I think I know exactly what's happening here. You're probably looking at the instructions for Form 8582 (Passive Activity Loss Limitations) where it might direct certain losses to other areas of the return depending on your specific situation. But even with passive activity or at-risk considerations, business losses would never be reported as dividends. Here's the correct flow for Schedule C losses: 1. Net loss flows from Schedule C to Schedule 1, Line 3 2. Then from Schedule 1 to Form 1040, Line 8 3. If you have at-risk limitations, you'd use Form 6198 first 4. If you have passive activity limitations, you'd use Form 8582 first For Schedule SE - the $434 threshold is the minimum self-employment income required to owe SE tax. Below that = no Schedule SE needed.

Is anyone using tax software for their Schedule C? I've been using TurboTax and it automatically puts everything on the right lines - it wouldn't let me put business losses on the dividend line even if I tried. Might be worth the investment to avoid these kinds of headaches.

Just a heads up on those cutting machines - I made the mistake of putting similar equipment ($250 range) under Section 179 last year, and my tax preparer said it created unnecessary complication. She had to go back and reclassify them as simple expenses under the de minimis rule, which apparently is much cleaner for audit purposes. For the utilities question, I use a Kill-A-Watt meter to track exactly how much electricity my craft equipment uses. I can literally show the difference in usage between when my machines are running vs not. My accountant said this is perfect documentation to justify claiming more than just the square footage percentage for electricity.

Great questions about Schedule C categorization! As someone who's been through this confusion before, here's my take based on experience and professional guidance: Your vinyl sheets are definitely COGS Materials and Supplies since they directly become part of your finished product. This is the clearest categorization you have. For those $230 cutting machines, you're overthinking it! Since they're under the $2,500 de minimis threshold and have short useful lives, just expense them immediately under Operations Expenses - Supplies. No need for Section 179 or depreciation headaches for relatively inexpensive equipment. Packaging materials should go under COGS Materials and Supplies too - they're essential for delivering your finished product to customers, so they're part of your cost of goods sold. For utilities, if you track actual usage (like with a power meter), you can definitely claim more than just the standard home office percentage. Document your machine usage patterns and put the business portion under Operations Expenses - Utilities. Phone/internet business usage goes under Operations Expenses - Utilities at whatever reasonable percentage you can document. Those Costco storage bins are definitely just Operations Expenses - Supplies. At $12, they're way below any capitalization threshold. The key is reasonable documentation and consistency in your categorization approach!

6 Is anyone using TurboTax instead of H&R Block? I'm having the exact same issue with negative foreign tax values in TurboTax and wondering if there's a similar fix.

I've been dealing with international dividend taxation for several years now, and I wanted to add some clarification that might help others avoid confusion. The foreign tax credit is definitely worth claiming - it's essentially getting back taxes you've already paid to another country. The $300 threshold for the simplified method ($600 if married filing jointly) is per tax year, so if you're consistently investing in international stocks, you'll want to track this annually. One thing I learned the hard way: keep good records of your foreign tax credits. If you can't use the full credit in one year because your US tax liability is lower than the foreign taxes paid, you can carry the unused portion forward for up to 10 years. But you'll need Form 1116 for carryovers, even if the original amount was small enough for the simplified method. Also, make sure the foreign taxes you're claiming actually qualify - they need to be income taxes, not other types of foreign taxes or fees. The 1099-DIV should clearly show "Foreign Tax Paid" in Box 7 if it qualifies for the credit.

Anyone know if box spreads on SPX options still qualify for section 1256 treatment? I've been using them for pseudo-financing and I'm not sure if I should be checking any of these elections for tax purposes.

I've been dealing with Form 6781 for my options trading for the past few years, and I totally feel your pain about the desktop vs. online TurboTax issue. The desktop version definitely requires more manual work for section 1256 contracts. A few quick tips that might help: 1. Double-check that your SPX and VIX options are actually being treated as section 1256 contracts in the desktop version. Sometimes the import doesn't categorize them correctly and they end up on Form 8949 instead of Form 6781. 2. For the "Net section 1256 contracts loss election" - only select this if you had significant section 1256 gains in the previous 3 years that you want to offset. If you didn't have prior gains, this election won't benefit you and your losses will just carry forward normally. 3. The account description can be pretty straightforward. I usually put something like "Options Trading Account - [Broker Name]" and have never had issues with the IRS. 4. If you're really stuck, consider reaching out to a tax professional who specializes in trading taxes. The cost might be worth it for the peace of mind, especially if you're dealing with complex positions or significant amounts. The learning curve is definitely steep when switching from the online version, but once you get the hang of it, the desktop version does give you more control over how everything is categorized.

I'm currently going through this exact same situation and wanted to share what I've learned from calling multiple times and speaking with different representatives. First off, the 120-day timeframe is definitely their standard CYA response, but from tracking cases in various tax communities, the actual resolution time for CP05 reviews this year has been averaging 8-12 weeks. The key factors seem to be: 1. Complexity of your return (multiple income sources, significant deductions, etc.) 2. Current IRS processing backlog in your region 3. Whether you proactively provide documentation Regarding the documentation question that several people have asked - I spoke with a Taxpayer Advocate who recommended waiting for the actual CP05 notice before sending anything. The notice will specify exactly what triggered the review and what (if any) documentation would be helpful. Sending docs too early can sometimes create a separate correspondence file that actually slows things down. For your renovation timeline Noah, I'd definitely recommend having a contingency plan. I learned this lesson the hard way with a roof repair that couldn't wait. Consider a 0% intro APR credit card if you have good credit - many offer 12-15 months no interest, which should cover you even if this takes the full timeframe. One helpful tip: your transcript cycle date (the 8-digit number at the top) is more reliable for tracking progress than the individual code dates. When that changes, it usually means real movement on your case. Hang in there - this process is frustrating but it does resolve!

I'm going through the exact same thing right now! Filed 4/19, accepted 4/20, got the 570/971 codes on 5/28, and just saw my second 971 code appear this morning. The timing is eerily similar to yours Noah - it's like we're all in some kind of tax refund time warp together! What's really frustrating is that I specifically chose to file early this year because I knew I'd need the refund for summer expenses (my daughter starts daycare in July), and now I'm potentially looking at waiting until August or September. The irony is not lost on me. After reading through everyone's experiences here, I'm feeling cautiously optimistic about the 8-12 week timeline that AstroAce mentioned rather than the full 120 days. It sounds like most people are seeing resolution much faster than what the phone agents tell you. I'm definitely going to wait for the actual CP05 notice before sending any documentation - that advice about creating a separate correspondence file that could slow things down really resonates. The last thing any of us need is to accidentally make this process even longer! Has anyone here had success with congressional inquiries if this drags on past the 10-12 week mark? I'm hoping it won't come to that, but good to know what options exist if needed. Hang in there everyone - sounds like we'll get through this sooner rather than later based on the patterns people are sharing!