I'm so sorry this happened to you! As someone who works in tax compliance, I can tell you that unfortunately the IRS holds taxpayers ultimately responsible for filing on time, even when a preparer fails them. However, you absolutely have grounds for penalty relief. The key is proving "reasonable cause" - which means you acted as an ordinary, prudent person would under similar circumstances. Your situation fits this perfectly: you hired a preparer well before the deadline, provided all documents timely, and paid for the service in good faith. When you write your penalty abatement letter, focus on these facts: the date you engaged the preparer (February), when you provided documents, payment proof, and any communications showing you believed your taxes were being handled. Don't get emotional in the letter - stick to a timeline of facts. Also, definitely file Form 14157 to report this preparer. The IRS takes these complaints seriously, especially with preparers who take payment but don't deliver services. This protects other taxpayers and strengthens your case. File your taxes immediately to stop additional penalties from accruing. If your return is straightforward, tax software might be fastest. For complex situations, find a credentialed preparer (CPA or Enrolled Agent) - just verify their credentials this time! You're not alone in this - preparer negligence cases happen more than you'd think, and the IRS does grant relief when taxpayers can prove they acted responsibly.

I'm so sorry you're dealing with this nightmare! As someone who went through a similar situation last year, I completely understand your frustration and panic. Here's what worked for me: First, file your taxes IMMEDIATELY using software like TurboTax or FreeTaxUSA if your situation is straightforward - don't wait for another preparer. Every day you delay adds more penalties. For the penalty abatement letter, be very specific about dates and include ALL documentation. I wrote something like: "On February 3rd, 2024, I engaged [preparer's name] and provided all required tax documents. On February 10th, I paid $350 for preparation and filing services. On [dates], the preparer assured me via [email/text/phone] that my return was being processed." Then attach screenshots, payment receipts, everything. The IRS actually has a "reasonable cause" provision in IRC Section 6651(a)(1) for situations exactly like this. In my case, they waived over $600 in penalties because I could prove I acted in good faith and the failure was due to circumstances beyond my control. Also, definitely report this preparer on Form 14157. I found out my guy had multiple complaints against him - wish I'd known to check that beforehand! Don't let this person's incompetence ruin your financial life. You did everything right, and the IRS recognizes that when you can document it properly.

I'm curious about this whole issue myself cuz I just started a commission job too. Anyone here know if tax withholding for commissions is different between states? Or is it all federal rules? Like if I move from NY to Texas mid-year, would it affect how my commission is taxed?

One thing I'd add as someone who went through this exact situation - keep detailed records of your paystubs throughout the year! I wish I had done this better my first year in commission sales. When tax time comes, having all your pay stubs organized makes it much easier to verify that your W-2 is accurate and that all the withholding amounts are correct. Sometimes payroll systems can have glitches, especially with variable commission structures. Also, consider setting aside a small percentage of those big commission checks in a separate savings account. Even though you'll likely get a nice refund, it's good to have a buffer in case there are any surprises or if you want to make estimated payments next year to avoid the overwithholding cycle altogether. The peace of mind of knowing you have some tax money set aside is worth it, especially when your income swings are as dramatic as yours. Congrats on the $107k YTD - sounds like you're killing it in sales!

I'm currently dealing with this exact issue at Fidelity and wanted to add another perspective. After reading through all these excellent responses, I tried the formal written request approach through their secure messaging system citing IRC Section 1014 and Treasury Regulation 1.1014-1, just like others suggested. What I learned is that timing your request strategically can make a difference. I sent mine right after quarter-end when their compliance teams are typically more active with account reviews. I also specifically requested written confirmation of the corrections rather than just asking them to "fix it" - this forced them to document exactly what they were doing. The key phrase that seemed to get immediate attention was: "Please provide written confirmation that all inherited securities have been adjusted to fair market value as of [date of death] in compliance with IRC Section 1014, or explain in writing why any securities cannot be corrected." This put the burden on them to either fix it or formally justify why they weren't complying with tax regulations. I got a response within 48 hours and corrections completed within 10 business days. Sometimes being very specific about what type of response you expect makes all the difference. The documentation requirement also helped me build a stronger paper trail for my tax records. Don't give up on getting Vanguard to fix this properly - you deserve accurate records, and they're legally required to provide them!

I'm dealing with a very similar situation at E*Trade right now with my father's inherited portfolio, and this thread has been absolutely invaluable! Like many others here, I was stuck in the endless customer service loop for months with no progress on getting the stepped-up basis corrected. After reading everyone's experiences, I'm convinced the formal written approach is the way to go. The specific regulatory language citing IRC Section 1014 and Treasury Regulation 1.1014-1 seems to be what actually gets compliance departments to take action rather than just giving you the runaround. What really gives me confidence is learning from the tax professional that using Form 8949 with Code B is a routine procedure for these brokerage reporting errors. I was so worried about potentially triggering an audit by making basis adjustments, but it sounds like the IRS has established processes specifically for these situations. I'm planning to combine the best strategies I've seen here: send a formal request through secure messaging with specific regulatory citations and a 30-day deadline, document everything thoroughly, and prepare proper backup documentation for tax filing regardless of whether they fix their records in time. Having that dual approach - push for the fix while being prepared to handle it correctly on taxes either way - takes away so much of the stress. Thanks to everyone who shared their experiences and strategies. It's reassuring to know this is a common issue with clear solutions, even if the brokerages make it unnecessarily difficult!

Don't forget about the "Deluxe" trap that both companies use. The basic version advertised at a low price usually won't cover homeowner deductions or self-employment income. You'll need at least the Deluxe version for mortgage interest and the Self-Employed version for your freelance work. If you really want to save money, the IRS has a Free File program where you can use name-brand tax software for free if your AGI is under about $73k. Worth checking that out before paying for either one.

Based on your situation with W-2 income, freelance work, and new homeownership, I'd lean toward H&R Block for 2025. Here's why: 1. **Cost**: H&R Block's Deluxe version (which you'll need for mortgage interest) is typically $20-30 cheaper than TurboTax's equivalent. 2. **Homeowner focus**: Their mortgage interest and property tax sections are really well-designed for first-time homeowners. They walk you through points deductions, PMI, and other homeowner benefits you might not know about. 3. **Freelance handling**: For $5,800 in freelance income, both platforms handle Schedule C fine, but H&R Block won't pressure you to upgrade to their most expensive tier like TurboTax often does. Just be aware that you'll definitely need their Deluxe version (not Basic) to handle both the mortgage interest and self-employment income. Don't let them upsell you beyond Deluxe unless you have more complex investments. One tip: Both companies run early-bird discounts in January, so if you can wait a few weeks into tax season, you might save another 15-20% off the regular price.

Something nobody mentioned yet - look into the Qualified Business Income Deduction (Section 199A). Depending on your total income and the nature of your side gig, you might qualify for up to a 20% deduction on your net self-employment income. Its a bit complicated but worth checking out! For example, if your qualified business income is $65k after expenses, you could potentially deduct another $13k! There are income phaseouts though, so check if your total income puts you over the limits.

Great breakdown everyone! As someone who just went through this exact situation, I wanted to add a few practical tips that might help Brandon and others: 1. **Keep meticulous records** - I use a separate business checking account for all side gig income and expenses. Makes tracking so much easier at tax time. 2. **Business vs hobby distinction** - The IRS looks at whether you're trying to make a profit. If your side gig consistently loses money, they might classify it as a hobby, which limits your deductions. 3. **State considerations** - Don't forget some states have their own self-employment taxes or different rules for business income. Check your state's requirements too. 4. **Mid-year planning** - Since you're making good money on both sides ($130k + $65k), consider increasing your W4 withholding from your day job to help cover the extra tax burden from self-employment income. Sometimes easier than quarterly payments. The combination of self-employment tax + higher tax bracket can be a shock the first year, but with proper planning and all these deductions mentioned, it becomes much more manageable!