Oh wow, I completely forgot about the stimulus payment situation! I did receive the stimulus payments but definitely need to make sure I account for them properly. I don't have kids so the Child Tax Credit doesn't apply to me, but this is super helpful info for anyone else reading this thread. Do you know if the tax software will walk me through these special credits for past years? Or do I need to specifically look for them?

Most tax software for 2021 should definitely ask you about stimulus payments received. They'll typically ask if you received the full amount, a partial amount, or nothing, and then calculate the Recovery Rebate Credit accordingly. If you received the full amount, you won't get more, but it's important to enter it correctly to avoid processing delays. Even though you don't have children, also check if you qualify for the Earned Income Tax Credit for those years. The eligibility was expanded for 2021, and more people without children qualified than in typical years. The income limits were higher too.

Would you recommend doing all the years in the same software? I've heard some people say it's better to use the same company for all your back taxes so there's consistency, but others say to just use whatever is cheapest for each individual year.

I've used both. H&R Block in-person cost me about $320 last year for a return with one W-2 and some 1099 freelance work. This year I switched to a local CPA who charged $650 for a much more complex return (added rental property and more extensive business deductions).

That's a good point about representation vs assistance. Do you know if TurboTax's audit defense actually provides representation? I always assumed they just helped with documentation too.

TurboTax's audit defense (which is provided through TaxAudit, not Intuit directly) does include representation. They actually assign a tax professional who can speak directly to the IRS on your behalf if you're audited. That's different than FreeTaxUSA's approach which is more consultative. But there's a major price difference - TurboTax charges around $50-60 for this coverage while FreeTaxUSA's Deluxe with Audit Assist is usually under $10. For many people with straightforward tax situations, the guidance approach is sufficient and much more cost-effective.

I had a CP2000 notice (not technically an audit but similar) last year and used FreeTaxUSA's Audit Assist. They were actually really helpful! They reviewed the notice with me, explained exactly what the IRS was questioning, and helped me gather the right documentation to respond. Ended up being a simple misunderstanding that we resolved quickly. The best part was being able to talk to someone who could translate the confusing IRS language into plain English. For the price difference between FTU and TurboTax, I thought it was excellent value.

Thanks so much for sharing! That's exactly the kind of real-world experience I was hoping to hear about. Definitely makes me feel better about choosing FreeTaxUSA with their Deluxe option.

That's really interesting about the AMT and SALT deduction cap! I didn't consider how those might interact differently between MFJ and MFS. Looking at our tax breakdown more carefully, I do see both of those factors at play. The SALT limitation does seem to be hitting us hard with MFJ, and splitting it does appear more beneficial in our case. Is there a good rule of thumb for when high-income couples in high-tax states should consider MFS instead of automatically going with MFJ?

There's no simple rule of thumb because it depends on too many factors specific to your situation. However, if you meet these criteria, it's definitely worth calculating both ways: 1) You live in a high-tax state like CA, NY, NJ, CT, etc. 2) Your combined income is over $300k 3) You have substantial itemized deductions, particularly SALT over $10k 4) Your incomes are somewhat balanced (not one extremely high earner and one low/no earner) Remember that filing separately does come with some disadvantages - you lose certain tax credits (like child and dependent care credit), both spouses must either itemize or take standard deduction, and you can't contribute to a Roth IRA if your income exceeds $10k. One last consideration: if either of you has income-based student loan payments, filing separately might drastically increase those payments, potentially wiping out any tax savings.

I experienced this too! H&R Block's software initially said MFJ was better for us, but when my accountant friend calculated it manually, MFS saved us about $3,200 due to state tax interactions that the software missed. Would you recommend just always calculating both ways manually instead of trusting the software recommendation?

Thanks for sharing your experience! Did your wife formally register her business, or was it just reported on Schedule C? And did your tax preparer mention anything about the ACA marketplace insurance specifically working differently with this deduction?

She never formally registered it - just reported everything on Schedule C using her SSN. No business registration, no EIN, nothing fancy required. Regarding ACA marketplace insurance, there's nothing special about it from a self-employed health insurance deduction perspective. The key is that you're paying the premiums with post-tax dollars (not getting a subsidy). If you were getting premium tax credits, you'd need to account for that, but since you mentioned you're unsubsidized, it should be straightforward.

This isn't quite right. The self-employed health insurance deduction isn't affected by whether you COULD qualify for subsidies but didn't take them. It's only affected if you DO receive premium tax credits (PTC). Then you can only deduct premiums you paid out of pocket.