Great question! Yes, when you dispose of your entire interest in a rental property, all those suspended passive losses become fully deductible in the year of sale. This is covered under IRC Section 469(g) - you can use them to offset ANY type of income, including your W2 salary. With $100K in suspended losses and a $135K salary, you're looking at potentially significant tax savings. However, a few things to watch out for: 1. **Depreciation recapture** - You'll still owe tax at 25% on depreciation you've claimed over the years, even with a sale loss 2. **Documentation** - Make sure you have proper records of these suspended losses from your Form 8582 worksheets each year 3. **Sale loss calculation** - Your actual loss on the property sale will be separate from the suspended passive losses The silver lining is that after years of carrying these losses forward, you finally get to use them all at once. Given the complexity with depreciation recapture and the large amounts involved, I'd strongly recommend getting professional help to make sure you're maximizing the benefit and reporting everything correctly. Sorry to hear about the rental nightmare, but at least the tax situation should work in your favor!

This is such a common situation with rental properties! I went through something similar with my rental condo that turned into a money pit. The good news is that when you dispose of your entire interest in the rental property, all those suspended passive losses get released and can offset your regular income - including your W2 salary. Just be prepared for the paperwork complexity. With $100K in suspended losses, you'll definitely want to have all your documentation in order. I'd recommend gathering all your Schedule E forms from the past six years and any Form 8582 worksheets that tracked these suspended losses. The IRS will want to see the trail of how these losses accumulated. One thing that caught me off guard was that even though I sold at a loss, I still had some tax liability due to depreciation recapture. It didn't eliminate all the benefits from the suspended losses, but it was something I hadn't initially factored into my calculations. Still, being able to finally use those losses after years of carrying them forward felt like getting something back from an otherwise frustrating investment experience!

I'm going through the exact same frustrating experience right now! Filed my Michigan state return in mid-March and I'm currently at 10 weeks stuck in review status with absolutely no communication from them. Like so many others here, my federal refund came through in under 3 weeks with zero issues, but Michigan just keeps showing that same useless "under review" message. What's really infuriating is the complete lack of transparency - no letter explaining what's being reviewed, no timeline estimates, nothing. I've been religiously checking my mail thinking maybe I missed a notice, but there's been complete radio silence from Michigan Treasury. After reading through everyone's experiences, it's both reassuring and terrifying to see that 8-12+ weeks has become the "new normal" this year. That's absolutely unacceptable - we shouldn't have to wait months for our own money while they provide zero accountability! I'm definitely going to try the secure messaging through Michigan Treasury Online since so many people have had actual success with that compared to the phone system (which sounds like a complete waste of time). Thanks for posting this Emma - it really helps to know we're not alone in dealing with Michigan's completely broken system, even though none of us should have to endure this nightmare!

I'm dealing with this exact same nightmare! Filed my Michigan return in early April and I'm currently at 8 weeks stuck in review with zero communication from them. Like everyone else here, my federal came through fine weeks ago, but Michigan just keeps showing that generic "under review" message. What's really frustrating is reading through all these experiences and seeing how completely random their process seems to be - some people wait 2 weeks, others wait 3+ months for seemingly identical situations. The lack of any communication or timeline is just cruel. Based on everyone's suggestions here, I'm going to try the secure messaging through Michigan Treasury Online this week since calling seems to be a complete waste of time. It's insane that we have to crowdsource solutions just to get our own money back from the state! Thanks for posting this Emma - it's both comforting and infuriating to see how many of us are stuck in the same broken system. Hopefully we all get our refunds soon because this waiting game is exhausting! 🤞

Does anyone have a recommendation for a free tax filing service that handles 1099-NEC and Schedule C well? I'm in basically the same situation as OP with a small amount of freelance income.

Just wanted to jump in as someone who went through this exact situation a couple years ago! You absolutely need to file because of the self-employment rules everyone mentioned - that $400 threshold is the key thing here, not the regular filing requirement. One thing I wish someone had told me when I was in your shoes: keep really good records of ANY expenses related to your design work. Software subscriptions, computer equipment, even a portion of your internet bill if you worked from home. These can all be legitimate business deductions that will reduce your self-employment tax. Also, don't stress too much about doing it "perfectly" on your first time filing. The IRS is actually pretty reasonable if you make an honest mistake and need to file an amended return later. The important thing is just getting it filed since you're over that $400 threshold. Good luck with your first tax return! It's not as scary as it seems once you get started.

Thanks everyone for sharing your experiences! This has been incredibly helpful. I'm feeling much more confident about the Section 125 plan now that I understand it better. The tax benefits are legitimate, but it sounds like the key is really understanding what type of accounts you're enrolling in and being realistic about your expense estimates. @Ava Harris - I'd recommend asking your HR department specifically what type of Section 125 benefits they're offering (FSA, dependent care, premium-only plan, etc.) and whether there are any carryover provisions or grace periods. Also ask about the administrator's customer service track record since that seems to be a real pain point with some companies. One question I still have - if my employer is taking an administrative fee (like the "slightly less" amount you mentioned), shouldn't that be clearly disclosed somewhere? That seems like something that should be transparent in the enrollment materials.

You're absolutely right that administrative fees should be transparent! When I enrolled in my company's Section 125 plan last year, I had to dig through multiple documents to find the fee structure. It was buried in the "plan administration" section rather than highlighted upfront. Most reputable administrators will disclose their fees somewhere in the enrollment materials, but it's often in fine print or separate documents. The fee typically ranges from $2-8 per month per participant, plus sometimes a small percentage of claims processed. Some employers absorb these costs, others pass them directly to employees. I'd definitely ask HR for a clear breakdown of all fees before enrolling. If they can't provide that information readily, that might be a red flag about the administrator's transparency. You have every right to know exactly what you're paying for these services, especially since you're trusting them with your pre-tax dollars.

Starting to feel like we're all just 🎰 gambling with these tax companies frfr

Been waiting 5 days for mine too! Called JH customer service and they said there's a backlog due to IRS system updates. Rep told me to expect it by end of week. Hang in there - at least we're not alone in this! 🤞