Something nobody's mentioned yet - if you bought the car in a different state with lower sales tax, you might have paid "use tax" to your home state to make up the difference. That use tax is also deductible as part of your sales tax deduction if you itemize. Just be careful not to double-count if you've already included it somewhere else on your return.

Gonna add something important - if you financed the car, only the sales tax you actually paid is deductible in 2023, not the total sales tax on the purchase price. Like if the dealer rolled your sales tax into your financing, you technically haven't paid all that tax yet, only the portion in your payments for 2023.

Check if your company's tax lawyers sent it certified mail with return receipt! If they did and have that receipt, your case is much stronger. The Form 3250-A penalties are insanely harsh but the IRS is actually reasonable about abating them when you can prove you attempted to comply. Also, ask your tax attorneys if they included a Form 843 (Claim for Refund and Request for Abatement) with their response to the IRS. That's the official form for requesting penalty abatement and is crucial for getting this resolved properly. One last thing - if this drags on, keep an eye on the collection deadline. The IRS can be slow processing abatement requests but quick to send accounts to collections. Make sure your attorneys request a formal collection hold while your case is being reviewed.

I went through something very similar with a Form 8938 penalty last year - $10,000 for "failure to file" even though I had submitted it. The stress is absolutely overwhelming, but you're taking the right steps. A few things that helped in my case: First, make sure your company's tax team provides you with a complete copy of what they actually submitted, not just confirmation they sent something. Sometimes there are discrepancies between what you prepared and what was actually filed. Second, if they used regular mail, don't panic - I've seen successful abatements even without certified mail when there's other supporting evidence. The key is building a timeline that shows your good faith effort to comply. Document everything: when you completed the form, when you gave it to your tax team, their written confirmation, any follow-up communications. The IRS Manual actually has specific provisions for situations where taxpayers reasonably relied on professionals to handle filings. One thing that really helped my case was getting a letter from the tax professional detailing their standard mailing procedures and confirming they followed them for my return. Even though we couldn't prove delivery, we could prove professional competence and established procedures were followed. Stay strong - reasonable cause abatements are very possible in situations like this, especially for first-time penalties.

Just want to add that even if you don't have to report the crypto gains on your US tax return, you should definitely be reporting them in Canada. The CRA (Canadian Revenue Agency) requires Canadian residents to report worldwide income, including all cryptocurrency transactions.

This is exactly the kind of situation where getting proper documentation is crucial. I went through something similar as an F-1 student from the UK with crypto gains. The consensus here is absolutely correct - as a non-resident alien, your crypto capital gains are sourced to your country of tax residency (Canada), not the US. This means you don't report them on your 1040-NR. Your CPA gave you the right advice. However, I'd strongly recommend getting this determination in writing somehow, whether through an official IRS consultation or at minimum keeping detailed records of your research and professional advice. The crypto tax landscape is still evolving, and having documentation of your reasoning will be invaluable if questions ever arise later. Also make sure you're keeping meticulous records of all your transactions for your Canadian tax filing - the CRA will definitely want to see those gains reported there since you're a Canadian tax resident.

3 Has anyone tried calling the company that issued the 1099-R directly? I had this same issue last year, and I just called their customer service department. They sent me a detailed breakdown of what was taxable and what wasn't. Saved me a lot of headache!

I'm dealing with this exact same situation right now! Got a 1099-R with box 2b checked for an inherited annuity from my grandmother. The insurance company's documentation shows the original premium payments versus the account value at death, but I wasn't sure if I could rely on that calculation. Reading through these responses has been incredibly helpful - especially knowing that using the taxable gain amount from the distribution paperwork is the accepted approach. I was worried I might be missing some complex calculation or IRS form I needed to file. One question though: should I attach a copy of the insurance company's breakdown to my tax return, or is it sufficient to just keep it with my records in case of questions later?

Did you check your tax transcript for TC 898? That's the transaction code for refund offsets. It should list the amount that was offset and potentially give you more info. You can view your transcript online through your IRS account.

Has anyone noticed how many more offset issues there seem to be this year compared to past years? I'm an accountant and I've had at least 8 clients with unexpected offsets this filing season alone.