One thing that hasn't been mentioned yet is the importance of keeping detailed records of your Robinhood cash sweep deposits. As an NRA, you'll want to maintain documentation showing that the interest truly comes from bank deposits rather than other investment activities. I'd recommend downloading your monthly statements from Robinhood that show the cash sweep transactions and which partner banks your funds were deposited into. This documentation will be helpful if the IRS ever questions the exempt status of your interest income. Also, be aware that if you have other types of interest income from Robinhood (like from bonds or other securities), those would be treated differently and might not qualify for the bank deposit exception. The 1099-INT should break down the different types of interest, so make sure you're only applying the exemption to the actual bank deposit interest from the cash sweep program.

As a fellow NRA dealing with similar tax questions, I want to emphasize something that helped me understand this better: the key distinction is between "portfolio interest" and "bank deposit interest" - both can be exempt for NRAs, but under different rules. For Robinhood's cash sweep program, you're almost certainly dealing with bank deposit interest since they explicitly state they sweep uninvested cash into FDIC-insured deposit accounts at partner banks. This falls squarely under the bank deposit interest exemption in IRC Section 871(i)(2)(A). However, I'd strongly recommend verifying this by looking at the specific language on your 1099-INT form. Box 1 should show the interest amount, and there might be additional codes or descriptions that clarify the source. If it says something like "cash sweep interest" or references partner banks, you're good to go with the exemption. One last tip: even though it's exempt from federal tax, don't forget to check if your state has any reporting requirements if you have any U.S. state tax obligations. Most states follow federal treatment for NRAs, but it's worth confirming.

Seriously, don't skip professional liability insurance if you're starting a tax prep business! I learned this the hard way when I made a calculation error on a client's Schedule C that resulted in them owing penalties. The client threatened to sue for the penalties plus damages. Insurance saved me thousands. Also, make sure you understand and use proper engagement letters with every client that clearly outline your responsibilities and theirs. This includes what happens if there's an audit, who's responsible for providing accurate information, and your fee structure.

Great advice from everyone here! I'm in a similar position - worked at a regional CPA firm for a few years but thinking about branching out on my own. One thing I'd add is to consider starting very small and growing gradually. Maybe begin with just 20-30 clients your first year to really understand the business side of things. Also, don't underestimate the technology costs beyond just tax software. You'll need secure file storage, client portals for document sharing, appointment scheduling systems, and potentially a separate business phone line. These costs can add up quickly but are essential for running a professional operation. One last tip - consider specializing in a particular niche rather than trying to be everything to everyone. Whether it's small business owners, freelancers, or people with rental properties, having expertise in specific areas can help you command higher fees and build a reputation.

Great question! As a newcomer to this complex topic, I'm learning a lot from this discussion. One thing I'm wondering about is whether there are any state-level implications to consider in addition to the federal tax rules everyone's discussing? I live in California, which I know has its own gift and inheritance tax rules. Would the cost basis carryover rules work the same way for state taxes, or could there be additional complications when gifting stock across state lines? For example, if your aunt lived in a different state when she originally purchased the Microsoft shares, or if your daughter will be attending college in another state where she might establish residency? Also, since several people mentioned the importance of documentation - is there a specific format or type of documentation that the IRS expects for gifted securities? I want to make sure I'm prepared if I ever find myself in a similar situation with family stock transfers. This thread has been incredibly helpful for understanding how complex these multi-generational transfers can be!

As someone new to this community and dealing with a similar gifted stock situation, this thread has been incredibly enlightening! I'm currently trying to navigate the cost basis rules for some Tesla shares my uncle gifted me last year, and reading about everyone's experiences has helped me understand I need to be much more proactive about documentation. One question I haven't seen addressed yet: what happens if the original giftor (in your case, your aunt) passes away before you complete the gift to your daughter? Does this affect the cost basis calculation at all, or would the carryover basis rules still apply the same way? I'm asking because my uncle is elderly and I want to make sure I understand all the potential scenarios before making any decisions about re-gifting portions of the Tesla stock to my own children. Also, for those who mentioned using tax preparation services, has anyone worked with a CPA who specializes in multi-generational wealth transfer? I'm wondering if the complexity of these situations warrants paying for specialized expertise rather than trying to navigate it through general tax software or services. Thank you all for sharing your experiences - it's clear this is much more complicated than I initially thought!

Haha, offsets are like that friend who remembers you owe them $20 from six years ago! 😂 But seriously, the community wisdom here is pretty consistent: offsets are definitely up this year compared to the past few. The pandemic protections have expired, and collection activities have resumed full force. The best approach is always to be proactive - check for potential offsets before you file, adjust your withholding if needed, and never count on your full refund until it's actually in your account. Most people don't realize you can call 800-304-3107, enter your SSN, and find out if you have potential offsets before you even file.

I can confirm this trend is absolutely real! As someone who works in tax preparation, I've seen a massive uptick in offset cases this filing season compared to the last few years. The COVID-19 protections that suspended most federal debt collections expired, and agencies are aggressively catching up on collections they couldn't pursue during 2020-2022. What's particularly frustrating is that many taxpayers aren't getting the required 60-day advance notice, so they're blindsided when their refund is reduced or eliminated entirely. I always recommend clients call the Treasury Offset Program hotline at 800-304-3107 BEFORE filing to check for potential offsets. It's a simple automated system - just enter your SSN and it'll tell you if any federal agencies have submitted your debt for offset collection. The main culprits I'm seeing this year: defaulted federal student loans (Department of Education is very active), unpaid state income taxes, child support arrearages, and old federal agency debts like SBA loans. Even debts that are years old can suddenly resurface for tax offset collection. Better to know ahead of time than get surprised!

I was in exactly this situation last year!! My advice - if u can afford it just hire a full service accountant for the entire return. I tried to do what ur suggesting and ended up with a mess. The accountant I approached wanted to review EVERYTHING anyway to make sure the 7203 was right. He said basis is connected to everything else. The debt transfer between personal/business cards makes it even more complicated. When I transferred business debt to personal, it was actually considered a contribution to capital which INCREASED my basis (which helped me claim more losses). But an accountant needs to see your full situation to determine this.

You've gotten some great advice here! I'm a tax preparer who works with a lot of small S Corps, and yes, absolutely you can hire someone just for the Form 7203. I do this type of work regularly. The key thing to understand is that while they won't need to sign as the preparer, they'll still want to review your prior year returns and understand the full picture of your business transactions. The basis calculation isn't just about one year - it's cumulative from when you started the S Corp. For your specific situation with the credit card debt transfer, that's actually a common issue that significantly affects basis. When you paid business debt with personal funds, that typically increases your stock basis, which could allow you to claim more of those suspended losses from 2021. I'd recommend looking for a CPA or EA who advertises S Corp expertise. Many will quote you a flat fee for just the 7203 - typically $200-500 depending on complexity. Make sure to ask upfront if they're comfortable doing just one form rather than the full return. Most professionals are fine with this arrangement. Bring your 2021 and 2022 tax returns, documentation of the credit card transfers, and any loan agreements between you and the business. Good luck!