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This happened to me last year! I got a letter from the IRS saying I underreported my income by $4,200. Turns out it was exactly the amount of my housing scholarship that exceeded my tuition. Had to pay back taxes plus a penalty. Worst part is I asked the financial aid office if the housing scholarship was taxable and they told me "we can't give tax advice" which was useless.
Did you have to fill out a specific form when you got the IRS letter? My situation sounds similar and I'm worried I might get one of these letters too. Was it difficult to resolve?
I received a CP2000 notice which is basically the IRS saying "we think you made a mistake" rather than a full audit. They calculated what they thought I owed including penalties and interest. I had to fill out a response form agreeing with their assessment (since they were right), and then set up a payment plan since I couldn't afford to pay it all at once. The process wasn't too difficult, but it was stressful and the penalties added about 20% to what I would have owed if I'd just done it correctly the first time.
Something else to watch out for - if you're an international student on an F-1 or J-1 visa, the tax rules for scholarships are TOTALLY different! Most tax software doesn't handle this correctly either. International students often need to file form 1040NR and may be exempt from taxes on scholarships under tax treaties.
Last year I had this same issue and finally figured out it was because I had ad blockers on my browser! Turned them off, cleared cache, logged back in and boomβcertificate appeared. Might be worth trying.
Thank you! This actually worked for me. I disabled uBlock Origin, cleared my cache, and logged back in. My certificate was there waiting in the "Completed Certifications" section. I feel kinda dumb now but also relieved. Guess I'll have to remember this for next year too!
Glad it worked for you! I spent days trying to figure it out last year before a VITA coordinator told me about this trick. They really should mention this somewhere in their instructions. Also, don't feel dumb - their system should be designed to work regardless of common browser extensions.
Has anyone had issues with the certificate showing up but with incorrect information? Mine finally appeared but has my name spelled wrong and shows the wrong exam date.
Check if you can edit your profile info in the VITA portal. I had a similar issue and discovered my own profile had my name misspelled somehow. After fixing it, I had to request a new certificate, but they sent a corrected one within 48 hours.
Thanks for the suggestion. Just checked my profile and you're right - somehow my last name was entered incorrectly (no idea how that happened). Fixed it and submitted a help ticket requesting a corrected certificate. Hopefully it won't take too long!
Quick clarification for everyone - Schedule 1 "other income" (line 8) is for income that doesn't fit elsewhere on your tax return. Common examples include: - Jury duty pay - Gambling winnings - Prizes and awards - Hobby income - Canceled debts - Alaska Permanent Fund dividends Tips are considered wages and should NOT be included in "other income" regardless of whether they were reported to your employer or not. Unreported tips go on Form 4137, but they're still considered part of your wage income.
What about income from selling stuff on eBay or Facebook Marketplace? Does that count as "other income" on Schedule 1?
It depends on whether you're selling items as a business or just occasionally selling personal items. If you're regularly buying things to resell for profit, that's considered business income and should go on Schedule C, not as "other income" on Schedule 1. If you're just occasionally selling personal belongings (like cleaning out your closet), and selling them for less than you paid originally, you generally don't need to report it at all since there's no gain.
Anyone know if DoorDash/UberEats delivery tips count as regular tips for tax purposes? My brother said I need a different form for those...
One thing to consider - the CPA exam itself is BRUTAL. I failed FAR twice before passing. If you didn't major in accounting, you might need to spend extra time on exam prep. I'd recommend starting the study process while you're still completing your educational requirements.
Which review course did you use? I'm trying to decide between Becker, Roger CPA, and Wiley.
Just wanted to add that I'm a CPA who came from a biology background! It took me about 2.5 years to complete all the requirements while working full time. The online route is totally doable. I took courses through my state university's online program and a community college. Don't get discouraged when the courses get tough - accounting builds on itself, so the beginning is always the hardest part for career changers. By the time you're in intermediate accounting, you'll have a solid foundation!
Amara Torres
Something to consider that hasn't been mentioned yet - check if you qualify for any Section 195 startup expense treatment for some of those early LLC costs. Even if the LLC itself wasn't brand new, certain expansion activities might qualify. Also, did you have any personal guarantees on business debt during the LLC period? Sometimes there are loss opportunities related to at-risk rules that can offset some of the pass-through income.
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Alicia Stern
β’Thanks for these suggestions! We didn't have the LLC for long (formed it about 4 months before converting to C-Corp), so the startup expense angle might be relevant. And yes, we did personally guarantee a business line of credit during the LLC period. How would the at-risk rules potentially help in this situation?
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Amara Torres
β’Since your LLC was relatively new, you might be able to classify more expenses as Section 195 startup costs. This allows you to deduct up to $5,000 in the first year (subject to phase-out rules) and amortize the rest over 15 years. While not a complete solution to your problem, it could reduce the immediate tax hit. Regarding the personally guaranteed business debt - the at-risk rules essentially allow you to claim losses up to the amount you have "at risk" in the business. With a personal guarantee on business debt, you may have increased your at-risk amount, potentially allowing you to claim more losses against other income. This is complex territory though, so definitely have your tax advisor look specifically at your at-risk basis during the LLC period.
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Olivia Van-Cleve
Have you considered whether any of the LLC income might qualify for the Section 199A deduction? If so, you could potentially get a 20% deduction on the qualified business income that's passing through to your personal return. Also, if your C-Corp is doing R&D, you might be able to claim some R&D credits at the LLC level if any of that work started before the conversion. Those credits could help offset some of the personal tax liability.
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Mason Kaczka
β’Doesn't the 199A deduction have income limitations though? If they made $675k in just two months as an LLC, I'm guessing they're well above the phase-out thresholds.
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