Just wanted to add that if you're doing this house flipping thing regularly, you might want to consider setting up quarterly estimated payments for next year too. I got hit with a nasty underpayment penalty my first year flipping houses because I didn't realize I should have been making quarterly payments all along.

One thing I'd add that helped me tremendously when I was in a similar situation - make sure you keep detailed records of all your expenses related to the property renovation. Things like materials, contractor fees, permits, even mileage to/from the property can be deducted against your capital gains. I was so focused on figuring out how to pay the estimated taxes that I almost forgot to properly document all my renovation expenses. Ended up saving me about $3k in taxes when I filed. Keep all receipts and take photos of major work being done - the IRS loves documentation if they ever audit real estate transactions. Also, since you mentioned this was with a business partner, make sure you're both on the same page about how you're reporting the income and expenses. If you split everything 50/50, your tax calculations should reflect that split consistently.

Has anyone had experience using a mail forwarding service instead of a PO box? I'm moving between 3 different countries this year and trying to figure out the best mail solution for tax purposes.

I've been filing from overseas for about 7 years now and can confirm that using a PO Box is completely normal and acceptable. The IRS actually expects this kind of thing from expats since international mail can be unreliable. A few practical tips from my experience: - Always use the same address format across ALL your forms (1040, FBAR, any state returns, etc.) - If you're in a country where mail takes forever, definitely set up that IRS online account - you can often see notices there before the physical mail arrives - Keep records of your actual physical address in case the IRS ever asks, but I've never had them request this in 7 years The statement explaining your situation is a good idea for peace of mind, but honestly I've never included one and never had issues. The IRS processes thousands of returns from expats every year - they're used to seeing foreign addresses and PO Boxes. One thing to watch out for: make sure your PO Box provider is reliable about holding mail long-term in case you're traveling when something important arrives. Some places only hold mail for 30 days.

Anyone else think the W-4 system is totally broken? Why do we have to figure this out ourselves? The government already knows how much we should be paying!

This is exactly what happened to us a few years ago! We learned the hard way that claiming the same child on both W-4s is a recipe for underwithholding. Here's what we did to fix it: 1. We had the higher earner (in your case, the $70K spouse) claim the child on their W-4 2. The lower earner ($45K spouse) should file a new W-4 with "Single or Married Filing Separately" checked in Step 1, even though you're married - this increases withholding 3. Consider adding extra withholding on one or both W-4s to be safe The income difference between you two isn't huge, but the higher earner claiming the child will still result in slightly better withholding accuracy. Most importantly, get those new W-4s submitted ASAP since you're already behind on withholding for this year. Pro tip: After you make the changes, check your next few pay stubs to make sure the withholding increased appropriately. You should see a noticeable bump in federal tax withheld from the higher earner's paycheck.

I just went through this situation! One thing to remember is you need to file Form 8843 if you're claiming the closer connection exception to the substantial presence test. And keep super detailed records of your entry/exit dates - I learned the hard way that the IRS and CBP records can sometimes differ from what you remember.

For older I-94 records beyond what's available on the CBP website, you can file a Freedom of Information Act (FOIA) request with CBP. Form G-639 is what you need - it's specifically for requesting immigration records. It can take several months to get a response, so file it as soon as possible if you need those records for tax purposes. Alternatively, if you have old passports with entry/exit stamps, those can serve as documentation. Some people also keep airline tickets, hotel reservations, or credit card statements that show transactions in specific countries on certain dates - these can help establish your travel timeline. Just make sure whatever documentation you use is consistent and complete. The IRS wants to see a clear pattern of when you were physically present in the US versus abroad.

Has anyone used TurboTax to handle this situation? I'm dealing with almost the exact same scenario (early IRA withdrawal + capital losses) and wondering if the software handles all these exceptions correctly or if I should see a tax professional.

I went through this exact situation two years ago and can confirm what others have said - capital losses and early withdrawal penalties are handled separately by the IRS. Your $12,000 in capital losses can offset up to $3,000 of ordinary income (including the IRA withdrawal amount), but they won't reduce the 10% penalty at all. However, definitely look into that medical expense exception that several people mentioned. Since you said the withdrawal was for unexpected medical expenses, you might be able to avoid the penalty entirely on some or all of the withdrawal if your total unreimbursed medical expenses for the year exceed 7.5% of your AGI. Also keep good records of exactly what the withdrawal was used for - even though the IRS doesn't require you to use the exact same dollars for medical expenses to qualify for the exception, having clear documentation always helps if there are any questions later. The remaining $9,000 in capital losses after using $3,000 this year can be carried forward indefinitely at $3,000 per year, which will help reduce your taxes for the next three years.