Has anyone used the "Sale of Business Property" worksheet in FreeTaxUSA specifically? I'm having similar issues and the interface is confusing me.

I went through this exact same situation last year with a business vehicle that was about 15% business use. The key thing that helped me was understanding that FreeTaxUSA handles this differently than you might expect. When you go to "Income" → "Less Common Income" → "Sale of Business Property", make sure you're entering ONLY the business portion of everything. So if your vehicle was 10% business use: - Original cost: $2,550 (10% of $25,500) - Accumulated depreciation: $1,350 (what you actually claimed) - Sales price: $1,980 (10% of $19,800) This gives you an adjusted basis of $1,200 ($2,550 - $1,350) and a gain of $780 ($1,980 - $1,200). The $380 in additional taxes you're seeing is likely correct - it's roughly 25-28% of that $780 gain (depending on your tax bracket). I know it feels unfair since you lost money overall, but the IRS treats the business and personal portions completely separately. The personal loss isn't deductible, and the business portion shows a gain due to the depreciation you've already benefited from over the years. Make sure you're not double-entering anything in the vehicle expenses section of Schedule C once you've reported the sale on Form 4797.

Has anyone tried requesting a penalty abatement for first-time late filing? I heard the IRS has a First Time Penalty Abatement policy where they'll waive penalties for people with clean previous filing history.

I'm going through something similar with my divorce proceedings - needed my 2021 return for financial disclosure and realized I never actually submitted it either! The stress is real when you need these documents for court. A few things that helped me: First, definitely file 2022 immediately as a separate return. The IRS systems are set up to handle each tax year individually, so there's no option to combine years anyway. For the court documentation, consider asking your attorney if they'll accept a copy of your prepared return along with proof that you've submitted it to the IRS (like a certified mail receipt if you file by paper, or the electronic confirmation if you e-file). Courts understand that IRS processing can take weeks, so they often accept evidence that you've filed rather than waiting for the processed return. Also, once you do file, you can request an Account Transcript from the IRS online at irs.gov which will show your filing status and any penalties/payments. This can serve as official documentation for court purposes while you wait for your actual return to be processed. The penalties will hurt, but getting this resolved quickly is more important than the extra money, especially with court deadlines looming. Good luck!

Has anyone used the "last-month rule" instead of prorating in situations like this? From what I understand, if you're eligible on December 1st, you can contribute the full annual amount (individual or family based on December status) as long as you remain eligible through the end of the following year. Would that work in the original poster's situation?

This is a great breakdown of how to handle HSA contributions with mid-year coverage changes! I wanted to add one important point about timing that might help others in similar situations. When making these prorated contributions, you have until the tax filing deadline (typically April 15th of the following year) to make HSA contributions for the previous tax year. So even though you're figuring this out now, you still have time to make the calculated $6,450 contribution for 2023 if you haven't already maxed it out. Also, make sure to keep detailed records of the coverage change dates and your calculations. The IRS may want documentation if they ever question your contribution amounts, especially with the complexity of mid-year switches between family and individual coverage. Your insurance company should be able to provide letters or statements showing exactly when coverage types changed. Congratulations on the pregnancy, by the way! Once your little one arrives, you'll likely be able to switch back to family HDHP coverage and family contribution limits if that makes sense for your situation.

Just to add something that was glossed over - in the original example with $67M revenue, we're assuming that's net profit after expenses, right? Because revenue itself isn't what passes through to your personal return - it's net business profit after all legitimate business expenses. So if your S-Corp had $67M in revenue but $40M in legitimate business expenses, your actual pass-through income would be $27M, not $67M.

Great point about revenue vs. net profit! This is a crucial distinction that trips up a lot of S-Corp owners. In your $67M example, if we're talking about actual revenue, you'd first subtract all legitimate business expenses - salaries, rent, equipment, marketing, professional fees, etc. Let's say your actual net profit after expenses is $27M (as Kolton suggested). Then your $2.7M salary would be part of those business expenses, reducing your pass-through income to around $24.3M. You'd pay personal income tax on that $24.3M whether you distribute it or keep it in the business. The self-employment tax savings would be on the $24.3M in distributions rather than $64.3M, but that's still substantial - roughly $3.7M in self-employment tax savings vs. if you structured as a sole proprietorship. Also worth noting that with profits this large, you'd definitely want to work with a tax professional to ensure your salary meets the "reasonable compensation" requirements. The IRS scrutinizes S-Corps with high distributions relative to salaries, especially when we're talking about millions in pass-through income.

Has anyone tried using one of those Certified Acceptance Agents instead of going directly through the IRS? The thought of sending my wife's original passport in the mail is making me really nervous...

Just to add some clarity for anyone else in this situation - you absolutely can apply for an ITIN after filing your return! I went through this exact process with my partner last year. The key things to remember: 1. Use Form W-7 and include a complete copy of your already-filed tax return as supporting documentation 2. If you're nervous about mailing original documents (totally understandable!), definitely look into using a Certified Acceptance Agent - they can verify originals in person and submit copies 3. The ITIN application won't affect your already-filed return for this year, but it will give you more filing options next year The whole process took about 10 weeks for us when we went through a CAA. Yes, there's a small fee, but the peace of mind was worth it. Don't stress too much - this is a pretty common situation and the IRS handles it regularly!