This is really important! When I refinanced from 4.5% to 2.75% during the pandemic, my interest payments dropped significantly. Great for monthly cash flow, but suddenly my itemized deductions fell below the standard deduction threshold. Worth checking if this applies to OP's situation.

Does this really work for someone with primarily W2 income though? I thought tax-loss harvesting was mainly beneficial for people with lots of investment income. If most of your money is from salary, wouldn't the benefit be limited to just that $3k per year?

You're right that the direct offset against W2 income is limited to $3k per year. However, there are two scenarios where this is still valuable for high W2 earners: First, many high-income professionals also have investment portfolios that generate capital gains. By harvesting losses, you can offset those gains completely before hitting the $3k limit against ordinary income. This prevents your investments from creating additional tax burden on top of your already high W2 taxes. Second, even if you don't currently have capital gains, harvested losses carry forward indefinitely. This creates a tax asset you can use in future years when you do have significant capital gains, like when selling a concentrated stock position, exercising stock options, or selling investment property. I've accumulated over $45k in carried-forward losses that I've used strategically when realizing gains.

I looked into opportunity zones but ended up not doing it. The tax benefits are good but many of these investments are in areas with serious economic challenges. The funds I researched had high fees and questionable projects. Be really careful - the tax tail shouldn't wag the investment dog.

Thanks for pointing this out! Do you happen to know if there's any way to check the status of a refund claim after submitting these forms? I'm worried about it just disappearing into the void.

Unfortunately, there's no online tracker for Form 843 claims like there is for regular tax refunds. The only way to check status is to call the IRS directly (1-800-829-1040), but prepare for a long wait time. What I did was send my forms via certified mail with return receipt so I at least had proof they received it. Then I marked my calendar for 6 months later as a reminder to call if I hadn't heard anything. When you call, have your Social Security number, the tax year, and the approximate date you mailed the forms ready.

I got my FICA refund approved without an employer letter. Instead, I included copies of all my unanswered emails to HR and payroll as evidence that I tried to resolve it with my employer first. I sent about 5 emails over 2 months with no response, and included all of them with my claim. The IRS accepted this as sufficient proof that I attempted to resolve it directly.

Thanks for mentioning this! Yes, it is definitely a legitimate notice - came certified mail, has the official letterhead, and specifically mentions the 90-day period to petition the Tax Court. I wish it was a scam, honestly would be less stressful! Do you think I should go directly to Tax Court, or try to resolve it with the IRS first? The RSU issue seems straightforward once I provide the correct basis info, but the unemployment thing has me worried.

I'd definitely try to resolve it directly with the IRS first. Tax Court should be a last resort, especially since your issues seem correctable with proper documentation. The RSU basis correction is routine, and the IRS generally handles these well once you provide the proper information. For the unemployment issue, treat it as identity theft from the start. File the Identity Theft Affidavit (Form 14039) immediately. Also contact the state unemployment office where the benefits were supposedly paid - they may already have a fraud department investigating similar cases. Getting documentation from them stating you never received benefits will be extremely helpful for your IRS response.

That's such a good point about exact numbers! When I had a similar issue, I rounded on one form and it caused weeks of additional back-and-forth. Also worth noting that the broker's "supplemental information" often has basis details that aren't on the main 1099-B. Check all those extra pages they send!

Wait can you have a Solo 401k if you also have a 401k through your regular employer? I thought there were limits that applied across all accounts?

You absolutely can have both! There are two types of contribution limits: employee contributions (which are shared across all your 401k accounts) and employer contributions (which are separate). Since you're both the employee AND the employer for your self-employment business, you can still make "employer" contributions to your Solo 401k even if you've maxed out your employee contributions at your W2 job. The calculation gets a bit complex, but basically you can contribute around 20% of your net self-employment earnings as the "employer." This is completely separate from whatever your main job's 401k situation is. Many tax professionals don't even mention this strategy, but it's completely legitimate and can dramatically reduce your tax bill while building your retirement savings.

Your friend is playing with fire. You can only deduct the BUSINESS PERCENTAGE of vehicle expenses, and you need a detailed mileage log to prove it. The IRS specifically targets this area for audits. If he's claiming 100% business use for a personal vehicle, he's practically begging for an audit. And when they find out he's been using it personally too without documentation? Big penalties.