That's a really good point about keeping all the documentation. Should I also be sending the payment by certified mail or some other trackable method? And do I need to include a copy of the latest CP2000 with my payment?

Absolutely send your payment via certified mail with return receipt requested. That gives you proof of exactly when you sent it and when they received it. I would recommend including a copy of the payment voucher from the CP2000 (not the entire notice), along with a brief letter stating that this payment is for the agreed amount on your CP2000 dated [specific date] for tax year 2019. Include your Social Security number, the notice number, and any other reference numbers on the CP2000. Better to include too much identifying information than not enough.

Totally agree about the IRS departments not communicating. I work at an accounting firm and we see this constantly. The examination department will agree to one thing while the collections department is still pursuing the original amount. For the OP, you might check if your local Low Income Taxpayer Clinic (LITC) can help. If you qualify based on income, they provide free representation.

I thought about that but was trying to save money since my income is already pretty tight. Do you think it's worth the cost even if my situation isn't super complicated? Did they find any deductions you missed or was it just for the reassurance?

Yes, I think it's worth the cost even for a relatively straightforward situation, especially in your first year or two of self-employment. The CPA actually found several deductions I had missed - part of my phone bill, a portion of my internet, some office supplies I'd forgotten about. These additional deductions saved me around $400 in taxes, so the service more than paid for itself. The peace of mind was the biggest value though. Having a professional review everything and say "this looks correct" eliminated so much anxiety. They also gave me a simple system for tracking everything this year, which has made the whole process much easier. If money is tight, you might look into VITA (Volunteer Income Tax Assistance) which offers free tax help for people who make under $60,000.

This is a good point. The IRS isn't suspicious of people who happen to be in the EIC range - they're looking for people who make up fake income or dependents. Lots of legitimate self-employed people naturally fall into this income range.

That's a good point about the tax rates! All my trades this year have been held less than a year, so I know I'm stuck with the higher short-term rates this time. Do you have any suggestions for tax planning with my current situation? Is there anything I should be doing before year-end to optimize my tax situation?

For your current situation, you might want to review your portfolio for any losing positions that you're not confident about anymore. Selling those before December 31st would allow you to harvest those losses to offset some of your gains. Just be careful of the wash sale rule - don't buy back the same or substantially identical securities within 30 days. Also, make sure you're setting aside enough for estimated tax payments. With $66,800 in gains, you could be looking at a significant tax bill, and if you haven't been making quarterly estimated payments, you might face underpayment penalties. Some people are surprised when they realize capital gains don't have automatic withholding like paychecks do.

This is mostly right but some brokers' 1099-Bs can still be confusing. My Etrade one last year showed the wash sales but didn't explain how they affected my final numbers. Had to spend hours figuring out what was happening.

Do you need receipts for all of these? I did some freelance work last year but was terrible about keeping records. Can I still claim some of these deductions?

You should ideally have documentation for all business expenses, but the level of documentation varies. For things like home office, you need to know the square footage. For mileage, you should have a log of business trips. For expenses like internet and phone, you can calculate the business percentage based on reasonable usage. If you don't have exact receipts but have bank or credit card statements showing the purchases, that can work too. The key is being able to show the expense was real and business-related if you ever get audited. For this year going forward, I recommend using a free app to track expenses or even just a simple spreadsheet. It makes tax time so much easier!

I used Direct Pay last year. When you go through the steps, you select "Form 1040" and then "Tax Return" or "Balance Due" as the payment type (I used Balance Due). Then select the right tax year. It was actually easier than I expected. Just make sure you keep the confirmation number they give you after the payment processes. I also took a screenshot of the confirmation page just to be safe.

Wouldn't selling trigger that punitive tax rate the first poster mentioned though? Wouldn't that be worse than just dealing with the annual reporting?

Yes, selling will trigger the tax event at potentially the highest rate plus interest charges if you're using the default PFIC method. However, it's a one-time pain versus ongoing compliance costs and headaches. If you can make a QEF election for the current year before selling, that might reduce the tax impact somewhat. Or if you've only held them for a short time, the interest charges might not be too severe. I did the math and realized that even with the higher tax rate on selling, the amount I'd save in accounting fees over the next decade made it worthwhile to just take the hit and simplify my life.

I use MTM for my Australian ETFs. You can only make the election on a timely filed return for the year, and once you make it, you're stuck with it. The upside is you report gains/losses annually as ordinary income (no special PFIC tax rates). The downside is you can't claim losses beyond your gains from other MTM PFICs. It's way less complicated than the default method though.