As someone who works in tax compliance, I want to emphasize something that's been touched on but bears repeating: the wash sale "functionality" isn't missing from FreeTaxUSA - it's working exactly as the IRS intends it to work. The wash sale rule requires brokers to adjust your cost basis and report it on your 1099-B. When you see Box 1g checked, that's your broker telling you (and the IRS) that they've already done all the wash sale calculations and factored them into the adjusted basis in Box 1e. This is actually much better than having tax software try to recalculate wash sales, because your broker has access to all your trading data throughout the year and can track the 30-day windows perfectly. If tax software tried to duplicate this calculation, there's a higher chance of errors or discrepancies with what your broker reported to the IRS. For anyone still worried: the IRS computer systems automatically match your 1099-B entries with what brokers reported. As long as you enter the exact numbers from your 1099-B into FreeTaxUSA, you're in complete compliance. No additional forms, no manual calculations needed. You're making the right choice sticking with FreeTaxUSA and saving the money!

I went through this exact same situation last year with about $18k in wash sales from some aggressive trading on tech stocks. I was convinced FreeTaxUSA was inadequate and was ready to pay for TurboTax Premium. After doing a deep dive into how wash sales actually work, I realized I was completely misunderstanding the process. Your broker (whether it's Fidelity, Schwab, E*TRADE, etc.) is required by law to calculate wash sale adjustments and include them in the adjusted cost basis they report on your 1099-B. Here's the simple test: Look at Box 1g on your 1099-B forms. If it's checked, your broker has already done ALL the wash sale calculations for you. The adjusted basis in Box 1e already includes the wash sale adjustments. You literally just enter those numbers exactly as they appear into FreeTaxUSA - no special functionality needed. I saved the $79 TurboTax fee and my return was processed without any issues. The IRS gets the same 1099-B forms you do, so as long as your entries match exactly what your broker reported, you're golden. The only time you'd need special wash sale functionality is if your broker somehow failed to calculate wash sales properly (which would be extremely unusual for major brokerages) or if you're doing complex manual calculations for some reason. Check Box 1g first before spending extra money - you'll probably find FreeTaxUSA works perfectly fine!

One important thing to consider is organizing your records NOW before tax season gets busy. Since you mentioned shutting down the business a few months ago, this is actually perfect timing to get everything sorted while it's still fresh in your memory. Create a simple spreadsheet with columns for: Date, Item Description, Purchase Cost, Sale Price, Platform Fees, Shipping Costs, and Net Profit/Loss per transaction. Even if you don't have perfect records, try to reconstruct what you can from your bank statements, PayPal records, and any Whatnot transaction history you can download. Also consider whether you want to treat this as a sole proprietorship (Schedule C) or if there are any advantages to filing as a partnership since you mentioned this was run with your partner. The tax implications can be different, and you might want to consult a tax professional for that specific question since it involves two people and substantial income. The key thing is that high gross sales with low/no profit is actually pretty common in reselling, especially when markets get saturated like you described with Lego. The IRS understands this, but you need solid documentation to support your expense claims.

Something to keep in mind - since you mentioned your partner ran the business but you're both concerned about taxes, make sure you're clear on whose SSN/EIN the Whatnot account was registered under. Whoever's tax ID is associated with the account will receive the 1099-K and be responsible for reporting all the income, even if you both contributed to the business. If the account was under your partner's SSN but you both invested money and time, you'll need to figure out how to handle the income split. The person who gets the 1099-K will need to report the full gross income on their Schedule C, but they can potentially "expense out" payments made to you as a business partner - though this gets complicated without formal partnership agreements. Also, don't stress too much about the high gross sales number. The IRS sees this all the time with resellers, especially on platforms like Whatnot, eBay, etc. What matters is your net profit after legitimate business expenses. Just make sure you have documentation for your major expense categories: inventory costs, shipping supplies, platform fees, storage costs if you rented space, mileage for sourcing inventory, and even a portion of utilities if you used part of your home for the business. The key is being organized and honest about your record-keeping. If you lost money or barely broke even, that's a legitimate business outcome that the IRS recognizes, especially in competitive reselling markets.

I'm confused about something - doesn't the 2-year ownership and use test apply regardless of this non-qualified use issue? Like if you move back and live there for 2 years before selling, wouldn't you qualify for the exclusion anyway? I've been trying to understand this for my own situation.

This is a really complex situation, and I appreciate everyone sharing their experiences and insights. As someone who's dealt with similar Section 121 exclusion questions, I want to emphasize how important it is to get this right given the significant tax implications. From what I understand about your situation, the key issue is whether the 17 years your brother-in-law lived there would count as "non-qualified use." Based on the responses here, it sounds like since you weren't charging rent and this was a family arrangement, those years likely wouldn't count against you under the non-qualified use rules. However, given that you're looking at a $675k gain with only $500k in potential exclusion, I'd strongly recommend getting a second opinion from a tax professional who specializes in real estate transactions. The difference between 25% exclusion and full exclusion that's been discussed here could save you tens of thousands of dollars. Also, make sure to document everything about the arrangement with your brother-in-law - even informal family arrangements should be properly documented in case the IRS has questions later. The fact that he paid property taxes directly actually seems to support that this was a family care arrangement rather than a rental situation.

This appears to be a CP2000 Proposed Adjustment Notice or similar correspondence. These notices typically involve a discrepancy between income reported on your return versus information the IRS received from third parties. The processing timeframe after acceptance varies based on current IRS backlog status and submission method. Electronic submission via the IRS portal generally results in faster processing (6-12 weeks) compared to mail submission (12-16 weeks).

I went through this exact process about 18 months ago with a CP2000 notice. Here's what I learned: definitely use the upload option through the IRS website - it's much faster than mail. I submitted mine electronically and got my adjusted refund in about 7 weeks. Make sure to take screenshots of your submission confirmation and save any reference numbers they give you. Also, set up online account access at irs.gov if you haven't already so you can monitor your account transcript for updates. The transcript will show processing codes that indicate where your case stands in the system. One tip: if you're uploading, make sure your signature is clear and the document quality is good - poor scans can cause delays.

What a stressful situation, but I'm really glad you got to the bottom of it! Having someone else's bonus accidentally added to your W2 is definitely the kind of payroll error that would make anyone panic when they see that inflated income amount. Filing for the extension is absolutely the smart move here. Since you now have written confirmation from HR about their mistake and know your actual income is $4,200 lower, you're in a much better position than if you had to guess what went wrong. One thing to keep in mind - when you file Form 4868 for the extension, make sure to calculate any estimated tax payment based on your correct income (from your paystubs), not the inflated W2 amount. No sense in overpaying the government and waiting months to get your own money back in a refund. This whole thread is actually a great reminder for everyone to compare their final December paystub with their W2 as soon as it arrives. Catching these errors in January gives you so much more time to get corrections processed before the filing deadline hits. Hope your W-2c comes through quickly and this all gets resolved smoothly!

This whole thread has been incredibly helpful! As someone who's never dealt with W2 errors before, seeing the step-by-step advice and real experiences from people who've been through this is reassuring. The key takeaways I'm getting are: 1. Always compare your final December paystub to your W2 immediately when it arrives 2. If there's an error and time is short, file Form 4868 for an extension 3. Calculate any estimated tax payment based on your CORRECT income, not the inflated W2 4. Keep all documentation (incorrect W2, paystubs, HR correspondence) 5. Use Form 4852 (substitute W2) if your employer can't provide a corrected W-2c in time It's wild that payroll can mix up someone else's bonus with your income - that would definitely send me into a panic! But it sounds like you handled it perfectly by persistently following up with HR until you got answers. Thanks to everyone who shared their experiences and advice. This is exactly the kind of community knowledge that helps people navigate these stressful tax situations!