That's an interesting point about retirement contributions! We do contribute to our 401ks but definitely not maxing them out. How much difference did that make in your tax situation? And no, we don't have any 1099 income - just our regular W-2 jobs.

For us, maxing out our 401ks made a huge difference. At your income level, it could save you around $8,000-10,000 in taxes annually depending on your tax bracket. When we went from contributing about 6% to the max (which is $22,500 per person for 2023), our withholding issues disappeared. It effectively reduced our taxable income by about $35,000 combined. It was a bit of a lifestyle adjustment to put that much away, but the tax savings plus the long-term retirement benefits made it worthwhile. And honestly, once it's automatically deducted, you adjust your spending and barely notice it.

This! I'm in NY and had the same issue. The state withholding tables don't always scale correctly with the federal ones, especially for dual-income households in high tax states.

Do those apps work if you have multiple rental properties? Like can you categorize which property you're visiting or does it just lump all "business" miles together?

Yes, most of the better mileage tracking apps let you create multiple subcategories under "business." I have mine set up with separate categories for each property address, so I can track which trips were for which property specifically. This is especially helpful at tax time since I have separate Schedule E forms for each property. You can even add notes for each trip like "monthly inspection" or "meeting tenant" or "repair visit." The detailed reports have actually saved me during an audit once when the IRS questioned some of my travel deductions.

I think it depends on the distance. If your rental is 5 miles away and you claim weekly visits, that's reasonable. If it's 100 miles away and you claim weekly inspections with no maintenance or tenant interactions, that might look suspicious. My accountant said regular inspections are fine but documentation is key.

Thank you for this advice. We made an appointment with a tax preparer for tomorrow to get last year's return filed properly. Do you know if we should wait to contact the IRS until after we've filed that missing return, or should we call them now to try to put a hold on the CP504?

I would contact the IRS immediately about the CP504, even before the tax return is completed. Let them know you're actively working on filing the missing return and have an appointment scheduled. Request a temporary hold on collection activities while you get everything in order. When you call, be prepared with your boyfriend's financial information because they might ask about his current income and expenses to determine what kind of payment arrangement is appropriate. The missing return is important, but addressing the immediate levy threat should be your first priority.

How much did they take from his paycheck? Is it like a fixed amount or a percentage?

Thanks for the clear explanation. I definitely don't want to do anything that would trigger an audit. Do you know if these carried forward losses have any time limit? Like if I keep the property for another 10 years, can I still use these losses when I eventually sell?

There is no time limit on carried forward passive losses. You can continue to carry them forward indefinitely until you either have passive income to offset them against or until you dispose of the property in a taxable transaction. When you eventually sell the property, you'll be able to use all accumulated passive losses against any type of income (not just passive income). This is one of the benefits of holding real estate long-term - those suspended losses can create a nice tax break when you ultimately sell the property, even if it's 10, 20, or more years down the road.

How do you tell the difference between a repair and an improvement? I replaced my water heater last year and wasn't sure how to classify it.

Wow, that's almost exactly what I'm dealing with! How did you handle it with your CPA once you figured out the mistake? And did you end up filing an amended return or did you catch it before filing?

I caught it before filing because I always review everything carefully. When I confronted my CPA, he initially tried to defend it saying it was a "strategy" he uses for clients. That was an immediate deal-breaker for me - there's no legitimate "strategy" for claiming credits you don't qualify for! I requested my documents back, found a new CPA, and reported the first one to the state board of accountancy. It's one thing to make an honest mistake, but his response showed it wasn't just a mix-up. My advice: don't sign anything until you understand every number on the return. Get a second opinion if needed. And definitely find a new tax professional who is responsive and transparent. The right CPA will welcome your questions and be able to explain their work clearly.

But QBI doesn't go on Schedule 3 line 8, it goes on Form 1040 line 13 as a deduction from taxable income. Schedule 3 line 8 is for credits and other payments, not deductions. I think this is something else.