I had a similar experience last year where a preparer promised a huge refund that seemed too good to be true. Turns out she was claiming I operated my home as a daycare (I don't) to get a massive home business deduction. I reported her to the IRS using Form 14157 (Tax Return Preparer Fraud). The IRS takes this seriously because shady preparers cost them billions.

This is a huge red flag situation. A legitimate tax preparer should ALWAYS be transparent about what deductions they're claiming on your behalf. The fact that she's being vague and won't explain the specifics is extremely concerning. Here's what you should do immediately: 1. Don't sign anything until you get a complete draft of your return 2. Ask her to walk through each deduction line by line - if she refuses, walk away 3. Compare the draft to your previous year's return to see what's different 4. Consider getting a second opinion from a CPA or EA (Enrolled Agent) With your income level and typical tax situation, a $9K swing without major life changes (new business, significant charitable donations, major medical expenses, etc.) is highly suspicious. Remember, YOU are legally responsible for everything on that return, not the preparer. If she's committing fraud, you could face penalties, interest, and even criminal charges. Trust your instincts - if it sounds too good to be true, it probably is. Better to pay what you actually owe than deal with an IRS audit and potential fraud charges.

I'm super confused about these K-2/K-3 schedules. My software (TaxAct) is forcing me to fill out ALL the parts even though we only have one foreign partner and all US income. Is there a way to override this in the software so I only complete the necessary sections?

I went through this exact situation last year with our partnership that has German and Swiss partners but only domestic US income. After hours of research and calls to the IRS, here's what I learned: You're absolutely right to complete Part 2 as a protective measure. The required sections for your situation are: **Part 1 (Partnership's Income)** - Complete Section 1 even if all zeros. This shows you've considered each category. **Part 2 (Foreign Tax Credit Information)** - Required when you have foreign partners who might claim foreign tax credits on their personal returns. **Part 10 (Foreign Partner Information)** - This is crucial. You need to break down each type of domestic income (ordinary business income, rental income, capital gains, etc.) allocated to your foreign partners. Don't just show totals. **Part 11 (Treaty Benefits)** - Check if any of your foreign partners are from treaty countries. If so, you may need to complete this section to help them claim treaty benefits. One thing that caught me off guard: make sure to include the partner's country code and tax identification number from their home country in Part 10. The IRS has been very specific about this requirement. I'd also recommend attaching a brief statement explaining that you have no foreign-sourced income but are filing these schedules due to foreign partners. It helps clarify your filing position if the IRS has questions later. The good news is once you get the format down, it becomes much easier for subsequent years!

Don't forget to consider if your music composition qualifies for Qualified Business Income (QBI) deduction! A lot of creative professionals miss this. The professional code can impact this too.

Great question! I'm a freelance musician and composer who went through this exact same situation a few years ago. I'd definitely recommend switching to code 711510 (Independent Artists, Writers, and Performers) as others have mentioned - it's much more accurate for what you're actually doing. One thing I wish I'd known earlier: make sure you're tracking all your composition-related expenses properly. Things like music software subscriptions, instrument maintenance, studio equipment, and even a portion of your internet bill if you're distributing music online can all be legitimate deductions. Since you're transitioning from having a CPA handle everything, it's worth doing a deep dive into what business expenses you might have been missing. Also, keep detailed records of your royalty payments and commission work - the IRS likes to see clear documentation of creative income streams. Good luck with your first self-filed return!

Has anyone dealt with the passive activity loss limitations? My rental property operates at a loss after all expenses and depreciation, but I've heard I might not be able to deduct all of it against my other income since I make around $160k from my job.

One important thing to keep in mind is the timing of when you convert the property to rental use. The IRS considers the conversion to happen when the property becomes "available for rent" - not necessarily when you find your first tenant. This matters because it affects when you start depreciating the property and which expenses you can deduct. Also, make sure you keep detailed records of all expenses from the conversion date forward. This includes not just the obvious ones like mortgage interest and property taxes, but also things like advertising costs to find tenants, repairs to get the property rent-ready, and any property management fees. These all become deductible business expenses once it's a rental property. Since you mentioned this was supposed to be your primary residence, you might also want to consider whether claiming the rental loss deduction (if applicable based on your income) is worth potentially losing eligibility for the Section 121 home sale exclusion if you decide to sell within a few years.

Ugh I feel your pain! Those transcript codes are like reading hieroglyphics 😵‍💫 I was in the exact same situation last year with a CP05 review. The waiting is the worst part honestly. Have you tried calling the IRS directly? Sometimes they can give you more info about what specifically they're reviewing. Also keep checking your transcript every Friday - that's when they usually update. Hang in there! 💪

I totally get the frustration with those transcript codes! 😤 As someone who's been through this maze before, here's what those codes mean: 150 = your return was processed, 570 = there's a hold (usually for review), and 971 = they sent you a notice (your CP05). The dates can be tricky because some are "as of" dates and others are actual transaction dates. Since you got the CP05 and your transcript updated yesterday, that's actually a good sign - it means they're actively working on your case! The review process for CP05 letters typically takes 45-60 days from when they first flagged it, but with it being tax season and you filing so recently, you might be looking at a bit longer. Keep checking that transcript on Fridays like someone mentioned - that's when most updates happen! 🤞