Oh crap, I had no idea there was a 3-year deadline on refunds! That's really good to know. Do you think we should use a tax service like Jackson Hewitt at this point or just try to do it ourselves with tax software?

For a simple tax situation, tax software should work fine and save you money compared to Jackson Hewitt. Something like TurboTax or FreeTaxUSA can handle late filings easily. If her taxes are more complicated (self-employment, multiple income sources, investments, etc.), then a professional service might be worth the cost. They sometimes catch deductions or credits you might miss on your own. But for basic W-2 income, the software should be more than adequate and much cheaper.

Exactly! IRS is the worst bank ever... they take your money all year and don't even pay interest when they owe you a refund, but they sure charge interest when you owe them 😑

Thanks, this is exactly what I needed to know! For tracking business vs personal use, would a simple log be sufficient or do I need something more formal? I probably use it about 85% for the Amazon business and 15% for personal browsing.

A simple log would work fine, but be consistent with it. I recommend creating a spreadsheet where you track hours of use and categorize them as business or personal. Do this for a representative time period (at least a few weeks) to establish your usage pattern. The key is having something contemporaneous - meaning you're tracking it as you go, not trying to recreate it later if you get audited. Also take screenshots of your work on the computer for the business as additional evidence. The IRS is particularly interested in seeing that high-cost assets claimed as business expenses are actually being used for business purposes.

I think the "hobby loss rule" is that you need to show a profit in 3 out of 5 consecutive years to automatically be considered a business. Otherwise you need other evidence that it's a legitimate business attempt.

Would this work even if the stock is only worth like $200? Seems like a lot of hassle for the charity for such a small amount. And how do you claim the deduction - is it complicated to do on your taxes?

Yes, it works even for smaller amounts! Many charities are set up to handle stock donations of all sizes. While some very small local organizations might not have the infrastructure, most medium to large charities definitely do. For claiming the deduction, it's straightforward if you itemize deductions on Schedule A. You'll get a receipt from the charity showing the donation value (usually the market value on the transfer date). If the stock is worth more than $500, you'll also need to fill out Form 8283, but the form isn't particularly complicated. For very small donations, make sure the tax benefit of itemizing would exceed the standard deduction, otherwise there's no additional tax advantage.

Did you have to pay any fees to sell through Computershare? I heard some transfer agents charge like $25-50 for selling shares which seems ridiculous if the stock isn't worth much.

Thanks for sharing your experience. Do you remember how long the amended return process took? And did you face any penalties from the IRS?

The amended return took about 16 weeks to process from when I mailed it - this was last year when they still had significant backlogs. They've supposedly improved processing times since then, but plan for at least 8-12 weeks. For paper returns, it's always slower. I didn't end up facing any penalties because I included a letter explaining that I received the 1099-DIV after the filing deadline. I did have to pay a small amount of interest on the additional tax (about $3 for a $200 tax difference), but the IRS waived the late payment penalty after I explained the situation. Make sure you include a clear explanation with your amendment!

I actually did! I sent an email to the company's finance department explaining the situation and included an invoice for the $120 I paid H&R Block to amend my return. They sent me a check about a month later with an apology letter. I was shocked it worked!

Thanks for the notebook tip - that's a great idea! I'll definitely start doing that. But what's this Section 1244 thing you mentioned? Is that something that would apply to my situation with just selling stuff online as a side thing?

I misspoke about Section 1244 - that's actually for losses on small business stock and wouldn't apply here. What I meant was that resellers can use the "Cost of Goods Sold" section on Schedule C to account for your inventory costs. The notebook method works great for casual sellers. I recommend categorizing items by type and condition, which helps establish a pattern. For example, "vintage t-shirts - good condition - $3-5 each" or "collectible figurines - mint condition - $10-15 each." This creates a reasonable framework for your estimates. Starting this practice now will make next year's taxes much easier, and having some documentation is always better than none.

TurboTax works ok for this but isn't great. It asks for cost of goods sold as a total number rather than helping you itemize. I found FreeTaxUSA actually handled my small eBay business better and asked more relevant questions about inventory and costs. Plus it's way cheaper.

I used TurboTax last year for my Etsy 1099-K. It was decent but I had to manually create my own spreadsheet for tracking cost of goods sold. It doesn't really help with estimating costs when you don't have receipts - you just enter your total estimate. If you're worried about documentation, you might want something more specialized or at least create your own tracking system alongside TurboTax.