One thing nobody's mentioned - many CPAs offer "audit protection" or "audit insurance" for an additional fee. This is different from simply having a CPA prepare your return. It's basically a guarantee that they'll represent you if you're audited without charging additional fees. If audit protection is important to you, you can specifically look for a CPA who offers this service. Just make sure to read the fine print about what's covered. Some only cover errors they made, while others provide full representation regardless of why you were audited.

I went through a similar situation a few years ago and ended up switching to doing my own taxes. For someone with your tax situation (W-2 + K-1s, standard deduction), you're absolutely right that $950 is excessive, especially with the poor service you're getting. The "CPA protection" myth is exactly that - a myth. The IRS selection process for audits is largely automated and based on statistical models that flag unusual patterns or discrepancies. They don't care who prepared your return. In fact, some studies suggest that electronically filed returns (which most tax software does automatically) have slightly lower error rates than paper returns. What you should focus on instead is accuracy and proper documentation. Keep good records of all your K-1 income and any deductions you claim. The IRS audit rate for individual returns is actually quite low - around 0.4% for most income levels - and even lower for straightforward returns like yours. Given that you're already catching mistakes in your CPA's work, you're probably better equipped to prepare your own return than you think. Most tax software handles K-1s pretty well these days and will walk you through everything step by step. You'll save money and likely get better results.

Also check your closing documents if you bought the house recently! When I purchased last year, I had to reimburse the seller for prepaid property taxes at closing, and that amount was also deductible but didn't show up on my 1098 at all. TurboTax has a separate section for property taxes paid outside of your mortgage escrow. Don't miss this if you had any special situations like buying a new home, paying taxes directly, or making additional tax payments.

Great to see you figured it out! For future reference, if anyone else runs into this issue, there's one more thing to watch out for - make sure you're not double-counting property taxes if you made any direct payments to your county during the year. I learned this the hard way when I got an IRS notice. My escrow account was short one year, so I had to pay part of my property tax bill directly to the county. I mistakenly entered both the escrow amount AND the direct payment in TurboTax, which inflated my deductions. The key is to add up ALL property tax payments made during the calendar year - whether through escrow, direct payments, or even amounts paid at closing when you bought the house. Just make sure you're not counting the same payment twice from different sources!

Has anyone actually recovered their FULL AMT credit eventually? I paid almost $26k in AMT three years ago from exercising ISOs and have only recovered about $7k in credits so far. At this rate it'll take like 8 years to get it all back!

This is such a frustrating situation, and unfortunately you're not alone in getting bad advice from tax preparers about ISOs. The EA you spoke with was definitely wrong - ISOs absolutely trigger AMT when exercised, even if you don't sell. I went through something similar a few years back and ended up owing $23k in AMT after exercising options. What really helped me was keeping detailed records of everything - not just relying on TurboTax to track the credits properly. I created a simple spreadsheet with the AMT amount paid each year and credits used, because I've heard too many stories of people losing track when switching software. One thing to watch out for: make sure your company reported the correct fair market value on Form 3921. I've seen cases where the FMV was calculated incorrectly (especially for private companies), which can significantly impact your AMT calculation. If something seems off about the numbers, it might be worth having someone review the form before you file. The silver lining is that AMT credits don't expire, so you will eventually get that money back. It just takes patience unfortunately.

Don't forget about possible state taxes too! Federal taxes won't affect your SSDI, but depending on which state you live in, you might have additional state taxes on that prize. Some states don't tax prizes, but most do.

I'm a tax preparer and wanted to add some clarification to help ease your concerns. You're absolutely right to be careful, but the good news is this situation is more straightforward than it might seem. First, yes you'll need to file a tax return since your prize exceeds the filing threshold. The prize will be reported on a 1099-MISC form that you should receive by January 31st. This gets reported as "other income" on your tax return. However, your SSDI benefits remain completely unaffected. SSDI only considers "earned income" from work activities - prizes, gifts, inheritance, investment income, etc. don't count against your benefits at all. So you can breathe easy on that front. Regarding taxes, since you normally don't have taxable income, you'll likely qualify for the standard deduction ($13,850 for 2023), which means you may owe little to no federal tax on this prize. But do set aside some money just in case, especially for potential state taxes. Don't try to gift it away to avoid taxes - you're already considered to have received the income when you won the prize, so gifting won't help your tax situation and could create gift tax complications for you. Consider consulting with a tax professional or using tax software designed for unusual situations to make sure everything is filed correctly. Congratulations on your win!

Has anyone thought about reporting these tax relief companies to the IRS itself? I remember reading that the IRS has a program called OPR (Office of Professional Responsibility) that oversees tax professionals. Maybe they could do something about companies that are falsely claiming they can resolve tax debts?

I'm so sorry you're going through this nightmare with Optima Tax Relief. Unfortunately, your experience mirrors what I've seen countless times in my work as a consumer advocate. These companies prey on people who are already vulnerable and desperate for help with tax problems. What's particularly infuriating is that they charge thousands upfront while the IRS actually offers many resolution options directly to taxpayers at no cost. The Taxpayer Advocate Service (TAS) is a free IRS service that helps people navigate complex tax situations - they might be able to assist you in getting your case back on track. I'd strongly recommend filing complaints with your state's consumer protection agency and the Consumer Financial Protection Bureau in addition to the FTC. Some states have been particularly aggressive in going after these tax resolution mills. Also, contact your local news stations - consumer investigation segments love exposing these types of scams, and media attention often gets faster results than regulatory complaints alone. Document everything and don't give up. You're not alone in this fight, and these predatory companies need to be held accountable for the harm they're causing to families already struggling with tax debt.