Has anyone had experience with options that aren't clearly Section 1256 contracts? I have some foreign index options and I'm not sure if they qualify for the 60/40 treatment or if they're just regular capital assets.

I went through this exact same headache last year with SPX spreads that crossed tax years. The key insight that finally solved it for me was understanding that the "mark-to-market" treatment under Section 1256 creates two separate tax events: one on December 31st (the deemed sale) and another when you actually close the position. For your bear put spread, you need to calculate the fair market value of each leg as of December 31st. The long 4800 put and short 4700 put each get treated as if they were sold and immediately repurchased at those values. This creates your 2023 tax liability/benefit under the 60/40 rules. Regarding the tax software issue with negative cost basis - this is definitely a common problem. What worked for me was creating separate entries for each leg rather than trying to enter them as a spread. For the short leg, I entered the premium received as the "proceeds" and the December 31st mark-to-market value as the "cost basis." This gives the correct economic result without triggering the software's validation errors. The IRS instructions are confusing on this point, but the underlying principle is that each Section 1256 contract stands alone for tax purposes, even when they're part of a larger strategy. Don't let the software limitations force you into incorrect reporting - the tax law is what matters, not what the software easily accepts.

Wait, I'm confused about one thing. If you e-filed your amended return, why would TurboTax give you a 1040-V at all? I thought amended returns (Form 1040-X) had to be filed by mail, not electronically. Has this changed recently?

Just to add some reassurance to what others have said - you're absolutely right to be confused about this! The 1040-V situation is one of those quirks where the tax software doesn't have enough context to know you've already overpaid. I went through something very similar two years ago with a backdoor Roth conversion that got reported incorrectly. Had already paid way more than I owed, filed an amended return, and got that same 1040-V telling me to send more money. I ignored it completely and everything worked out fine - got my refund about 4.5 months later. The key thing to remember is that the IRS systems will reconcile everything when they process your amended return. They can see your original payment and will automatically issue the refund for the overpayment. No need to send additional money or paperwork beyond what you've already e-filed. One tip: keep good records of your original payment confirmation and the acceptance confirmation for your amended return. If there are any delays or questions later, having those documents handy will make resolving issues much easier.

17 Has anyone actually had the IRS contact them over a wrong address on a W2? I've had this happen twice (once my employer put the wrong apt number, once they used my old address) and filed with my correct address both times. Never heard a peep from the IRS about it.

I'm a tax preparer and can confirm what others have said - address discrepancies on W-2s are extremely common and won't cause any issues with your tax filing. The IRS uses your SSN as the primary identifier, and the financial data (wages, withholdings) is what matters for processing your return. When you file your 2024 tax return, just use your correct current address. This automatically updates your address of record with the IRS. I've prepared thousands of returns over the years with similar situations and have never seen the IRS flag or delay a return due to a W-2 address mismatch. Your concern about missing correspondence is understandable, but since you'll be filing with your correct address, any future IRS communications will go to the right place. The only time address issues become problematic is if there are discrepancies in the actual tax data (income amounts, withholdings, etc.), which isn't your situation.

Has anyone actually tried exercising and selling in the same tax year to avoid AMT entirely? My financial advisor suggested this approach, but I'm not sure if it works in all situations.

One thing that really helped me understand this was realizing that AMT creates a "parallel tax system" where you essentially maintain two sets of books. When you exercised your ISOs, you paid AMT on the bargain element, but that payment creates an AMT credit that you can use in future years when your regular tax exceeds your AMT. The key insight is that when you sell after holding for over a year, your AMT basis in the stock is higher than your regular tax basis (because it includes that bargain element you already paid AMT on). This means your AMT gain will be smaller than your regular tax gain, creating what's called a "negative AMT adjustment" that helps you recover the AMT credit. So you're not being taxed twice - you're actually on track to recover some of that AMT you paid through the credit system. Just make sure you file Form 8801 to claim your AMT credit when you sell!

As a newcomer to this community, I want to thank everyone for this incredibly detailed discussion! I'm dealing with my first Schedule AI this year after starting a side business alongside my W-2 job, and I was completely overwhelmed by the form. The explanations here about how each period creates its own "snapshot" projection have been game-changing for my understanding. I was making the same mistake as the original poster - thinking I needed to somehow predict my entire year's business income back in January and divide it into equal quarterly payments. What really clicked for me was understanding that the annualized income method is actually protecting taxpayers with variable income. My business had slow revenue in Q1-Q2 but picked up significantly in Q3-Q4. Without Schedule AI, I would have been penalized for not paying 25% of my actual annual tax by March 15th, even though my business barely existed then! The fact that you ended up only $20 off your total tax liability really shows how well the system works when properly applied. It gives me confidence that I can navigate my own Schedule AI calculations correctly. This thread has been more educational than hours of trying to decipher IRS publications - thank you all for sharing your experiences and insights!

As a newcomer to this community, I'm amazed by how helpful this discussion has been! I've been struggling with Schedule AI myself after having irregular income this year - started with steady W-2 employment, then had a period of unemployment, followed by some freelance work that came in chunks. Reading through everyone's explanations, especially the "snapshot" and "time machine" analogies, finally made the annualized income method click for me. I was making the classic mistake of thinking I should have predicted my entire year's income pattern back in January and made proportional payments. What really resonates is how this method actually protects taxpayers rather than penalizes them. My freelance income was heavily weighted toward the end of the year, and without Schedule AI, I would have been expected to pay estimated taxes on income I hadn't even earned yet. The original poster's situation with the November Roth conversion is such a perfect example - you can't be expected to predict and pay for a financial decision you hadn't made yet! The fact that they ended up only $20 off shows the system really does work when you understand it properly. Thank you all for taking the time to explain this so clearly. This thread has been more valuable than any official IRS guidance I've tried to read!