Does anyone know if using a service like TurboTax or H&R Block would automatically flag this kind of issue? I'm wondering if their software would prompt me to enter cost basis if I input a 1099-NEC for personal item sales.

This is a really common issue that many people don't realize until it's too late. I work as a bookkeeper and see this mistake frequently - not just with firearms, but with other personal property sold through consignment shops, art galleries, and online platforms. The key thing to remember is that the form of payment or the 1099 you receive doesn't determine how income should be taxed. The underlying transaction does. Personal property sales are always capital gains transactions, regardless of what form the payer sends you. I'd also recommend keeping detailed records of all your firearms purchases going forward - receipts, dates, any improvements or modifications you made. This makes it much easier to establish cost basis if you sell them later. For firearms you already own without receipts, you can use resources like the Blue Book of Gun Values or similar pricing guides to establish reasonable cost basis based on the condition and market value when you purchased them. One more tip: if you're selling multiple firearms regularly, the IRS might eventually question whether this constitutes a business activity rather than personal property sales. Generally, occasional sales from a personal collection are treated as capital gains, but if you're buying and selling frequently for profit, it could be considered dealer activity subject to different tax rules.

Does anyone know if there's any difference in how this works for different types of brokerage accounts? Like would the deduction rules be different for a trust account vs an individual account?

I appreciate all the detailed discussion here. One thing I want to emphasize for anyone considering this strategy is the importance of keeping meticulous records regardless of which approach you choose. If you decide to roll the interest into new loans, document everything: the original loan amount, each year's interest that gets rolled over, and the cumulative totals. Create a simple spreadsheet tracking the "investment interest basis" versus the actual loan balance. This becomes crucial not just for tax purposes, but also for your own financial planning. Also consider your broker's policies carefully. Some brokerages have restrictions on how they handle rolled-over interest or may charge fees for loan modifications that could eat into any tax benefits. I learned this the hard way when my broker charged me $50 each time I wanted to roll interest into the loan balance. The tax treatment is important, but make sure the overall financial picture (including fees, rate risks, and cash flow impact) still makes sense for your situation.

Did you claim EIC or CTC? Those returns take longer to process and might explain the delay

Same thing happened to me last year! The disconnect between WMR and transcripts is super confusing but totally normal. WMR updates first when they receive your return, but transcripts don't populate until they actually start processing it. I'd say give it another week or two - processing times have been all over the place this season. You're not alone in this!

Don't forget that property tax rules can vary by state! In some places, property taxes are paid partly in advance rather than fully in arrears. And some counties have weird fiscal years that don't align with calendar years. Might be worth a quick call to your county tax assessor's office to confirm exactly how your local system works before making any decisions.

Great question! I went through the exact same confusion when I bought my first home. The key thing to remember is that for individual taxpayers, property tax deductions follow the "cash basis" rule - you can only deduct what you actually paid out of pocket to the tax authority in that tax year. Since your escrow account didn't make any property tax payments in 2023, you won't have a property tax deduction for your 2023 return. The credit you received at closing from the seller is considered a purchase price adjustment, not a tax payment by you. When you pay the 2023 property taxes in January 2024 (even though they're for the previous year), that's when you'll get the deduction - on your 2024 tax return that you'll file in 2025. Make sure to keep your closing statement and all escrow records organized, as you'll need them for future reference and when you eventually sell the home.

Something people aren't mentioning is that Cash App now has that new $1 minimum fee for instant transfers to a bank account. If you're constantly moving money in and out for your family, those fees can add up! I learned you can avoid the fees if you do the standard 1-3 day transfer instead of instant. Might save you some money if you're not in a rush.

One thing to watch out for with Cash App - if you deposit over $10,000 in cash within a short period, your bank might file a Currency Transaction Report. This isn't a tax issue but a regulatory thing for preventing money laundering. It doesn't mean you're in trouble, but if you're regularly depositing large amounts of cash, it might trigger some questions.