How are you guys handling the furniture and stuff in your short term rentals? Do you just buy everything outright or do some kind of furniture rental? I'm trying to figure out the most tax-efficient way to furnish my basement apartment rental.

Thanks for sharing all this helpful information everyone! I'm still wrapping my head around the personal use tracking requirements. One question I have - when you're calculating the percentage split between rental and personal use, do you base it on total days in the year or just the days when the space was actually occupied (either by renters or yourself)? For example, if my basement was rented for 100 days, I used it personally for 20 days, and it sat vacant for 245 days, do I calculate personal use as 20/365 days or 20/120 occupied days? This seems like it would make a huge difference in how expenses get allocated! Also, has anyone dealt with the situation where you have overnight guests (family/friends) staying in the rental space for free? I'm assuming those count as personal use days even though I'm not the one sleeping there?

H&R Block offers an Peace of Mind® guarantee that covers penalties and interest if they make a mistake. Call them ASAP and explain the situation. But it sounds like they didn't make an error if you forgot to tell them about stock sales - that wouldn't be covered. You might still qualify for their Audit Support though, where they'll explain the notice and help you respond. Worth checking what your service package included!

Anna, glad you figured out what caused the discrepancy! Unreported stock sales are actually one of the most common reasons people get CP14 notices. The IRS automatically matches 1099-B forms from brokerages against tax returns, so they catch these pretty quickly. Since you've identified the issue and are setting up a payment plan, make sure to file an amended return (Form 1040X) to properly report the capital gains. This will show the IRS you're taking responsibility for the error. If you held the stocks for more than a year, you might qualify for lower long-term capital gains rates which could reduce what you owe. Also, keep detailed records of this whole process - if you ever face a similar situation in the future, having documentation of how you resolved it properly will be helpful. It's a stressful lesson but you're handling it the right way!

Congrats on getting your refund approved! That July 17th date is your direct deposit date (DDD). In my experience, most banks receive the funds on that exact date or sometimes 1-2 days early depending on how they process ACH transfers. Since you mentioned your bank usually processes deposits immediately, you'll likely see it hit your account on the 17th or possibly even the 16th. The transcript is actually pretty reliable for timing once you see that 846 code with the date - you're definitely in the final stretch now!

I've been through this exact same situation! The July 17th date you see next to the 846 code is your official direct deposit date. Most people get their refund on that exact date, though some banks process it a day or two early. Since your bank processes deposits quickly, you'll most likely see it hit your account on the 17th. I'd recommend checking your account starting the morning of the 16th just in case it comes early. The fact that you can see the 846 code with the amount means everything is approved and you're just waiting for the actual transfer now. You're so close!

Is your Box 2 (amounts billed for qualified expenses) empty on your 1098-T? Sometimes schools only fill out Box 1 OR Box 2, not both. If Box 2 has an amount and it's higher than Box 1, try using that figure instead. Also, double check that you're enrolled in a degree program and that this isn't your 5th year claiming AOTC. There's a 4-year lifetime limit.

Brooklyn, I went through this exact same frustrating situation last year! The scholarship allocation issue that others mentioned is almost certainly what's happening. One thing that really helped me was understanding that you have a choice in how to treat scholarship money. You can elect to treat the portion used for room/board/living expenses as taxable income, which then frees up your actual tuition payments to qualify for the American Opportunity Credit. In your case, with $8,000 going to dorm and meals, you could report that as taxable income on your return. Yes, you'll pay some tax on it (probably around 12% rate given your income), but the American Opportunity Credit is worth up to $2,500 - so you'd still come out way ahead. The key is making sure H&R Block knows about this allocation. Look for the education section where it asks about scholarship usage - there should be a place to specify how much went to qualified vs non-qualified expenses. If you can't find it, try searching their help section for "scholarship allocation" or "room and board." This is one of those tax situations where the software assumes you want to minimize current year taxes (by treating all scholarship as tax-free), but that actually prevents you from getting a bigger refund through the credit. Sometimes paying a little more tax upfront gets you a lot more back!

Just want to add that if your first abatement request is denied (which happens sometimes), don't give up! You can appeal the decision. When I got hit with a 5500EZ penalty, my first request was denied with a form letter. I called the IRS, got the name of a specific person to send my appeal to, and rewrote my letter with more specific details. The second time worked, and they removed the entire penalty. Just be persistent and keep good records of all your communications. And definitely use certified mail for everything you send them!

I'm sorry for your loss, Lucas. Losing a parent is incredibly difficult, and it's completely understandable that handling paperwork wasn't your priority during that time. Based on what you've described, you have a strong case for penalty abatement. The death of a close family member is one of the most well-recognized reasonable cause exceptions the IRS accepts. I'd recommend structuring your letter chronologically: explain that your father passed away in June, that you received the Form 5500EZ in late July while dealing with grief and estate matters, and that you mailed it from Canada where international postal delays are common. Keep the tone professional but don't hesitate to briefly explain how your father's passing affected your ability to handle financial matters promptly. The IRS agents reviewing these cases are human too, and they understand that major life events can disrupt normal routines. Since this was your first time filing Form 5500EZ and you have a clean compliance history, make sure to emphasize that in your letter as well. The combination of reasonable cause (family death) plus your good standing should work in your favor. Send everything certified mail with return receipt requested, and keep copies of everything. Good luck with your request!