The IRS is so backed up rn its not even funny. My friend works there and says they're still processing returns from last summer 😬

Ugh, I feel your pain! Been dealing with a similar 810 freeze since April and it's absolutely maddening. The fact that your transcript shows everything processed correctly but they're still holding onto $6,541 is just cruel. At least you got the in-person verification done - I'm still waiting for my appointment. Have you tried reaching out to your congressperson's office? I know it sounds extreme but sometimes they can light a fire under the IRS when normal channels aren't working. The taxpayer advocate service might also be worth a shot since you're going on almost a year now 😤

Has anybody used TurboTax to handle this kind of mixed-use property situation? I'm wondering if it can correctly track the suspended passive losses from year to year when a property changes from full rental to mixed-use...

I want to add another important consideration that hasn't been mentioned yet - the short-term rental classification could actually work in your favor for future years. Since you mentioned most rentals will be weekend getaways averaging less than 7 days, this income would be classified as non-passive under IRC Section 469(c)(7) if you provide substantial services. If you're actively managing the property (cleaning, maintenance, guest services, etc.) and the average rental period is 7 days or less, the rental income becomes ordinary business income rather than passive rental income. This means you could potentially use those suspended passive losses from last year against OTHER passive income sources, while treating your current short-term rental as active business income. However, this creates a mixed situation where your prior losses remain passive (from when it was traditional rental) while current income is active - so they still can't offset each other. But it might open up better deduction opportunities for current year expenses and depreciation since you'd be treated as actively engaged in the rental business. Worth discussing with a tax professional who understands both passive activity rules AND short-term rental classifications!

Anyone know if the tax treatment is different for federal vs state settlements? I got both from my case.

I went through this exact situation about two years ago with a $85k wrongful termination settlement. Here's what I learned the hard way: First, don't wait for your former employer to send tax forms - they might not, or they might send them late. My employer didn't send anything until I contacted them in February asking about it. The key thing is getting a clear breakdown of what each portion represents. My settlement had: - $45k for lost wages (taxed as regular income, got a W-2) - $25k for emotional distress (taxable as ordinary income since no physical injury) - $15k for punitive damages (also taxable as ordinary income) One thing that really helped me was keeping detailed records of everything - all the paperwork, correspondence, medical bills if you had any stress-related health issues. Even if those don't qualify as "physical injuries" for tax-free treatment, having documentation helps if questions come up later. Also, don't forget about estimated taxes! If your settlement is large enough, you might need to make quarterly payments to avoid penalties. I got hit with an underpayment penalty because I didn't realize this. My biggest recommendation is to set aside about 30-35% of the taxable portions right away for taxes. Better to have too much saved than to scramble come tax time.

Has anyone used TurboTax for this situation? I'm having the exact same problem but TurboTax doesn't seem to have anywhere to enter the different mortgages for different parts of the year...

I went through this exact scenario two years ago and found that the key is understanding that Pub 936's "average balance" calculation needs to be done month-by-month, not as simple annual averages. Here's what I learned from my CPA: For January-March, only your condo mortgage counts ($170k declining to ~$168k). For April-July, BOTH mortgages count toward your qualified loan limit since you owned both properties simultaneously. For August-December, only your house mortgage counts. The tricky part with MFS is that $550k limit. During your overlap months (April-July), your combined mortgage balances were probably around $1.55M, which far exceeds your limit. This means for those months, you can only deduct interest proportional to $550k/$1.55M ≈ 35.5% of the interest paid. My suggestion: Calculate your monthly qualified loan balances first, then determine what percentage of your total $42,300 in interest ($2,800 + $39,500) is actually deductible. You'll likely end up deducting around $18k-20k rather than the full amount. I'd also recommend attaching a clear explanation of your calculation to avoid any IRS questions later. This is a legitimate but complex situation that benefits from documentation.

Just to add another point - remember that for EITC, your daughter needs to have lived with you for more than half the year. Time away at college counts as temporary absence so that's fine in your case. But also double-check if your income falls within the EITC limits since they change every year.

One thing to keep in mind is that even though your daughter can file her own return for her bookstore income, she likely won't owe any federal taxes since she only made $2,800 (well below the standard deduction). However, she should still file if taxes were withheld from her paychecks - she'll probably get a full refund of any federal taxes that were taken out. Also, since you mentioned you're a single mom, make sure you're filing as Head of Household rather than Single - this gives you a higher standard deduction and potentially more favorable tax brackets. You qualify for Head of Household status since you're unmarried and have a qualifying dependent living with you for more than half the year.