Don't forget to look into cost segregation studies for your rental properties! Even with income limitations, accelerated depreciation on components of your property can still benefit you long-term by increasing those suspended losses that you'll eventually get to use.

The passive activity loss rules can be really frustrating when your income crosses that threshold! One thing that hasn't been mentioned yet is the potential for material participation elections. If you can document significant involvement in your rental activities (not just the real estate professional test, but actual material participation), you might be able to treat some rental income as non-passive. Also, don't overlook the benefits of proper entity structuring. Some rental property owners benefit from holding properties in LLCs or partnerships where the income characterization might be different, though this requires careful planning with a tax professional. The key is to keep meticulous records of everything - time spent, expenses, improvements, etc. Even if you can't use the losses now, they're building up valuable tax benefits for the future. I've seen people with suspended losses from years ago get massive tax savings when they eventually sell their properties or their income situation changes.

Harper, you're definitely not alone in this situation - health emergencies have a way of putting everything else on the back burner, and that's exactly as it should be. Your husband's health was the priority, and you made the right choice focusing on what mattered most. From reading through all the responses here, it's clear that this withholding compliance program letter is just an unfortunate timing issue. The IRS systems that monitor for non-filing patterns work independently from their return processing systems, so the December letter was generated before your recent filings could be reflected in their compliance database. The most encouraging thing about your situation is those consistent large refunds - $7,000+ per year is solid evidence that you're actually overwithholding, not underwithholding. This means the compliance program was triggered purely by the filing gap, not any actual tax withholding issues. When you do call the IRS, I'd suggest framing it this way: "I received a withholding compliance program notice, but I believe it was generated due to late filings from 2020-2021 caused by a family medical emergency. I've since filed both returns and consistently receive large refunds showing proper withholding. Can you confirm this will be resolved once my recent filings are processed?" Having that clear narrative ready will help you feel more confident on the call, and it gives the agent all the key information they need to understand your situation. You're already back in compliance - it's just a matter of letting their systems catch up.

Harper, I'm really sorry to hear about your husband's health struggles - major heart surgery and complications would absolutely take priority over everything else. Please don't be hard on yourself for missing those filings during such a difficult time. Reading through all the responses here, I think you can take a deep breath. This compliance program letter is almost certainly just an automated system flag triggered by those missed 2020-2021 filings, not because you've done anything wrong with your withholding. The timing makes perfect sense - their compliance monitoring system generated the December letter before your recent filings (from 10 days ago) could be processed and updated in their system. Here's what's actually really encouraging about your situation: those consistent large refunds ($7K+ each year) are strong proof that you're having MORE than enough taxes withheld from your paycheck, not less. The IRS compliance program targets people who consistently underwithhold, but you're clearly in the opposite situation. When you call the IRS, I'd recommend having this simple explanation ready: "I received a withholding compliance notice, but I believe it was triggered by late 2020-2021 filings due to my husband's medical emergency. I've now filed both returns and consistently receive large refunds showing I'm not underwithholding. Will this be resolved automatically once my recent filings are processed?" The systems just need time to catch up and recognize that you're back in compliance. You've already done the hard part by getting those returns filed!

Does anyone know if the S corp election date on your acceptance letter can be different from what you requested on Form 2553? I selected "beginning of tax year" on my form but I'm worried they might assign a different date.

I went through this exact same situation about 6 months ago and completely understand the anxiety! The IRS processing times for Form 2553 have been really inconsistent lately - some people get their acceptance letters in 3-4 weeks, others wait 8-10 weeks or more. Since you're at 4 weeks, I'd give it another 2-3 weeks before getting too worried. However, if you have upcoming quarterly filings that depend on knowing your S Corp status, here are a few things that helped me: 1. Keep detailed records of when you submitted Form 2553 (certified mail receipt, fax confirmation, etc.) 2. If you need to file quarterly taxes before receiving confirmation, you can proceed based on your intended election date, but include a note explaining the situation 3. The IRS Business Tax Line (800-829-4933) can sometimes provide status updates, though wait times are brutal The acceptance letter will definitely show your effective date clearly, so once you get it, you'll have everything you need. In my case, my effective date matched exactly what I requested on the form since I submitted within the proper timeframe. Hang in there - the letter should arrive soon!

As someone who just went through this exact decision process, I wanted to share what I learned that might help others avoid some confusion. The distinction everyone's discussing is absolutely correct - it comes down to whether the solar component generates electricity for your home or just powers the device itself. But here's what I wish someone had told me earlier: even within the "solar-powered skylights" category, there are different subcategories that affect your credit calculation. I ended up installing Velux Solar Powered Venting Skylights, and while they fall under the Section 25C credit (with the $3,200 annual limit), they qualified as "exterior windows, doors, and skylights" which has its own sublimit of $600 per year for windows and skylights specifically, separate from the overall $3,200 cap. This was a surprise because I was planning my improvements thinking I had more of that $3,200 available for other items. The $600 skylights sublimit, plus the $2,000 HVAC sublimit, plus other qualified improvements can add up to the $3,200 total pretty quickly. My advice: when you call manufacturers for technical specs (which is definitely the right approach), also ask them which specific subcategory of the energy credit their products typically fall under. The IRS has different sublimits for different types of improvements, and understanding this upfront can really help with planning your renovation timing and maximizing your credits.

Wow, this thread has been incredibly educational! I'm a newcomer to the community and was completely overwhelmed trying to figure out energy tax credits for my planned home improvements. Reading through everyone's experiences and advice has saved me from making some expensive mistakes. The key takeaway I'm getting is that most "solar skylights" on the market are really just energy-efficient skylights with solar-powered operation, which puts them under Section 25C with the $3,200 annual limit - not the unlimited Section 25D credit for actual solar electric systems. What really opened my eyes was learning about the sublimits within that $3,200 cap. I had no idea there was a separate $600 limit specifically for skylights and windows. This completely changes how I need to plan my improvements across tax years. For anyone else just starting this research, the advice about calling manufacturers directly for technical specifications seems invaluable. Having official documentation about whether your specific products generate electricity for home use (Section 25D) or just power device operation (Section 25C) appears to be crucial for proper tax filing and potential audit protection. I'm definitely going to use some of the resources mentioned here to analyze my planned purchases before moving forward. Thank you all for sharing your real-world experiences - it's so much more helpful than trying to decode IRS publications alone!

Great advice from everyone here! As someone who works in tax preparation, I just wanted to emphasize a few key points for anyone else reading this thread: 1. **Report it regardless** - Even if you never receive a W-2G form from the lottery commission, you're still legally obligated to report the full $5,000 as "Other Income" on your tax return. 2. **Estimated taxes** - Since no taxes were withheld, you might want to consider making an estimated tax payment for Q4 2024 if this win significantly increases your tax liability. This can help you avoid underpayment penalties. 3. **State considerations** - Don't forget to check your state's lottery tax rules. Some states have different thresholds for when they issue tax forms or withhold taxes. 4. **Keep everything** - Save any receipts, photos, bank deposit records, or other documentation related to this win. The IRS can ask for proof up to 3 years after you file. The good news is that lottery winnings are straightforward to report compared to other types of gambling income. TurboTax and other tax software handle this really well, so you should be all set for next year's filing season!

Hey there! Congrats on your big win! I just wanted to chime in as someone who's been through this exact situation before. A few years back I won $4,800 on a scratch-off and was totally clueless about the tax implications. One thing I didn't see mentioned yet - if you're planning to buy more lottery tickets or do any other gambling before the end of the year, keep detailed records of ALL your gambling activity (wins AND losses). Even if you don't think you'll have enough losses to itemize deductions, it's good to have the documentation just in case your situation changes. Also, since you mentioned using TurboTax - when you get to the gambling winnings section next year, make sure you enter the GROSS amount you won ($5,000), not the amount after you might have spent on other tickets that day. I made that mistake my first time and had to file an amended return. The cash payout thing threw me off too initially, but as others mentioned, the lottery commission will handle sending you the tax forms. Just make sure your address is up to date with them if you move between now and tax season! You're being smart by asking these questions early. Shows you're taking it seriously, which is exactly the right approach with the IRS.