Great question, Diego! I went through this exact situation last year. Your wife's real estate professional status definitely allows you to deduct the full $23,400 rental loss against your ordinary income on a joint return. One important thing to keep in mind beyond what others have mentioned - make sure you're tracking not just her property management hours, but also any time she spends on your personal rental property (showing units, coordinating repairs, reviewing financials, etc.). All of this counts toward her real estate activities. Also, consider whether you want to make a grouping election under Reg. 1.469-9 to treat all your rental properties as a single activity. This can be beneficial if you have multiple rentals or plan to acquire more in the future. You make this election by attaching a statement to your tax return. The $23,400 loss will reduce your taxable income dollar-for-dollar, which at your income level could save you around $5,600-$6,100 in federal taxes alone (depending on your effective tax rate). Don't forget about state tax savings too if you're in a state with income tax. Just make sure to keep detailed records of her hours - a simple spreadsheet with dates, activities, and time spent is usually sufficient. The IRS scrutinizes real estate professional claims closely, so good documentation is your best protection.

Just wanted to add a practical tip from my experience - make sure you're also aware of the depreciation recapture implications when you eventually sell the rental property. While being able to deduct the full $23,400 loss against ordinary income is fantastic now, any depreciation you've claimed over the years will be subject to recapture at up to 25% when you sell. This doesn't change the fact that claiming the loss now is still beneficial - the time value of money means getting the tax savings today is worth more than paying recapture later. But it's good to plan ahead and maybe set aside some of those tax savings for the eventual recapture bill. Also, since your wife qualifies as a real estate professional, you might want to consider whether it makes sense to accelerate any planned repairs or improvements this year to maximize your current year deductions. Things like new flooring, appliances, or HVAC systems can often be fully deducted under Section 199A or through bonus depreciation rules. One last thing - if you're in a high-tax state, the state tax savings from this loss deduction could be substantial too. In states like California or New York, you could be saving an additional $2,000+ on state taxes alone from that $23,400 loss.

Just want to add - make sure to request a "penalty abatement" when you finally reach the IRS! If this is your brother's first time missing a payment deadline for the 2290, the IRS has a "First Time Penalty Abatement" policy that can remove those extra charges. Sounds like the $42 might include penalties and interest that could potentially be removed.

I went through almost the exact same nightmare with my delivery business last year! The key thing that saved me was understanding that CP504B notices are often generated automatically even after you've paid, especially with Form 2290 where there can be significant processing delays. Here's what worked for me: Don't try to make another payment until you confirm whether your September payment was actually processed. Call the Practitioner Priority Service line at 866-860-4259 early in the morning (around 7 AM) - this line typically has shorter wait times than the main taxpayer assistance line. When you do get through, ask them to do a "payment tracer" on your September payment. They can tell you exactly where that money went and whether it was applied correctly. In my case, the payment had been received but was sitting in a suspense account because the reference information wasn't complete. Also, definitely get that authorization form from your brother ASAP. The IRS won't discuss anything without proper authorization, and you're wasting time on calls where they can't help you without it. The CP504B is scary but you typically have at least 30 days from the notice date before any actual levy action, so you have time to sort this out properly rather than panic-paying.

3 Has anyone used the IRS Free File program when transitioning from 1040-NR to 1040? I'm in the same boat and wondering if any of those services handle this state refund situation correctly.

I went through this exact situation two years ago when I transitioned from H-1B to green card status. The key thing to understand is that your state refund is taxable to the extent you received a federal tax benefit from deducting those state taxes on your 1040-NR. Since you were required to itemize on the 1040-NR (no standard deduction available), you almost certainly did receive a tax benefit from the state tax deduction. However, the amount that's taxable might not be the full refund amount if you hit the $10,000 SALT deduction cap. You'll need to do what's called the "tax benefit rule" calculation. Look at your 2023 return and see how much state tax you actually deducted. If it was limited by the SALT cap, then only the portion that provided a benefit is taxable when you receive the refund. The change from nonresident to resident status doesn't affect the taxability of the refund - what matters is whether you got a federal tax benefit in the year you took the deduction. Report the taxable portion on Schedule 1, Line 1 of your 2024 Form 1040.

I filed an amendment electronically on March 14, 2024, and it was accepted by the IRS the same day. Just got my additional refund on May 2nd - so about 7 weeks total. Such a relief compared to last year when I filed a paper amendment on February 10th and didn't see my refund until July! Electronic is definitely the way to go.

Just wanted to add that if you're unsure about whether your deduction qualifies or how to properly claim it on the amendment, the IRS has some helpful resources on their website. Publication 17 (Your Federal Income Tax) has a comprehensive section on amendments, and there's also the Interactive Tax Assistant tool that can help you determine if amending is the right choice for your situation. Better to double-check the details before filing than to have to amend the amendment! Also, make sure you have all your supporting documentation ready - the IRS may request it even for electronic filings.

Has anyone used the IRS's Donation Value Guide? I found it super helpful for figuring out reasonable values. Men's shirts $2-12, women's dresses $4-22, etc. Just Google "IRS donation value guide" and you'll find it. Also worth knowing - you can only deduct fair market value (what someone would pay for the used item), NOT what you originally paid. So that $2000 couch you bought 10 years ago might only be worth $200-300 for donation purposes.

The key thing to remember is that charitable donations are only beneficial if you're itemizing deductions. With the standard deduction at $29,200 for married filing jointly in 2025, you need your total itemized deductions (charitable donations + mortgage interest + state/local taxes + medical expenses) to exceed that amount. If you're already over the threshold due to mortgage interest and state taxes, then yes - those donations absolutely still provide tax savings. Each dollar of fair market value reduces your taxable income by a dollar. For your specific situation with $2,700-$3,800 in donations, you'll definitely need Form 8283 since you're over the $500 threshold. But since no individual items are worth $5,000+, you just need to maintain good records with descriptions, dates, fair market values, and receipts - no professional appraisals required. One tip: don't undervalue your donations. Use resources like the Salvation Army Value Guide or Goodwill's valuation tool to ensure you're claiming appropriate fair market values. Many people leave money on the table by being too conservative with their valuations.