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I've been filing for free with H&R Block Free Online for the past 3 years. But be careful - you need to go directly through the IRS Free File portal (not their main website) to get the actually free version that includes state filing. If you google H&R Block and go to their site directly, you'll end up with their "free" version that charges for state.
For South Dakota specifically, since you mentioned DirectFile isn't available there, I'd recommend checking out the VITA (Volunteer Income Tax Assistance) program if your income is under $64,000. They offer completely free tax preparation by IRS-certified volunteers, including both federal and state returns. You can find locations on the IRS website. Also, just a heads up about waiting for your Wage & Income transcript - while it's smart to double-check, most employers are required to send you corrected forms if there are discrepancies. The March 15th transcript might not show everything if you have late-filing employers or financial institutions. One more truly free option: if you're comfortable doing it yourself, you can always file directly with the IRS using their fillable forms (Free File Fillable Forms) and then file your South Dakota return directly with the state. SD actually has a pretty simple state return since they don't tax wages - just need to report federal AGI in most cases.
I had a similar situation and my accountant told me to keep track of "startup" activities vs ongoing business expenses. Apparently pre-opening costs have different rules than regular business expenses. You might want to check out IRS Publication 535 (Business Expenses) which talks about the difference. I think you can elect to amortize startup costs over 15 years or something like that.
Publication 535 is definitely helpful, but for rental properties specifically, also look at Publication 527 "Residential Rental Property." It covers the exact scenario of when you can start taking deductions and depreciation based on when a property is "placed in service.
The key distinction you need to understand is between startup costs and regular business expenses. Since you already have rental properties, this new property expansion might not qualify for the same startup cost treatment as someone just entering the rental business. For your $14,000 in repairs, you'll need to categorize each expense: 1. **Repairs that restore the property to working condition** (fixing plumbing, painting) - these can typically be deducted immediately once the property is placed in service 2. **Improvements that add value or extend useful life** (upgraded flooring, better water heater) - these must be depreciated over 27.5 years 3. **Costs incurred before the property was available for rent** - these might need special treatment The critical date is when you made the property "available for rent" - not when you found a tenant. If you completed repairs in November 2022 but didn't list it until January 2023, then January 2023 is likely your "placed in service" date. This means you'd claim the deductible expenses on your 2023 return, not 2022. However, if you can demonstrate the property was ready and you were actively seeking tenants in 2022 (even informally), you might be able to claim 2022 as the placed-in-service year. I'd recommend getting professional guidance since the timing affects not just which year you claim expenses, but also how they're treated under passive activity loss rules.
This is really helpful breakdown! I'm in a similar situation as Malik where I'm trying to figure out the "placed in service" date. My property was technically ready in December 2022, but I held off on listing it because of the holidays and winter market conditions. I started actively marketing it in February 2023. Would the IRS consider February 2023 as my placed-in-service date since that's when I began actively seeking tenants? Or could I argue for December 2022 since the property was physically ready? The timing difference could significantly impact which tax year I claim these expenses and how the passive loss limitations apply. Also, when you mention "demonstrate the property was ready and you were actively seeking tenants" - what kind of documentation would support that? Would things like contractor completion certificates or photos showing the finished work be sufficient?
Does anyone know what happens if I just dissolve this foreign corporation without filing a final non-dormant 5471? I'm in a similar situation - keep paying to file forms for a dormant company because I'm afraid of the headache of dissolution. But it's been dormant for 8 years now - wondering if I can just let it go and stop filing.
Don't do that! I tried something similar and got hit with a $10,000 penalty for failure to file the final 5471. The IRS is extremely serious about these international forms. You need to properly dissolve it and file the final forms correctly.
@Statiia Aarssizan is absolutely right - DO NOT just abandon the corporation without proper dissolution. The IRS treats missing final 5471s very seriously, and the penalties can be devastating. I've seen people get hit with penalties ranging from $10,000 to $60,000 for failure to file final forms. The proper dissolution process requires filing a final 5471 that's NOT dormant status, which means you'll need to complete more schedules and provide detailed information about the dissolution. It's more complex than the dormant filings you've been doing, but it's absolutely necessary to avoid massive penalties. If you've been successfully filing dormant 5471s for 8 years, you might want to consider just continuing that until you're ready to handle the dissolution properly. The cost of professional help for the final dissolution filing is much less than the potential penalties for not filing at all.
I've been dealing with a similar situation for the past 6 years with a dormant UK subsidiary. What finally convinced me to try doing it myself was realizing that my CPA was literally just copying the same information year after year - basically charging me $750 to update dates on an identical form. For anyone hesitant about the DIY approach, I'd recommend starting by comparing your last few years of filed 5471s. If they're nearly identical (which they should be for truly dormant entities), that's a good sign the form is straightforward enough to handle yourself. One thing I learned the hard way - make sure you're crystal clear on what "dormant" actually means to the IRS. My corporation had a small bank account that earned like $12 in interest one year, and I almost filed it as dormant when technically it wasn't. The interest income, even though tiny, would have made it non-dormant for that year. Caught it just in time after doing more research. The peace of mind from understanding exactly what you're filing (rather than just trusting someone else did it right) has been worth the effort for me.
That's a really good point about the interest income! I hadn't thought about that - my dormant corporation also has a small bank account that probably earns a few dollars in interest each year. I've been filing it as dormant, but now I'm wondering if I should double-check those interest statements. Do you know what the threshold is for when interest income would make it non-dormant? Even $12 seems like it should still qualify as dormant in the grand scheme of things, but I guess the IRS probably has specific rules about this.
Has anyone considered that maybe the father didn't do this maliciously? Maybe he thought he was helping his kid establish credit or a business history? I'm not saying what he did was right - it definitely wasn't - but before going straight to identity theft claims and potentially sending your dad to jail, maybe have an honest conversation with him first?
Intent doesn't really matter when you're talking about $105K in tax debt that could follow this person for life. Even if the father meant well (which seems doubtful), he's essentially saddled his child with a massive financial burden without consent. That's not something you do to someone you care about, regardless of intention.
I understand this is an incredibly difficult situation, and I want to echo what others have said about getting professional help immediately. One thing I haven't seen mentioned yet is that you should document EVERYTHING right now while the trail is still relatively fresh. Start gathering any documents you can find - business registration papers, any correspondence about the business, bank statements if you have access, etc. Even if your father cooperates later, having this documentation will be crucial whether you go the identity theft route or try to work out some other arrangement with the IRS. Also, consider that there might be a middle ground here. Some tax attorneys specialize in "innocent spouse" relief and similar situations where one person gets stuck with tax liability they shouldn't be responsible for. This might be a way to resolve the debt without necessarily triggering criminal charges against your father, but you'd need to speak with a qualified tax attorney to understand if this applies to your situation. The most important thing is to stop letting your tax refunds get seized while you figure this out. Every year this continues, you're essentially paying someone else's debt. Time is not on your side here.
TommyKapitz
Pro tip: get multiple signed copies of 8332 for future years when your ex is actually cooperating. Learned this the hard way lol
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Abby Marshall
ā¢this is actually genius thank you š
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CosmicCadet
I went through this exact same situation last year. Unfortunately, TurboTax will definitely require the Form 8332 if you're the non-custodial parent trying to claim your child. The software is pretty strict about IRS requirements and won't let you proceed without proper documentation. Even though it sucks having to deal with your ex, you really need that signed form. One thing that helped me was explaining to my ex that it doesn't cost her anything tax-wise if she's not claiming the kid anyway. Maybe approach it from a practical angle rather than making it confrontational? Good luck!
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Keisha Johnson
ā¢This is really helpful advice! I'm dealing with a similar situation and was dreading having to ask my ex for the 8332. The approach of explaining it doesn't hurt them financially is smart - framing it as just paperwork rather than giving up anything valuable might make the conversation easier. Did you find any other ways to make the process smoother?
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