That's a great point! Do you know if these state/utility rebates affect the federal tax credit amount? Can I still claim the full federal amount if I also got local incentives?

You can generally claim the full federal tax credit even if you receive state or utility rebates. The IRS treats these as separate incentives. However, you may need to adjust the cost basis you use when calculating your federal credit. For example, if your system cost $10,000 and you received a $1,000 utility rebate that was applied at purchase, you would calculate your federal tax credit based on the $9,000 you actually paid. This is an area where good documentation is essential, so keep all your paperwork!

This happened to my parents too! Their contractor said "energy efficient" but the actual ratings were just below the qualifying threshold. What software did you use to file? Did it catch the issue or did you figure it out yourself?

These are great questions I hadn't thought to ask! Do CPAs typically provide some kind of service agreement that spells all this out, or is it more informal? I definitely want to make sure we know exactly what we're getting.

Yes, reputable CPAs will provide an engagement letter that outlines exactly what services are included, their fees, and any potential additional charges. This is a formal document that protects both you and them by setting clear expectations. It's completely normal and professional to ask for this in writing before proceeding. The engagement letter should detail everything - filing which forms, for which states, what happens if you need amendments, audit support terms, and for advisory services, how many consultations you get and what specific planning areas they'll address. If they're reluctant to provide this in writing, that's actually a red flag.

This is a really good point. I've seen TurboTax struggle with multi-state income and self-employment situations. One specific issue to check: TurboTax sometimes doesn't properly allocate income between states when you've moved mid-year, which can lead to double taxation. It also sometimes misses home office deductions for self-employed people.

Thanks for mentioning those specific deductions/credits we'd lose. We do have some student loan interest, so that's definitely a factor. Do you know roughly how much the student loan interest deduction is worth in tax savings? I'm wondering if that alone would make up the difference.

The student loan interest deduction allows you to deduct up to $2,500 of interest paid on qualified student loans. The actual tax savings depends on your tax bracket. At your combined income level, you're probably in the 24% or 32% federal tax bracket, so that deduction could save you between $600-$800 in federal taxes if you're able to deduct the full $2,500. That alone might not make up the entire difference you're seeing, but it's substantial. Plus when you add in the other benefits of joint filing and the proper comparison of tax brackets, the difference starts to make more sense.

This is exactly right. The software doesn't know your full situation until you enter all info. It's like if you only put in half your income at first, the software might show a refund, then when you add the rest it shows you owe. Doesn't mean you should only report half your income lol.

Thank you all for the advice. I'm definitely going to file now after reading everything. I had no idea the failure-to-file penalties were so much worse than failure-to-pay. I'm going to look into both the installment plan and that Offer in Compromise program. One last question - if I get on a payment plan, will they still put liens on my property or anything like that? I'm renting right now but hoping to buy a house in the next couple years.

Generally, if you're on a payment plan and staying current with your payments, the IRS won't file a tax lien. However, this depends partly on how much you owe. For smaller debts (under $25,000) with an installment agreement, they typically don't file liens if you're compliant with the terms. For larger amounts, they might still file a lien as protection, even with a payment plan in place. The good news is that once you've made enough payments to get below a certain threshold, or if you've been in compliance with your plan for a specified period, you can request for them to withdraw the lien. This is something that changed with their Fresh Start program to help taxpayers.

This is so true. I'm in California and the Franchise Tax Board is WAY more aggressive than the IRS. They suspended my driver's license over a $2200 tax bill I didn't pay. The IRS gives you more time and options generally.

That's interesting about the state provisions. Do you know which states besides California allow home office deductions for employees? I'm in New York if that helps.

New York does allow itemized deductions for unreimbursed employee expenses, including home office expenses in some cases. You'd need to file IT-196 to claim these deductions on your state return. Other states that may allow employee business expense deductions include Alabama, Arkansas, Hawaii, Minnesota, Pennsylvania, and several others. Each has different rules and thresholds though, so you'll need to check your specific state's guidelines or consult with a tax professional familiar with your state's tax code.

I haven't heard of this before. How does it work exactly? Did you have to provide documentation or anything? My company is pretty flexible so they might go for something like this.