I use QB for my pottery business. It can track COGS but you have to set it up correctly first! Make sure you classify your items properly as inventory items rather than non-inventory, and enable the inventory tracking feature. Then when you purchase materials, you'd post to inventory asset accounts, not expense accounts. When you sell, QB will automatically calculate COGS.

This is super helpful! Does this ordering change at all depending on whether you're dealing with federal vs. state tax issues? I'm trying to figure out where state tax court decisions fit in this hierarchy.

Great question! For state tax issues, you'd have a parallel hierarchy, starting with the State Constitution, then State Statutes, State Regulations, State Revenue Rulings, etc. For conflicts between federal and state tax law, federal law generally prevails due to the Supremacy Clause of the U.S. Constitution, but states have significant autonomy in creating their own tax systems. State tax court decisions would only be authoritative for that state's tax laws and wouldn't impact federal tax law interpretation.

IRS Notices and Announcements generally fall below Revenue Procedures in the hierarchy. They're considered "official pronouncements of tax policy" but don't have the same weight as Revenue Rulings or Revenue Procedures. That said, Notice 2020-75 specifically is pretty influential regarding state and local tax (SALT) workarounds since it announced the Treasury's intent to issue regulations on a particular matter. If your tax preparer is citing it, it's probably relevant to your situation, but just know that if it ever directly conflicted with a statute or regulation, those higher sources would prevail.

Does FreeTaxUSA handle state taxes too? And how much harder is it to manually enter all the stock stuff? I have like 6 different RSU vesting events plus some sales.

Yes, FreeTaxUSA does handle state taxes, but there's a small fee for state filing (around $15 last I checked) while federal filing is free for almost any tax situation. Manually entering the stock information isn't terribly difficult, just more time-consuming. For 6 RSU vesting events plus sales, I'd estimate it might take you an extra 30-45 minutes compared to an automatic import. The interface walks you through each entry systematically. The main thing is to have all your Fidelity statements organized before you start. I personally think the money saved is worth the extra time, especially if you're comfortable with basic investment terminology.

This explains so much! I got double-taxed last year and couldn't figure out why. How do you ensure TurboTax calculates this correctly? Is there a specific form or section where I need to verify this?

The key is to make sure your cost basis is correctly set when you enter the stock sale information in TurboTax. When you sell RSU shares, your cost basis should be the market value of the shares on the vesting date (the amount that was already included in your W-2 income). TurboTax Premier should handle this correctly if you import directly from Fidelity, but always double-check! Look for the section where it shows your capital gains/losses from stock sales. The "cost basis" column should match the value of your shares on the vesting date, not zero. If the cost basis is wrong, you can manually adjust it. This ensures you're only paying capital gains tax on the change in value since vesting, not on the entire sale amount.

Thank you so much for breaking it down like that! I honestly had no idea there was a difference between adjustments to income and itemized deductions. This makes so much more sense now. One more question - what about charitable donations? Do those only count if I itemize or are they like student loan interest?

Charitable donations typically only provide tax benefits if you itemize your deductions. They're part of the Schedule A itemized deductions along with things like mortgage interest, medical expenses, and state/local taxes. There was a temporary exception during COVID where people could deduct some charitable donations even if taking the standard deduction, but that provision has expired for the current tax year. So unless Congress revives that provision, your charitable giving only affects your taxes if the total of all your potential itemized deductions exceeds the standard deduction amount.

Which tax software do you think is best for handling all these adjustments to income stuff? I've been using the free version of TurboTax but wonder if I should upgrade or try something else.

Does claiming the Recovery Rebate Credit also trigger a review? I claimed that for a missing stimulus payment.

Recovery Rebate Credit can definitely trigger additional review, especially if the amount you're claiming doesn't match IRS records. The IRS is extra careful with these credits because there were a lot of issues with improper claims (both accidental and fraudulent) during the pandemic years. The good news is that even with the delay, you should eventually get the refund if you're legitimately entitled to it. But it might take 6-8 weeks instead of the usual 21 days.

Thanks for this info! I checked and I do have that PATH Act hold. Wish the "Where's My Refund" tool would just tell you this instead of the vague "still processing" message.