One thing I haven't seen mentioned yet is the home office deduction if you used part of your home exclusively for job searching as an independent contractor. Since you mentioned you were working as an independent contractor before getting laid off, you might qualify for the home office deduction on Schedule C for the space you used to run your contracting business - even during the months you were between clients. The key is that the space needs to be used regularly and exclusively for business purposes. If you had a dedicated area where you managed your contracting work, applied for new contracts, and maintained your business operations, you could potentially deduct either the simplified method ($5 per square foot up to 300 sq ft) or actual expenses method. Also, since you mentioned not qualifying for unemployment benefits, you might want to look into whether you paid self-employment tax on your contracting income throughout the year. If you did, you can deduct the employer portion of SE tax (about half of what you paid) on Form 1040, which is an above-the-line deduction that reduces your adjusted gross income. These deductions are still available even with the current tax law changes, unlike the traditional employee job hunting expenses that got suspended.

Since you mentioned being an independent contractor, you're actually in a better position than traditional employees when it comes to tax deductions during your job search period. While most job hunting expenses were suspended for regular employees, contractors can still deduct legitimate business expenses on Schedule C. Consider tracking expenses for: - Professional development courses or certifications you took during the gap - Business meals with potential clients or networking contacts (50% deductible) - Professional subscriptions or memberships you maintained - Equipment or software needed for your contracting work - Marketing materials like updated portfolios or business cards Also, don't overlook the self-employment tax deduction - you can deduct half of the self-employment tax you paid on your 1040, which reduces your adjusted gross income. This applies to all your contractor income for the year, not just the periods when you were actively working. Since you were unemployed for 3 months, you might also want to consider whether any continuing education expenses qualify for the Lifetime Learning Credit, especially if you used the downtime to build skills for your new position. The credit can be worth up to $2,000 and doesn't require itemizing. Keep detailed records of everything business-related during your gap period - the IRS views job searching as business development for independent contractors, so many expenses that wouldn't qualify for employees can still be legitimate business deductions for you.

Thanks for this detailed question! I had the exact same issue when I switched from TurboTax to FreeTaxUSA last year. Like others mentioned, you'll definitely want to look at your 2023 Schedule D, Line 21 - that's where your capital loss carryforward amount is listed. One thing I learned the hard way is that you need to be careful about which type of loss you're carrying forward. Since you mentioned selling stocks at a loss, that would be a capital loss, which is different from business losses or other types of carryovers. Capital losses can offset capital gains dollar-for-dollar, and any excess (up to $3,000) can reduce your ordinary income. Anything beyond that $3,000 limit gets carried forward to future years. If you remember losing about $4,200 on stock sales but only used part of it, you should be able to find the exact carryforward amount on that Schedule D line. The good news is that capital loss carryforwards never expire - they can be carried forward indefinitely until fully used up. Just make sure when you enter it in H&R Block that you're putting it in the right section for carryover losses, not as a new transaction for this tax year.

I've been in your exact situation before when switching between tax software! Beyond just finding the carryforward amount on Schedule D Line 21, here's a pro tip that saved me time: when you enter the carryforward in H&R Block, make sure you input it as a "Prior Year Carryover" in the capital gains section, NOT as a new sale transaction for this year. I made that mistake initially and it messed up my entire Schedule D. Also, if you're having trouble locating your 2023 return, check if you saved it to cloud storage like Google Drive or Dropbox. Many people automatically save their completed tax returns there and forget about it. That's actually how I found mine when I switched from FreeTaxUSA to TaxAct last year. One more thing - even if you can't find the exact carryforward amount right away, H&R Block has a decent interview process that will ask you specifically about prior year capital losses. Just have a rough estimate ready ($4,200 sounds right based on what you mentioned) and you can always go back and adjust it once you locate the precise figure. The important thing is not to forget about it entirely and miss out on the tax benefit!

As someone who's dealt with this exact issue multiple times, I can confirm that a $140+ fraction of cents adjustment is definitely not normal and indicates a systematic error somewhere in your calculations. The good news is that you've already identified the root cause by finding the discrepancy in your February deposit ($58,435 vs $58,294.81). Here's what I'd recommend as your next steps: First, go through every single deposit on Schedule B and compare it to your actual EFTPS payment history - don't just spot check. Second, verify that your Schedule B is reporting tax LIABILITY by pay date, not deposit amounts or deposit dates. These are often confused. Third, if you have employees hitting the Social Security wage base ($160,200 for 2023), double-check that withholding stopped at exactly the right amount mid-quarter. The fraction of cents line should only account for rounding differences when you calculate tax liability per employee vs. the aggregate. Once you fix the Schedule B errors, that $140 should disappear almost entirely. Don't submit until you've tracked down every significant discrepancy - the IRS computers will flag unusual adjustments and it's much easier to fix now than deal with correspondence later.

I've been following this thread and wanted to add another potential cause I've encountered - check if your payroll system is handling state unemployment insurance (SUI) wage bases correctly. Some payroll systems incorrectly include SUI adjustments in federal tax calculations, especially when employees hit state-specific wage base limits that differ from federal limits. Also, if you're using a third-party payroll processor, they sometimes make "correcting" entries that don't get properly reflected in your 941 calculations. I'd recommend requesting a detailed payroll tax reconciliation report from them that shows exactly how they calculated each tax component for the quarter. One more thing - make sure you're not double-counting any year-end adjustments or corrections that might have carried over from Q4 of last year. Sometimes accounting departments make manual adjustments that create phantom discrepancies in subsequent quarters.

This thread has been absolutely invaluable! As someone who's been dealing with capital loss carryovers for the first time, I had the exact same misconception as so many others here. I've been carrying forward about $10,500 in losses from some disastrous crypto investments in 2022, and I was completely baffled when TurboTax started applying way more than $3,000 of them this year. Like everyone else, I was convinced there was a software error because I thought the $3,000 limit was a hard cap on ALL capital loss usage each year. I actually spent hours on tax forums trying to figure out if TurboTax was broken! The explanations in this thread - especially understanding that losses first offset capital gains dollar-for-dollar with NO limit, and the $3,000 restriction only applies to losses against ordinary income - have completely revolutionized my understanding. I realize now that I have about $7,500 in capital gains this year from some stocks that finally recovered, so TurboTax is correctly using $7,500 of my carryover losses against those gains, plus allowing the full $3,000 against my regular income. This means I'm using $10,500 of my carryover in just one year - essentially wiping out my entire loss carryover instead of the 3-4 years I was expecting! I had been so worried about "wasting" these losses by having gains, when actually the gains are helping me use them much more efficiently. Thank you to everyone who shared their experiences and knowledge. This community discussion has been better than any tax guide I've read. It's amazing how much clearer these rules become when explained through real examples by people dealing with the same confusion!

This entire discussion has been absolutely fantastic! As someone new to both investing and this community, I can't believe how many of us had the exact same misconception about capital loss carryovers. I'm dealing with about $7,200 in losses from some really poor investment timing in 2023, and like everyone else here, I was completely confused when my tax software applied way more than $3,000 of them. I actually called my brother (who's an accountant) in a panic thinking my TurboTax was glitched, and he had to explain the same thing everyone here has been saying - that losses first offset capital gains with no annual limit, and the $3,000 restriction only applies to the portion used against ordinary income like wages. What makes this thread so valuable is seeing so many real examples with actual numbers. It really drives home how this system works in practice. I have about $5,800 in capital gains this year from some tech stocks that finally recovered, so my software is correctly using $5,800 of my loss carryover against those gains, plus the remaining $1,400 against my ordinary income. That completely exhausts my entire carryover in one year! I had been avoiding taking any profits because I thought it would somehow interfere with my loss carryovers, but now I understand that having gains actually helps you use up those carryovers more efficiently. This community is amazing for helping newcomers like me navigate these confusing tax situations. Thank you all for sharing your knowledge so generously!

Based on your situation, you're handling this correctly with the sessions method. You should report the $815k in winning sessions as gambling income and deduct the $246k in losing sessions on Schedule A - not your total individual transaction losses of $3.1m. The sessions method requires consistency throughout your entire approach. Since you've calculated your gambling activity using daily sessions (which is the standard approach for online platforms like FanDuel), you must stick with those session totals for both income reporting and loss deductions. A few important considerations for your specific case: 1. **Documentation is critical** - Keep your FanDuel transaction exports, your session calculation spreadsheets, and clear notes on your methodology. Define exactly how you determined each session (likely by calendar day) and apply it consistently. 2. **Tax software limitations** - H&R Block may try to default to reporting your full W-2G amounts. You'll likely need to override this and manually enter your session-calculated figures with proper documentation. 3. **State tax implications** - Double-check how your state handles gambling income. Some states don't recognize the sessions method and may require you to report the full W-2G amounts, which could significantly impact your state tax bill. 4. **Professional review recommended** - Given the substantial amounts involved ($290k federal tax liability), consider having a tax professional who specializes in gambling taxes review your calculations before filing. The upfront cost could save you significant problems if the IRS has questions later. The sessions method is well-established in tax court precedent and is designed to reflect the economic reality of continuous gambling activity. Just ensure your documentation clearly supports your methodology and calculations.

The sessions method approach you're using is definitely the correct way to handle this situation. Your calculation of $815k in winning sessions as reportable income and $246k in losing sessions as your deductible losses is spot-on. What many people miss is that the sessions method isn't just about reducing taxes - it's about accurately reflecting the economic reality of your gambling activity. When you're making continuous bets on FanDuel throughout a day, each individual transaction doesn't represent a complete gambling event. The session as a whole does. A few key points for your situation: **Federal reporting**: Report the $815k as "Other Income" on Schedule 1 and deduct the $246k as gambling losses on Schedule A (subject to itemizing). You cannot mix methodologies by using session income but total transaction losses. **Record keeping**: Make sure you have clear documentation of how you defined each session (most likely by calendar day for online betting) and that you applied this consistently throughout 2023. Keep your FanDuel transaction exports and any spreadsheets showing your calculations. **Software considerations**: Tax software often defaults to W-2G amounts, so you may need to override these entries manually. Include a statement explaining your sessions methodology and reference supporting tax court cases like Mayo v. Commissioner. The $290k federal tax bill you're seeing is based on legitimate gambling income under an accepted methodology. While painful, it's much better than the alternative of reporting the full $2.3m in W-2Gs without proper session accounting. Consider having a tax professional who specializes in gambling taxes review everything before filing, especially given the substantial amounts involved.