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The comments about software vs CPAs made me wonder - does anyone have recommendations for the best tax software for someone with a relatively basic 1040 but with some stock trades? I used FreeTaxUSA last year but wasn't super impressed with how it handled my investments.
I'm a licensed CPA and I'll tell you the honest truth - if your return is truly simple (just W-2s and standard deduction), there's not much value we can add beyond what tax software provides. We mainly help people with: 1) Complex situations like business income, rental properties, investments 2) Tax planning throughout the year (not just filing) 3) Representation if you get audited 4) Peace of mind knowing a professional reviewed everything Most of our clients have complexities beyond a basic 1040. For simple returns, you're probably fine with software. But be honest about how "simple" your taxes really are. Many people think their return is simple when it actually has complications they're overlooking.
Just to add something no one's mentioned yet - does your wife have a tax ID in her home country? My wife kept both her green card AND her foreign tax residency (legally) by structuring things properly. There are tax treaties between the US and many countries that can help determine primary tax residency. Also check if the rental income is from a country with a tax treaty with the US!
This is misleading. You cannot legally maintain US permanent residency (green card) while claiming to be a tax non-resident of the US. The green card is literally proof of permanent residency, and permanent residents must file US taxes as residents. Your wife is potentially committing tax fraud if she has a green card but isn't filing US tax returns reporting worldwide income.
Has anyone dealt with Form 8854 (Expatriation Statement) in this kind of situation? I think that's required when surrendering a green card if you've had it for a certain period.
Here's a simple approach I use: Just calculate 4 different versions of your weekly pay in your spreadsheet: 1. Base 40 hours (lowest withholding %) 2. Moderate OT (medium withholding %) 3. Heavy OT (highest withholding %) 4. An average based on your typical pattern Then depending on what your week looks like, you can quickly reference the appropriate scenario. Not perfect but way easier than trying to build a complex formula.
That's not a bad approach for quick budgeting! Do you have any tips for how to determine the withholding percentages for each scenario? Are you just using the actual percentages from past paychecks?
I just look at my past paystubs and calculate the actual withholding percentage for each category. So I'll find a few examples of 40-hour weeks, average the withholding percentage, and use that. Same for the other scenarios. It's not perfect, but it gets me close enough for budgeting. The key is to categorize your past paychecks based on hours worked and then find the patterns. Over time, you'll see that the percentages are fairly consistent within each band of hours.
Have you tried the IRS Withholding Calculator? It's free and on the IRS website. You can run different scenarios with different weekly incomes to see how the withholding changes. I use it every January to make sure my withholding is on track.
The IRS calculator is good for annual planning but it's not great for weekly variations. It assumes consistent income throughout the year which is exactly what OP doesn't have.
My sister dealt with this same situation. If the IRS already sent your refund including the child tax credit/EIC, there's a good chance they sided with you initially. The system automatically checks for duplicate SSNs being claimed, so they probably processed your claim first. BUT... the other person might still be going through review. If they submitted after you and included documentation, the IRS might still be reviewing their claim. In that case, you could still get a letter in the future. Keep EVERYTHING that proves you supported the child financially and that they lived with you. Calendar showing overnight stays, medical receipts, daycare payments, anything with dates on it. Don't throw away any of that until at least 3 years have passed.
Doesn't the tiebreaker rule mean that if two people can claim a child, the person with the higher AGI gets the claim? Or is that only when both people are equally eligible?
The tiebreaker rules only come into play when BOTH people are eligible to claim the dependent under all the qualifying child or qualifying relative tests. They're essentially the "last resort" when two people legitimately could claim the same dependent. In most disputes like this, the IRS determines only one person actually qualifies under the support and residency tests. If the child lived with the grandparent for more than half the year and the grandparent provided more than half the support, then the tiebreaker rules won't even be needed - the other person simply doesn't qualify regardless of their AGI.
watch out they might still audit u later. happened to my cousin last year. got the refund with dependent then 4 months later got a letter saying they were auditing. make sure u have proof of EVERYTHING. did u save receipts from when u bought stuff for the baby? need proof for: - medical expenses - food/formula - diapers - clothes - toys - percent of rent/utilities also need proof baby lived with u like mail addressed to baby at ur house, doctor records, anything with the address
You don't need proof for all that. IRS Publication 501 clearly states that for the support test, you only need to show you provided MORE than half of the child's total support for the year. You don't need to document every single expense.
ur right but in an audit they ask for everything. my cousin had to make a spreadsheet showing all expenses for the kid and who paid what. better to have too much proof than not enough! in a normal year ya don't need all that but when someone else also claimed the same kid its different. they check everything super carefully.
Steven Adams
One thing nobody mentioned yet - if you're trading options in an IRA, you don't have to worry about any of this tax reporting! All my buy to open, sell to close trades happen in my Roth and I never pay taxes on the gains. Just something to consider if the tax headache is too much.
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Alice Fleming
ā¢Doesn't the IRA limit what kind of options strategies you can use though? I thought you couldn't sell naked calls or do certain spreads.
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Steven Adams
ā¢You're absolutely right about the limitations. In an IRA, you generally can't sell naked calls or puts because they have undefined risk and require margin. Most brokers only allow covered calls, cash-secured puts, and certain defined-risk strategies like vertical spreads. The exact permissions depend on your broker and your approved option level within the IRA. Fidelity, for example, is pretty conservative and might restrict you to just covered calls, while some others allow vertical spreads if you have enough experience and account value.
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Hassan Khoury
Has anyone here actually gotten audited because of options trading? I'm doing similar stuff (buy to open / sell to close) but sometimes I do like 20-30 trades a week. I'm worried that's gonna trigger something with the IRS.
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Victoria Stark
ā¢I got a "review" (not technically an audit) last year because my 1099-B didn't match what I reported. Turns out my broker didn't have the correct cost basis for some options I traded. Make sure you're keeping your own records and don't just rely on the broker forms.
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