One thing to keep in mind that hasn't been mentioned yet - make sure you keep meticulous records of when you actually convert the property from rental to primary residence. The IRS will want clear documentation of the conversion date, which affects your qualified vs non-qualified use calculations. I'd recommend documenting things like: when you moved in, utility transfers to your name, voter registration changes, driver's license updates, and any lease terminations with tenants. Also keep records of any improvements you make after converting it to primary residence, as these can increase your basis and potentially reduce your taxable gain. The devil is really in the details with these conversions, and having solid documentation will save you headaches if you ever get audited. I learned this from a friend who had to reconstruct his timeline years later when the IRS questioned his conversion date.

This is such a valuable discussion! As someone who's been considering this exact strategy, I wanted to add a few points that might help others thinking about rental-to-primary conversions. One thing I've learned from researching this is that the "2 out of 5 years" rule for primary residence can be tricky with conversions. You need to live in the property as your primary residence for at least 2 years during the 5-year period ending on the sale date. But as others have mentioned, the non-qualified use periods (rental time after 2008) will reduce your exclusion proportionally. Also, don't forget about the timing of when you take depreciation. If you're planning to convert a rental property, you might want to consult with a tax professional about whether to continue taking depreciation right up until conversion or stop earlier. The depreciation recapture at 25% applies to ALL depreciation taken (or allowed to be taken), so this could affect your overall tax strategy. For anyone just starting to consider this path, I'd recommend running the numbers on multiple scenarios - different rental periods, different sale timing, etc. - before making the initial purchase. The tax implications can really impact the overall profitability of the investment strategy.

One important thing nobody's mentioned yet - be careful how you document the "fair market value" of collectibles. The IRS is VERY picky about this and it's a common audit trigger. FMV isn't what you paid, what it's insured for, or what similar items sell for at specialty shops. It's specifically what a willing buyer would pay a willing seller when neither is under pressure. For action figures, I'd recommend looking at actual completed eBay sales (not just listings) of the same items in similar condition. Screenshot these as evidence. And be conservative in your valuations - better to undervalue slightly than to raise red flags.

Just wanted to add another perspective on the appraisal requirement - I went through this exact situation last year with my vintage baseball card collection. One thing that helped me was finding an appraiser who specializes in collectibles and offers "batch pricing" for large collections. Instead of charging per item, they charged a flat fee based on the total estimated value range. This made it much more affordable than I initially thought. Also, keep in mind that the appraisal fee itself can be deductible as a miscellaneous expense related to tax preparation. So while you're paying upfront, you do get some of that back. The documentation requirements are strict, but if you're organized about it (taking photos, keeping receipts, noting condition), the whole process is manageable. And honestly, having that professional appraisal gives you peace of mind that your valuation will hold up if the IRS ever questions it. The splitting across tax years strategy mentioned earlier is legitimate, but just make sure you're genuinely spreading out the physical donations too - not just artificially timing the paperwork.

I just went through this exact process last month! The advice about getting an ITIN is correct - you'll need to file Form W-7 with your joint return and write "APPLIED FOR" where her SSN would go. One thing I learned the hard way: make sure you have ALL the required documentation ready before you submit. The IRS is very strict about what they'll accept for identity verification. Original documents or certified copies from the issuing agency only - no photocopies or notarized copies. Also, consider timing carefully. If you're expecting a large refund, the 6-8 week delay for ITIN processing might be worth it for the tax savings of filing jointly. But if the refund is small and you need the money soon, filing separately might make more sense this year. The good news is this is a one-time hassle - once she gets her SSN through the immigration process, future tax years will be much simpler!

I'm actually going through this same process right now with my husband who's on a K-1 visa. We decided to go the ITIN route after consulting with a tax professional. One thing I'd add to all the great advice here is to double-check the mailing address when you send in your W-7 and tax return. The IRS has specific addresses for ITIN applications that are different from regular tax return processing centers, and using the wrong address can add weeks to your processing time. Also, keep copies of EVERYTHING you send - not just photocopies, but actually scan or photograph every page before mailing. The IRS has been known to lose documentation occasionally, and having digital copies makes it much easier to resend if needed. We're about 4 weeks into the process now and haven't heard anything yet, but based on what others are saying, we're prepared to wait the full 6-8 weeks. The peace of mind of filing jointly and getting the better tax treatment is worth the wait for us, especially since we're expecting a decent refund too.

I'm new to this community and just went through this exact same situation! My direct deposit was rejected by my bank (KeyBank) about 10 days ago due to their daily deposit limit, and I saw code 841 appear on my transcript shortly after. I was really stressed about it at first, but reading through everyone's experiences here has been incredibly reassuring! My paper check just arrived yesterday - exactly 10 business days after code 841 appeared on my transcript. The process was completely automatic, just like everyone has described. The check came from "U.S. TREASURY" in a white envelope with "BUREAU OF THE FISCAL SERVICE" as the return address, clearly marked as important tax documents. @Brooklyn Foley - I hope your check arrived by now since you posted this over a week ago! Based on all the consistent timelines people have shared here (10-15 days seems to be the standard), you should have received it already. The waiting is definitely nerve-wracking when you need your money, but the system really does work automatically. What really helped me during the wait was reading all these real experiences from people who've actually been through this process. The IRS website doesn't explain it clearly, but this community has provided so much valuable insight. Thanks to everyone who shared their timelines - it makes such a stressful situation much more manageable when you know what to expect! The key takeaways I learned: it's completely automatic, no action needed on your part, and the Treasury Department handles it efficiently within that 10-15 day window. Hope this helps others going through the same situation!

I'm completely new to this community but wanted to share my experience to help others going through code 841! My direct deposit was rejected by PNC Bank just 5 days ago (refund was $6,800, their daily limit was $5,000), and code 841 appeared on my transcript 3 days ago. Reading through this entire thread has been absolutely incredible - everyone's real experiences and consistent timelines have completely calmed my nerves! It's amazing how helpful this community is compared to trying to understand the vague IRS website information. @Brooklyn Foley - I really hope your check arrived safely by now! Your original question created such a valuable resource thread that's helping so many of us newcomers understand this confusing process. Based on all the detailed experiences shared here, I'm now confident that: • The paper check conversion is completely automatic (no calls or forms needed) • Timeline is consistently 10-15 days from when code 841 appears • Check comes from "U.S. TREASURY" with "BUREAU OF THE FISCAL SERVICE" return address • White envelope clearly marked as important tax documents • WMR status probably won't update to show paper check This community is absolutely amazing for getting real answers from people who've actually lived through these situations. The consistency in everyone's timelines (10-15 days) is so reassuring and shows the system really does work reliably, even if the waiting is stressful when you need your money. Thanks to everyone who took the time to share their experiences and timelines - it makes navigating this confusing tax situation so much easier for newcomers like me!

quick questions - do the payments actually need to match the profitability by quarter or can i just divide my total estimated taxes for the year into 4 equal payments? my s-corp has really seasonal income so some quarters have way more profit than others.

Great question about S Corp quarterly payments! Just to add some clarity - you're absolutely right to be thinking about this carefully. The key thing to remember is that as an S Corp owner, you wear two hats: employee (if you take a salary) and owner/shareholder. From the business account, you should pay: - Payroll taxes for your salary (employer portion of FICA, unemployment taxes, etc.) - Any business-specific taxes like state franchise fees From your personal account, you should pay: - Estimated quarterly payments for the income tax on your share of the S Corp profits - Your portion of self-employment tax equivalent (though S Corp profits aren't subject to SE tax, which is one of the benefits) Since this is your first profitable quarter, make sure you're also paying yourself a reasonable salary if you haven't been already - the IRS expects S Corp owner-employees to take W-2 wages before distributions. Congrats on the profit, and keep that business/personal separation clean for your records!