I think everyone is overlooking something important - if your daughter is a dependent on your tax return, her standard deduction is much lower than the regular standard deduction. It's limited to either $1,250 or her earned income plus $400, whichever is greater (but not more than the regular standard deduction). So with $2,700 in earned income, her standard deduction would be $3,100 ($2,700 + $400), which means some of her capital gains might be taxable! Make sure FreeTaxUSA is calculating this correctly.

You're absolutely right to be confused about FreeTaxUSA not recognizing the earned income! I went through this exact same issue with my nephew's landscaping income last year. The key is making sure you enter the dog sitting income in the right place. In FreeTaxUSA, you need to: 1. Go to Income → Business Income (Schedule C) 2. Enter "Pet Care Services" or similar as the business name 3. Report the $2,700 as gross receipts 4. Deduct any legitimate business expenses (supplies, mileage, etc.) Once you complete Schedule C, FreeTaxUSA will automatically calculate the self-employment tax AND recognize this as earned income for Roth IRA purposes. The software should then stop giving you errors about the Roth contribution. One thing to note - she'll owe about 15.3% self-employment tax on her net business income (around $413 if she has no deductible expenses), but this is separate from regular income tax. The good news is her total income is still under the standard deduction, so no regular income tax owed. The $1,422 in capital gains goes in the investment section and doesn't count toward Roth IRA eligibility, but it shouldn't push her into owing income tax either.

I went through this exact same situation with our family plumbing business partnership last year. We got hit with a $3,400 penalty for late 1065 filing due to similar circumstances (our CPA had health issues and we had some missing K-1s from a subcontractor). Here's what worked for us: we ended up going with the reasonable cause route since we had good documentation. The key things that helped our case were: 1. A letter from our CPA explaining his unavailability during the critical filing period 2. Email chains showing we were actively trying to get our documents together before the deadline 3. Records showing we filed an extension request (even though we missed the original deadline) We sent everything by certified mail to the address on our penalty notice, and it took about 8 weeks to get a response. They approved our reasonable cause request and removed the entire penalty. One thing I'd add to what others have said - if you're a small partnership like us, make sure to emphasize in your letter that you typically handle your tax obligations responsibly. The IRS seems to look more favorably on small businesses that can show they're not habitually non-compliant. Good luck! These penalties are brutal for small businesses, but there's definitely hope for getting them removed with the right approach.

I've been dealing with IRS penalty issues for our small accounting firm partnership, and I wanted to share what I learned about the documentation requirements since that seems to be a common question here. For reasonable cause requests, the IRS really wants to see a clear timeline that shows you made good faith efforts to comply but couldn't due to circumstances beyond your control. In your case with the accountant's family emergency and office flooding, here's what I'd recommend including: 1. **Accountant documentation**: A brief letter from your accountant stating the nature of the emergency, dates they were unavailable, and when they notified you they couldn't complete the return 2. **Flooding documentation**: Insurance claims, photos of damaged records, repair estimates - anything showing the scope and timing of the damage 3. **Communication records**: Emails or texts showing you were actively trying to gather documents and complete the filing before the deadline 4. **Timeline of events**: A clear chronological explanation of what happened when, and what steps you took to try to file on time The key is showing that despite these events, you were still trying to meet your obligations. The IRS distinguishes between taxpayers who ignore their responsibilities and those who face genuine obstacles while still making good faith efforts. One more tip: if this is truly your first penalty for late filing, definitely consider the first-time abatement route first - it's much simpler and doesn't require proving your specific circumstances were reasonable cause.

This entire discussion has been a huge eye-opener! I've been sitting on some gold coins for about 8 months now and was completely paralyzed by the tax confusion. Every article I read seemed to contradict the last one about collectible rates. What really helped me understand was seeing how everyone broke down that "up to 28%" language. I kept thinking it meant there were special collectible tax brackets or that everyone automatically paid 28%. Now I get that it's just your regular income tax rate with a ceiling at 28% for high earners. I'm in the 22% bracket, so reading all these real experiences from people in similar situations has given me so much confidence. Knowing I'll pay 22% on my gains (not 28%) makes selling some of my position seem much more manageable. The advice about keeping detailed records really resonates too - I've been pretty casual about saving my purchase receipts, but I can see how that would become crucial when calculating gains. Thanks to everyone for turning such a confusing topic into something actually understandable! This community is amazing for cutting through tax jargon with real-world experiences.

This thread has been absolutely fantastic! As someone who's been hesitant to dive into precious metals investing specifically because of tax confusion, reading through everyone's real experiences has been incredibly valuable. I kept seeing that "up to 28%" language everywhere and, like so many others here, I assumed it meant there was some automatic 28% tax rate for all collectibles. Understanding that it's actually just your ordinary income tax rate (with the 28% serving as a maximum cap) has completely changed my perspective. I'm currently in the 24% tax bracket, so knowing I'd pay exactly 24% on any long-term gains from gold or silver investments - not automatically 28% - makes this asset class much more attractive for my portfolio diversification goals. The practical advice about record-keeping has been especially helpful too. I can see how maintaining detailed purchase records from day one would save a lot of headaches down the road when calculating gains for tax purposes. Thanks to everyone for sharing their actual experiences rather than just repeating generic tax advice. This kind of real-world insight is exactly what newcomers like me need to feel confident moving forward with precious metals investing!

Has anyone actually successfully amended their return after paying the amount on a CP23? I'm in a similar situation but I already paid what they asked because I was scared of penalties, and now I'm trying to figure out how to get my money back by providing the missing documentation.

I'm dealing with a very similar situation right now! Also on a J-1 visa and just became a tax resident for 2024. The transition from nonresident to resident status creates so much confusion with the withholding forms. One thing I learned from my tax advisor is that you should definitely mention in your response letter that you're a tax resident filing Form 1040 even though you received a 1042-S. The IRS systems sometimes flag this as inconsistent, so explaining the visa status change and why the university issued the 1042-S (before they knew about your resident status) helps prevent further confusion. Also, if you have any documentation from your university showing when they became aware of your tax resident status, include that too. It helps explain the timeline and why the withholding was processed differently than your filing status. Good luck with your response! The stress is real but it sounds like you have a clear path forward.

Hey Isabella! Congratulations on your upcoming wedding! I went through this exact same situation two years ago and completely understand the anxiety around getting the tax stuff right. One thing that really helped me was using the IRS Tax Withholding Estimator (it's free on IRS.gov) about a month after we got married. You input both of your incomes, current withholdings, and marital status, and it calculates exactly how much you should be withholding for the rest of the year. It even generates the specific numbers to put on your W-4 forms. At your combined income level, you're definitely in marriage bonus territory rather than penalty territory. My husband and I had very similar incomes to you and your fiancée, and we ended up saving about $2,200 compared to filing single the year before. One practical tip: when you update your W-4s after the wedding, consider having the higher earner (your fiancée at $83k) claim "Married filing jointly" and you claim "Married but withhold at higher single rate" - this often provides better withholding accuracy for dual-income couples and helps avoid any surprises at tax time. The most important thing is not to stress too much about getting it perfect immediately. Even if your withholding is slightly off, you can always make a small estimated payment in January if needed. You've got plenty of time to adjust once you see how everything plays out in your paychecks after the wedding!

Hey Isabella! Congratulations on your upcoming August wedding! 🎉 As a tax professional, I can confirm that everyone here has given you solid advice. You're absolutely right that being married on December 31st means you're considered married for the entire tax year - so your August 15th wedding date means you'll file as married for all of 2025. The great news is that with your combined income of $161k, you're nowhere near the marriage penalty threshold (which typically kicks in around $600k+). You'll almost certainly see a marriage bonus by filing jointly! Here's my step-by-step recommendation: 1. Enjoy your wedding first - don't stress about this beforehand! 2. Within 30 days after the wedding, both update your W-4s with HR 3. Use the IRS Withholding Calculator online to get exact numbers 4. Consider having the higher earner (your fiancée) file as "Married filing jointly" and you file as "Married but withhold at higher single rate" for more accurate withholding One often-overlooked tip: if either of you gets a bonus or commission later in the year, make sure your payroll department withholds at the married rate for those payments too, not the single rate. You're being very smart to plan ahead, but remember - even if your withholding isn't perfect, you can always make a small estimated payment in January. The IRS safe harbor rules protect you from penalties as long as you pay at least 100% of last year's total tax liability. Don't let tax anxiety overshadow your wedding joy - you've got this! 💕