Do you remember approximately how long it took for the IRS to process your e-filed 1040-X through FreeTaxUSA? I've heard horror stories about paper amendments taking 6+ months, wondering if e-filing is significantly faster.

It took about 7 weeks from submission to getting my refund, which was significantly faster than paper filing. The IRS sent an acknowledgment of receipt within 2 days of e-filing, which gave me peace of mind that they actually had my amendment. From what I've heard, paper amendments are taking 6-12 months right now, so e-filing is definitely the way to go if you qualify. Just make sure your changes are for forms that support e-filing - not all schedules can be e-filed for amendments even now.

Actually this isn't always true. If you've had tax payments applied to the year in question after filing (like estimated tax payments that were applied forward or carryforwards from other years), the deadline can be extended to 2 years from the date of the last payment rather than 3 years from filing. Worth checking if this applies to your situation OP.

Quick question - does filing an extension for your original return extend the amendment deadline too? Like if someone filed a 2019 extension until October 2020, would they have until October 2023 to amend?

Thank you for mentioning this! My fictional taxpayer has an AGI of $123,000, so they'd be in that phaseout range. How exactly do I calculate the deductible portion of the $7,500 rental loss in this case? Is there a specific worksheet in the instructions?

For an AGI of $123,000, you're right in the middle of the phaseout range. The calculation is pretty straightforward: you lose $0.50 of the $25,000 maximum deduction for every $1 over $100,000. So take $123,000 - $100,000 = $23,000 over the threshold. Multiply that by 0.5 = $11,500 reduction. This means your maximum deduction would be $25,000 - $11,500 = $13,500. Since your loss is only $7,500, you can deduct the entire amount because it's less than your modified maximum. Form 8582 is where you'd calculate this for a real return, but for your assignment, just showing this calculation should be sufficient unless your professor specifically required Form 8582 as part of the project.

Our professor had us use the free fillable PDFs from the IRS website for older tax years. Way less headache than dealing with outdated software! You can still download the 2017 forms and instructions directly from irs.gov/prior-year

Thank you! My income is around $48,000 - would I still qualify for EITC? And my brother is still in high school, but I am paying for some tutoring services. Would those count as educational expenses?

With $48,000 income and two dependents, you should still qualify for some EITC, though not the maximum amount. The phase-out for Head of Household with two qualifying dependents starts higher than your income, but you'll get a partial credit. Every bit helps! For educational expenses, unfortunately tutoring for high school generally doesn't qualify for the education credits. Those are primarily for post-secondary education (college, vocational schools, etc.). However, if the tutoring is related to a medical condition and prescribed by a doctor, you might be able to count it as a medical expense instead.

This is super important! And just adding on - there's sometimes a gap between disability approval and Medicare coverage starting. During that time, look into if your state has a Medicare Savings Program that could help with premiums.

That's really good to know - my bankruptcy was discharged about 14 months ago, so sounds like I should be past that waiting period. I do have one tax return I haven't filed yet because I knew I'd owe and couldn't pay. Should I get that filed ASAP before contacting them about the Fresh Start options?

Yes, absolutely file that outstanding return immediately. The IRS won't even discuss resolution options until you're in compliance with all filing requirements. Even if you can't pay what you owe, getting the return filed is the necessary first step. Think of it this way - the IRS sees unfiled returns as someone trying to hide or avoid their obligations entirely, while someone who files but can't pay is at least being transparent about their situation. Once you've filed everything, then you can approach them about payment options through the Fresh Start program with a much better chance of success.

I think this depends on your specific situation though. The IRS doesn't actually expect you to create more debt (like maxing out credit cards) to pay tax debt. They look at reasonable collection potential. When I submitted my OIC, I just had to document my current financial situation honestly.

That's really helpful and kind of concerning - I definitely don't want to accidentally look like I'm doing something illegal! Is there anything specific I should do besides keeping good records? Should I mention anything to my bank about these transfers?

You don't necessarily need to proactively contact your bank, as they're already monitoring transactions. Just be completely transparent if they ask any questions. What I would strongly recommend is keeping a detailed spreadsheet with dates of all purchases and sales, original purchase prices (receipts if you have them), sale prices, and the purpose of each transaction. Take photos of the clothing items before shipping as additional evidence. Also save all communication with your buyer that shows these are legitimate sales of personal items. If you file taxes with an accountant, discuss this situation with them so they're aware of the full context.

Do wire transfers even generate 1099-Ks though? I thought those were mainly for payment platforms like PayPal, Venmo, etc.