditional businesses that have fixed office locations. For truly mobile service businesses like pet sitting, dog walking, mobile grooming, etc., the rules are different because our "office" is wherever our clients are. I track every single mile from my house to client locations, even on days when I only have one appointment. Last year my mileage deduction was over $12,000 - it's typically my largest business expense! The IRS has never questioned it because it's completely legitimate for our type of work. One thing I'd add to the great advice already given: make sure you're also tracking any stops you make for business supplies between clients (pet store runs, gas stations, etc.). Those miles count too! And if you ever drive directly from one client to another without going home first, those are definitely business miles. Your record-keeping sounds solid. The key is being able to show the business purpose for each trip, which is easy for pet sitters since every trip is to provide services to a client. Keep doing what you're doing - you'll be in great shape when tax time comes!

As someone who's been through multiple IRS audits for my mobile business (not by choice!), I can confirm that tracking mileage from home to clients is absolutely legitimate for pet sitting businesses. The auditors actually complimented my documentation system because I had clear records showing each trip was for a specific client appointment. What really sealed it for me was when the auditor explained that since pet sitting can ONLY be performed at the client's location (you can't bring someone's cat to your house for sitting!), every trip from your home base to provide services is considered business travel, not commuting. Here's what I learned saves time and headaches: create a simple spreadsheet with columns for date, client name, starting odometer, ending odometer, total miles, and purpose. For repeat clients, I calculate the round-trip distance once and just reference it. Takes maybe 2 minutes per day to maintain. The fact that you're asking these questions and tracking everything from the start puts you way ahead of most new business owners. Your CPA will definitely confirm what everyone here is telling you, but you can feel confident moving forward with those deductions. The mileage savings alone will probably be one of your biggest tax benefits! Don't let the complexity scare you - mobile service businesses like ours are supposed to have high mileage. It's the nature of what we do.

One thing to watch out for with BC PST - if you're providing digital products or services, the rules can be different than for physical goods. I learned this the hard way last year. For digital services sold to BC customers, you generally need to charge PST. But the same digital service sold to customers outside BC (including US) is PST-exempt. Check out the BC gov website's bulletin PST 107 for the specific rules on telecommunications services which includes digital products. Don't make the same mistake I did and assume digital = exempt!

Quick heads up for anyone with BC small businesses - make sure you're also keeping track of where YOUR suppliers are located. If you're buying stuff from other provinces or internationally, different input tax rules apply. For example, I was buying software from an Ontario company and they were charging me HST, which affects how I claim input tax credits compared to GST. And when I buy from US suppliers, there's no GST/HST charged but I might pay duties or import taxes depending on what I'm buying. Tracking this stuff from day one saves massive headaches at tax time!!