


Ask the community...
I had something similar happen in 2023. The second deposit turned out to be interest they owed me because they took too long processing my return. Just be aware that interest payments from the IRS are taxable income - you'll get a 1099-INT next January and need to include it when you file next year. Not a big deal, but something to remember!
Do you have to pay taxes on ALL money from the IRS? Like if they made a mistake on my return and sent me more money later, is that taxable too?
No, you don't pay taxes on all money from the IRS. If they made a correction to your return and sent additional refund money, that's not taxable because it's still just your regular tax refund (which isn't taxable income). The only part that's taxable is specifically interest they pay you for holding your money too long. The IRS is required to add interest to refunds issued more than 45 days after the filing deadline or after you filed (whichever is later).
anybody else notice the irs has been super weird this year?? they sent me THREE different amounts and then a letter saying i owe them money?!?!? the whole system is broken smh
I think it's because they're still catching up from covid backlog. My tax person said they're making more corrections automatically now instead of rejecting returns or sending them back. Might explain why people are getting unexpected deposits.
19 Another option that hasn't been mentioned is adjusting your state withholding separately. In many states, you can fill out a state-specific withholding form that's different from your federal W-4. I found out last year that even though I had my federal withholding dialed in perfectly, I was still having way too much withheld for state taxes. Check your state's tax department website - they usually have forms and calculators specifically for state withholding.
14 Oh I didn't realize state withholding was separate! Does changing your federal W-4 automatically adjust your state withholding too, or do you have to do both separately?
19 It depends on your state. In some states, your state withholding is based on your federal W-4, so changing one affects the other. But many states have their own withholding forms. For example, states like California (DE 4), New York (IT-2104), and Illinois (IL-W-4) have their own forms. Your employer's HR department should know which forms apply to your state. If you only adjust your federal withholding, you might still get a large state refund, so it's worth looking into both!
12 Careful about adjusting too much! My brother tried to get his refund to zero and ended up OWING $800 at tax time, which he wasn't prepared for. Maybe aim for a small refund of a few hundred as a cushion in case your tax situation changes during the year.
Don't forget about depreciation! When you rent out a property, you have to take depreciation on the building portion of your property (not the land). This is a significant deduction that offsets your rental income. If you don't take it voluntarily, the IRS will assume you took it anyway when you eventually sell the property, so there's no reason not to claim it. The general rule is 27.5 years for residential rental property. So you'd divide your building value (minus land value) by 27.5 to get your annual depreciation deduction.
How do you determine the building value vs land value? My property tax statement just shows one total value.
Your property tax assessment should actually break down the value between land and improvements (building), even if the total tax is combined. Look more carefully at your tax statement for this breakdown. If it really doesn't show it, you can use a reasonable method to determine the split. Some people use the ratio that insurance companies use (since they only insure the building, not the land). Another approach is to look at comparable vacant land sales in your area to estimate land value, then subtract from your total purchase price.
Just to add something others haven't mentioned - since your property was intended to be your primary residence initially, be careful about the qualified residence interest rules if you later move into it. The rules get complicated if you convert back from rental to primary residence regarding how much of your future sale would be eligible for the principal residence exclusion ($250k/$500k). Keep VERY good records about when you converted it to rental use, what improvements you make during the rental period, and depreciation taken. You'll thank yourself later if/when you sell.
Just to add a practical tip - when you mail in a return with zero income that's only claiming the recovery rebate credit, write "RECOVERY REBATE CREDIT ONLY" in big letters at the top of the first page of the 1040. This helps the IRS route it properly and can speed up processing. Also, use certified mail with tracking so you can prove when it was sent and received. The IRS is still dealing with massive backlogs, and these paper returns sometimes get lost in the shuffle.
Thanks for this advice! Would regular certified mail be good enough, or should I do certified mail with return receipt? And should my friend expect to wait a long time to get the rebate after filing?
Regular certified mail with tracking is sufficient - you just need proof it was delivered. Return receipt is extra protection but not strictly necessary. Your friend should definitely expect to wait several months for the rebate after filing. Zero-income returns claiming only the recovery rebate credit typically get flagged for manual review, which adds processing time. Current estimates I've seen suggest 3-6 months for these special case paper returns, though it could be shorter or longer depending on the IRS backlog at the time of filing. Make sure your friend keeps a complete copy of everything submitted so they can follow up if needed.
Has anybody had this experience? My sister filed a return like this last year just to claim her missing stimulus, and she got a letter from the IRS asking for ID verification before they would process it. She had to upload her ID through the IRS website and answer some questions to prove her identity.
Natasha Ivanova
This might sound basic, but double-check that you entered ALL your info exactly the same in each program. When I was comparing, I accidentally missed entering a 1099 in one of them which threw everything off. Also check if one is calculating your state as resident for the full year while another might have you as part-year if you moved.
0 coins
Miguel Diaz
ā¢That's a good point! I just went back through TurboTax vs TaxAct and realized I somehow entered my student loan interest in TaxAct but completely missed that section in TurboTax. That explains part of the difference but still leaves about $400 unaccounted for. I'm going to keep digging...
0 coins
Natasha Ivanova
ā¢Glad you found one issue! For the remaining $400 difference, check if one program is taking standard deduction while another is itemizing. Also look at any tax credits - especially things like Earned Income Credit, education credits, or child/dependent credits if applicable. Those can easily create differences of several hundred dollars.
0 coins
NebulaNomad
From my experience working at a tax prep firm, software differences usually come down to how questionnaires are structured. Tax Act might ask "Do you have any education expenses?" while TurboTax might specifically ask "Did you pay tuition for college this year?" - leading to different answers.
0 coins
Javier Garcia
ā¢Is there one software that's generally better than others? I always assumed TurboTax was the best since it costs the most but now I'm not sure...
0 coins