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Has anyone used TaxAct or FreeTaxUSA for reporting sublease income? TurboTax seems to be giving conflicting advice but I'm wondering if other tax software handles this situation better? I only sublet my place for about 2 months while I was away for work.
I used FreeTaxUSA last year for a similar situation. It worked well because it let me file Schedule C easily. You just need to categorize your activity as "rental services" or something similar, not as rental property. I found their interview process more flexible than TurboTax for situations that don't fit the standard boxes.
I went through this exact same situation last year with Airbnb hosting in my rented apartment. The confusion between Schedule E vs Schedule C is really common because most tax software assumes you own property when you're earning rental income. What helped me was understanding that Schedule E is specifically for "passive" rental income from property you own, while Schedule C is for "active" business income - which is what subleasing really is since you're actively providing housing services. One tip that saved me money: keep detailed records of everything during your sublease period. Beyond just rent and utilities, you can deduct things like extra cleaning supplies, any furnishings you bought specifically for the sublet, advertising costs if you used Airbnb/Craigslist, and even a portion of your internet bill if your subletter used WiFi. Also, that $150 fee you paid to your landlord for permission? That's definitely a deductible business expense since it was necessary to conduct your subletting activity. Make sure to include that on your Schedule C.
This is really helpful! I'm new to this whole situation and didn't realize there were so many deductible expenses beyond just rent. Quick question - when you say "advertising costs" for Airbnb, do you mean the service fees that Airbnb charges hosts? Or are you talking about something else like promoting your listing? Also, how do you calculate the internet portion? Is it just based on the same percentage you use for rent (like the room size calculation) or is there a different way to figure that out?
According to IRS Publication 2043 (Digital Payments Guidance), the IRS considers its obligation fulfilled when the funds are released on the DDD, regardless of when they actually post to your account. The distinction between traditional financial institutions and non-bank financial services providers (NBFSPs) like PayPal is significant here. NBFSPs are subject to Regulation E under the Electronic Fund Transfer Act but operate under different processing protocols than institutions directly connected to the Federal Reserve system. This regulatory distinction often results in the processing delay you experienced.
Thanks for sharing this timeline, Summer! This is really helpful data. I'm curious - did you receive any notification from PayPal when the funds actually hit your account, or did you just happen to check and find them there? I'm waiting on my refund with a DDD of 03/10 and wondering if I should set up alerts or just check periodically. Also, for future reference, do you think it would be worth switching to a traditional bank account for tax refunds, or is the convenience of having everything in one PayPal ecosystem worth the extra wait time?
Hey Mason! As someone who's dealt with similar PayPal delays, I'd recommend setting up notifications if possible - it's way less stressful than constantly checking. From my experience, PayPal usually sends a push notification when larger deposits hit, but it's not always immediate. Regarding switching to a traditional bank - I've been going back and forth on this myself. The convenience factor is nice, but when you're counting on those funds for specific bills or expenses, that extra 2-4 day wait can really throw off your timing. Maybe consider keeping both options and using the bank account just for tax refunds if the timing is critical for your financial planning?
Kinda off-topic, but worth mentioning - if you're paying your niece's tuition directly to the educational institution, that's actually exempt from gift tax reporting regardless of the amount! Same goes for medical expenses paid directly to providers. So if any part of that $30k went straight to the school, that portion doesn't count toward the $15k annual limit.
Wait really? I didn't know that! About $12k of the money went directly to her university for this year's tuition, and the rest was for housing and expenses. Does that mean I'm actually only gifting $18k for gift tax purposes? Does that change my filing requirement?
Yes, any payments made directly to educational institutions for tuition are completely exempt from gift tax rules! They don't count toward your annual or lifetime limits at all. If $12k went directly to the school for tuition and only $18k went to your niece, you're actually much closer to the annual exclusion limit ($15k for 2023). You would only need to file a Form 709 for the $3k that exceeds the annual exclusion, not the full $30k. That's a significant difference in terms of how much of your lifetime exemption you'd be using.
Just to add an important detail - if you're married, you and your spouse can "split" gifts even if the money comes from just one of you. This allows you to give up to $30k ($34k in 2024) to a single person without filing a gift tax return. You would both need to sign the return though if you go over that amount.
Been 3 weeks since I verified still nothing fml
I verified through ID.me about 6 weeks ago and just got my transcript update last Friday! The wait is definitely nerve-wracking but it does happen. One thing that helped me was setting up IRS transcript monitoring so I got email alerts instead of constantly checking manually. Also, make sure your address is updated with the IRS - I've seen delays happen when there are address mismatches between ID.me and IRS records.
NebulaNomad
Has anyone actually gotten their refund after going through all this identity theft mess? I filed my 14039 almost 7 months ago and still nothing. The identity theft PIN came after 4 months but no movement on my refund.
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Luca Ferrari
β’I got mine after 9 months last year. It was a nightmare but the money did eventually come through with interest. The key for me was getting someone on the phone around the 6-month mark who could verify it was still in process and hadn't been lost or forgotten.
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NebulaNomad
β’That's somewhat reassuring, thanks. 9 months is ridiculous but at least you got interest on it. Did you have to do anything special to keep the case moving, or did it just resolve on its own after you confirmed it was still in process?
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Abigail bergen
I'm going through this exact same situation right now - filed my 14039 about 8 weeks ago after getting the duplicate e-file rejection. The waiting and uncertainty is absolutely maddening! One thing that's helped me manage the stress is setting up alerts on my IRS account online (if you can access it) and checking the "Where's My Refund" tool weekly, even though it probably won't show updates for identity theft cases. I also started keeping a detailed log of every call attempt, reference numbers, and any correspondence - it makes me feel like I'm doing something productive while waiting. @Isabella Silva - have you tried reaching out to your local Taxpayer Advocate Service office? They can sometimes help expedite cases that have been stuck in the system for an unreasonable amount of time. The 10-week mark might be worth giving them a call, especially since you're experiencing financial hardship waiting for your refund. Hang in there - from everything I've read here, it sounds like persistence pays off eventually, even though the timeline is frustratingly long.
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