Quick question about this - does this same rule apply for state taxes too? My husband and I file separately for federal but jointly for state because our state has better credits for joint filers.

I've been following this thread and wanted to share my experience as someone who went through almost exactly the same situation. My spouse and I had been filing separately for about 6 years, with me itemizing (due to high medical expenses and charitable donations) while my spouse took the standard deduction. Like you, we never received any notices from the IRS, so I assumed we were doing everything correctly. It wasn't until I mentioned our situation to a CPA friend that I learned about the "both must itemize if one itemizes" rule for married filing separately. What really opened my eyes was when we finally did a comprehensive comparison of filing jointly vs. separately (with both of us itemizing correctly). We discovered we had been overpaying by about $1,800 annually! The joint filing gave us access to credits we couldn't claim when filing separately, and even though our combined income pushed us into a higher bracket, the overall tax was still significantly lower. The lesson I learned is that tax situations change over time - income levels, deduction amounts, tax law changes - and what made sense years ago might not be optimal anymore. I'd strongly recommend doing that side-by-side comparison before this year's filing deadline. You might be surprised by the results!

I'm going through the EXACT same thing right now but with DraftKings. Is anyone using TurboTax to handle this? I can't figure out where to enter my gambling wins and losses, and it doesn't seem to have a specific spot to reconcile the 1099-K amounts that aren't income. I'm so confused!!

I went through this exact situation last year with my Hard Rock account and PayPal 1099-K. The key thing that helped me was creating a detailed spreadsheet that matched up my PayPal transactions with my Hard Rock win/loss statement by date. What I found was that the 1099-K included not just my deposits, but also some withdrawals that got processed back to PayPal, which made the total even more confusing. The actual taxable amount was way less than what the 1099-K showed. One thing to watch out for - make sure your Hard Rock win/loss statement covers the exact same tax year as your 1099-K. Sometimes there's a day or two difference in how they calculate the reporting period, and those end-of-year transactions can throw everything off. I ended up using the gambling reconciliation worksheet that comes with the tax software to show the IRS exactly why my reported income was different from the 1099-K amount. Keep all your documentation - the win/loss statement, the 1099-K, and any records of your actual deposits/withdrawals. The IRS is seeing a lot of these cases this year so they're pretty familiar with the situation.

I tried TurboTax's import feature last year and it was kinda hit or miss. Got my main W2 from my full-time job but completely failed to import anything from my side gig. My bank's 1099-INT imported fine but Robinhood's forms didn't. Just don't go in expecting it to import everything automatically. You'll probably still need to enter some stuff manually. And ALWAYS double-check the imported values against your paper forms. I caught a few errors last year where the imported numbers didn't match my actual documents.

Great question! As someone who just went through this process myself, I can confirm that TurboTax's import feature is pretty solid but definitely not perfect. Since you mentioned ADP specifically - you're in luck! ADP is one of the major payroll providers that works well with TurboTax's direct import. You'll need your ADP login credentials, and the W2 should import automatically once it's available (usually by late January). For Fidelity, they're also well-supported for importing 1099s. Your investment income forms should come through without issues. The student loan interest (1098-E) import depends on your loan servicer - the big ones like Navient, Nelnet, and Great Lakes typically work fine. One tip: even when everything imports correctly, definitely review all the numbers against your paper/PDF copies. I caught a small error in my imported 1099-DIV last year that would have cost me a few hundred dollars in incorrect taxes. Also, if some forms don't import, don't panic! The manual entry in TurboTax is pretty straightforward and walks you through each field. Good luck with your first solo tax filing!

I was in same boat last year! Here's one thing nobody mentioned yet - keeping track of home office expenses if you work from home. That's been a game changer for me tax-wise since my mortgage interest alone wasn't enough to itemize.

Great thread - this really helped clarify things! I just want to add one more document that might be relevant: if you refinanced during the year, make sure to get the 1098 from BOTH your old lender and new lender. I almost missed this last year and would have under-reported my mortgage interest deduction by about $800. The old lender's 1098 covered January through the refinance date, and the new lender's covered from refinance through December. Also, if you paid any loan origination fees or discount points during a refinance, those might be deductible too - but they're usually spread out over the life of the loan rather than taken all at once like points on a purchase. Your tax preparer should know the rules but it's worth mentioning if you refinanced!

Has anyone had experience dealing with functional currency elections under Section 985 in connection with this issue? Wondering if making that election would simplify the filing process for future years even though it wouldn't help with the past unfiled returns.

I've dealt with this exact situation multiple times with foreign clients who had unfiled 1120F returns. The M-1 adjustment approach is definitely the way to go for these currency translation differences. One thing I'd add is to be very careful about your exchange rate sources and document them thoroughly. I always use the Federal Reserve's daily exchange rates and create a detailed memo explaining the methodology - which rates were used for which items and why. This becomes crucial if you're ever questioned during an exam. Also, since you're dealing with multiple years of unfiled returns, consider whether you need to address any potential penalties under the reasonable cause provisions. The IRS tends to be more understanding when there's a legitimate business reason for the delay and you're making a good faith effort to comply correctly.