Wait really?? I do have some freelance income on the side of my regular job. So you're saying even though I'm extending my 2024 tax return, I still need to make my first quarterly payment for 2025 by April 18th? How do I even figure that out when I haven't completed last year's taxes yet??

Yes, that's exactly right. The extension only applies to your 2024 return, not to your 2025 estimated payments. It's super confusing and trips up a lot of people. For figuring out your 2025 quarterly payment, you can use last year's income as a basis (the safe harbor rule). If you pay 100% of what you owed last year (or 110% if your AGI was over $150,000), spread across your quarterly payments, you'll avoid penalties even if you end up owing more. You can always adjust later payments up or down as you get a better picture of your 2025 income.

This is technically true but still not a great idea. If you don't file or extend and then discover you actually DID owe money (like if you made a calculation error), you'll get hit with both failure-to-file AND failure-to-pay penalties, which add up fast. Plus, the statute of limitations for the IRS to audit you doesn't start until you file.

Thanks for this advice! I'll ask my accountant about Form 911 tomorrow. Does filing this form have any downsides? Does it ever annoy the examiner or make them more likely to be thorough/harsh with the audit?

There are no downsides to filing Form 911. The Taxpayer Advocate Service exists specifically to help in situations like yours where normal procedures aren't working. Examiners understand this is part of the process and won't take it personally or be harsher as a result. In fact, in my experience, having TAS involvement often leads to more reasonable outcomes because it adds another layer of oversight to the audit process. The important thing is that you're demonstrating your willingness to cooperate and resolve the matter appropriately, which is always viewed favorably.

Try calling right when they open (7am Eastern I think). That's the only time I've had success. Also, don't select the option for "questions about a letter you received" because that queue is always full. Instead, choose "questions about tax law" and then just explain your situation once you get a human. They'll transfer you.

Thanks for the tip! I'll try calling at 7am tomorrow. It's crazy we have to use these workarounds just to talk to someone at the agency that's taking our money. Appreciate the suggestion about which option to select too - I've been picking the "letter" option since that matches my situation.

Thank you for this advice - you're right that I should respond directly to this notice rather than assuming they'll eventually process the amendment. Did you have to get tax transcripts to resolve your situation? Someone else mentioned those and I'm not sure if I need them.

Yes, tax transcripts were really helpful in my case. They show exactly what the IRS has in their system versus what you filed. You can request them online through the IRS website or have your accountant get them. The transcript will show if your amended return is in their system and whether your $4k payment was properly applied. The other thing to consider is requesting a formal appeal or audit reconsideration. This creates a separate track for resolving your case rather than just waiting for the amendment to be processed, which can take forever. Your accountant should be familiar with this process. The key is to be proactive rather than reactive - don't just wait for the IRS to figure it out.

This is excellent advice. I'm a tax preparer and see this issue multiple times every tax season. The IRS computers just match document numbers, so if the cost basis isn't properly reported, they'll tax the entire proceeds as gain.

I used TurboTax to file my extension with payment last week and it went through without any issues. Their system is pretty straightforward for extensions. It costs like $49 but honestly it was worth it just for the peace of mind. The confirmation came through in about an hour.

Thanks for sharing your experience! Good to know TurboTax is working properly for extensions. I think I'll go that route since time is running out. At this point, the $49 is worth avoiding all this stress and potential late penalties if the extension doesn't go through properly.

Interesting! Does this work for the payment date field specifically? And did you leave the phone number field blank or fill it in?

Thanks so much for sharing your experience! That's exactly what I was thinking - that it seemed like a lot of work for zero actual tax impact. I think I'll just use the correct carryover amount on my 2023 return and move on. It's reassuring to hear that's what a tax professional recommended in a similar situation. Do you know if I should make any kind of note on my 2023 return explaining the slight difference in carryover amount?

No need to include any special note or explanation on your 2023 return. Just use the correct carryover amount. The capital loss worksheet where you calculate your carryover is something you keep with your records, not something you submit to the IRS. The IRS only sees the final number you report. A $30 adjustment is well below their threshold for scrutiny, especially when it doesn't change your tax liability.

Were the penalties significant? I'm worried I might have made a similar mistake but haven't received any notices yet.