Something else to consider - if you're coming from a zero-tax country, you might also need to look into whether your home country has any tax obligations for residents abroad. Some countries tax worldwide income regardless of where you live, which could complicate things. Also, at your income level ($525k), you'll definitely want to work with a tax professional who understands international relocations. The interplay between federal/state taxes, potential foreign tax credits, and various deductions can get complex quickly. A good CPA who specializes in high-income earners and international moves will save you way more than their fees in optimized tax planning. One more tip - if you do choose a no-income-tax state like Florida or Texas, make sure you establish proper residency there (driver's license, voter registration, etc.) to avoid any questions from high-tax states about where you're actually domiciled for tax purposes.

Great question! As someone who went through a similar transition (though at a lower income level), here are some practical considerations beyond the tax rates: **Effective Tax Rate vs Marginal Rate**: Your effective federal tax rate won't be the full 37% - that's only on income above ~$578k. Your total federal effective rate will likely be around 32-33% on $525k. **State Comparison for Your Situation**: - **Florida/Texas**: ~32-33% total (federal only) - **New York**: ~42-43% total (federal + ~10% state + potential NYC tax) - **California**: ~45-46% total (federal + ~13% state at your income level) **Hidden Costs to Consider**: - States with no income tax often compensate with higher sales tax, property tax, or fees - Cost of living varies dramatically (housing costs in NYC vs Texas can offset tax savings) - Some states have better infrastructure, schools, healthcare systems **My Recommendation**: 1. Use a comprehensive tax calculator that accounts for all taxes (income, property, sales, etc.) 2. Factor in your lifestyle preferences - climate, culture, proximity to work/family 3. Consider hiring a tax professional familiar with international relocations before making your final decision The "best" choice depends on your total financial picture, not just income tax rates!

One thing I haven't seen mentioned yet is the state tax implications of amending your federal return. If your federal amendment affects your state taxes (which it often does), you'll typically need to file an amended state return as well. Each state has its own deadline for amendments - some follow the federal 3-year rule, but others have different timeframes. For example, California gives you 4 years to amend, while some states only give you 3 years from when you filed the original state return (not the due date). If your federal amendment results in additional federal tax owed, it could also trigger additional state tax, so factor that into your calculations. Also, don't forget about estimated tax payments if your amendment shows you'll owe a significant amount. If the additional tax is over $1,000, you might need to make quarterly estimated payments going forward to avoid underpayment penalties next year.

This has been such a helpful thread! I'm dealing with a 2021 amendment myself and had no idea about so many of these details. One thing I wanted to add that might help others - if you're amending because you forgot to claim the Recovery Rebate Credit (for missing stimulus payments), that's actually pretty straightforward and usually processes faster than other types of amendments. I filed mine in March and got my refund in about 10 weeks, which was much quicker than the 12-16 weeks everyone talks about. The IRS seems to have streamlined processing for these since so many people missed claiming their stimulus money on their original returns. Also, for anyone worried about making mistakes on the 1040-X form - the instructions are actually pretty clear if you read them carefully. The key is being very specific in Part III about what you're changing and why. Don't just say "correcting income" - explain exactly what income you're adding/removing and reference the specific line numbers from your original return.

I'm dealing with a similar situation right now and wanted to share what my tax preparer told me. Since you haven't lived in the house for 5+ years, you won't qualify for the primary residence exclusion, but don't panic about the documentation issue. The IRS has specific guidelines for "adequate records" and they recognize that homeowners don't always keep perfect documentation. Here's what my CPA suggested as a systematic approach: **Start with what you definitely have:** - Any financing records (mortgages, home equity loans, credit lines used for improvements) - Photos with timestamps from your phone or social media - Any permits you can find through your city/county records **Then reconstruct methodically:** - Create a timeline of all improvements by year - Search all email accounts for contractor communications - Check bank/credit statements for large purchases at home improvement stores - Look for any insurance claims or policy updates related to the improvements **For valuation:** - Use cost estimation tools like RSMeans or local contractor websites to establish reasonable market rates for the work done in those specific years - Your sister might have better records since she stayed in the house - definitely coordinate with her The key is showing good faith effort to reconstruct accurate records. The IRS allows reasonable estimates when original documentation is lost, as long as you can support your numbers with some form of evidence. Don't let the fear of imperfect records stop you from claiming legitimate improvements that significantly increase your basis.

As someone who went through a similar situation with capital gains and missing receipts, I want to emphasize that you're not stuck with a massive tax bill! The key is being thorough and systematic in reconstructing your records. Here's my recommended action plan based on what worked for me: **Immediate steps:** - Contact your sister ASAP to coordinate - she may have kept records you forgot about since she handled the house after you moved - Pull all bank and credit card statements from 2013-2018 and highlight every home improvement expense - Search ALL your email accounts using keywords like "contractor," "renovation," "quote," "invoice," "Home Depot," etc. **Documentation goldmines people often overlook:** - Your county's permit database (usually searchable online by address) - Property tax assessment records showing value increases after improvements - Homeowner's insurance policy updates reflecting increased coverage - Social media posts with dated photos of renovation progress - Text message archives if you backed up your phone **For the major projects you mentioned:** - Kitchen renovation (2016): Check for any home improvement loans, appliance purchase records, or contractor communications - Roof replacement: This almost certainly required a permit - check county records - Windows: Energy efficiency rebates from utility companies sometimes have records - Bathroom renovations: Plumbing permits are common for full bathroom remodels The IRS accepts "reasonable reconstruction" when original records are unavailable. Create a detailed spreadsheet with your best estimates supported by whatever evidence you can gather. Even if you can only document 70-80% of your actual improvements, that could still save you thousands in capital gains taxes. Don't give up - you have more documentation than you think!

I'm curious about the piece of land you received as part of the settlement. That's considered a non-cash payment and you'll have a tax basis in that land equal to its fair market value at the time of the settlement. Did your accountant mention how to handle that part?

Your accountant may be oversimplifying this. Property damage settlements have specific tax rules that depend on several factors. The key question is whether the settlement exceeds your "adjusted basis" in the damaged property (trees and land). For the trees specifically, if they were mature trees that had been growing for years, they likely had significant value that should be part of your property's basis. The IRS generally treats compensation for destroyed timber/trees as a return of capital up to your basis, not taxable income. Given that your settlement specified $8k for "diminished property value" as mentioned in your comment, that portion should definitely reduce your basis rather than being taxable income. I'd strongly recommend getting a second opinion from a tax professional who specializes in property damage settlements, because it sounds like your current accountant might not be familiar with these specific rules. Also consider getting documentation of the trees' value before destruction - this could significantly increase your basis and reduce any potential tax liability.

One thing nobody's mentioned yet - make sure you're considering the difference between short-term and long-term capital gains/losses. They're taxed at different rates! Short-term gains (assets held less than a year) are taxed at your ordinary income rate, while long-term gains get preferential lower tax rates. When calculating your net position, short-term losses first offset short-term gains, and long-term losses offset long-term gains. If you have excess in one category, then it can offset the other category. For your specific situation with the $700 net loss, it doesn't matter much, but if you're trying to be strategic about which positions to sell, the holding period can make a big difference in the tax impact.

Great question about capital loss deductions! Just to clarify the mechanics for anyone else reading - when you have a net capital loss like your $700, you can indeed deduct it dollar-for-dollar against your ordinary income, up to the $3,000 annual limit. The key thing to understand is that capital losses first offset capital gains (which you've calculated correctly), and then any remaining net loss can reduce your other taxable income. Since your net loss is only $700, you'll be able to deduct the full amount this year. One additional consideration: if you're close to year-end, you might want to review whether you have any other positions with unrealized gains or losses. Sometimes it makes sense to do a bit more tax-loss harvesting to optimize your overall tax situation, especially if you're in a higher tax bracket where every deduction counts more.