How do you qualify for their help? Do you need to show proof of hardship or something? My CP2000 is for $4k and there's no way I can pay that right now.

You need to demonstrate that the tax issue is causing you significant financial difficulty or that the normal IRS processes aren't working correctly in your case. Examples would be if paying the amount would prevent you from affording necessary living expenses or if you've made multiple attempts to resolve the issue through normal channels without success. You can call them directly or fill out Form 911 (Request for Taxpayer Advocate Service Assistance). You'll need to explain your hardship situation clearly. For your $4k situation, if paying that would prevent you from paying rent, utilities, or medical expenses, that could qualify. They can sometimes help set up manageable payment plans or put a temporary hold on collection activities.

I used the payment plan last year. It was actually pretty straightforward. You can set it up online for smaller amounts or by phone/mail for larger ones. Interest still accrues but the penalties are much less. I did $100/month and it was manageable.

Oh wow, thanks for pointing that out! I had no idea there was a $5,000 limit for tax refund bonds. Would've been a huge headache if my return got rejected because of that. I'll definitely adjust my Form 8888 to allocate $5,000 to bonds and the remaining $1,630 to direct deposit instead. Does anyone know if there's any special processing time I should expect when buying I bonds with my refund? Is it slower than a regular refund?

You're welcome! Glad I could help. From my experience, refunds with I-bond purchases do typically take a bit longer to process - usually 1-2 weeks longer than standard direct deposit refunds. The IRS needs to coordinate with Treasury Direct to create your bonds, which adds some processing time. Last year, my regular refund portion hit my bank account about 3 weeks after filing, but the confirmation email about my I-bonds didn't come until almost 5 weeks after filing. Just something to keep in mind if you're watching for your refund.

You don't need a pre-existing Treasury Direct account! When you purchase I bonds with your tax refund through Form 8888, the Treasury will actually mail you paper I bonds. These aren't the electronic bonds you'd get through TreasuryDirect.gov. It's one of the few ways to still get paper savings bonds nowadays.

Thanks for mentioning Box 2a! I do have a small amount there ($12.45) that I'm reporting on Schedule D. And yes, I did get a notification about the liquidation. It was for a small REIT position I had that was bought out. I think what confused me is that the brokerage also reported it as a normal sale on my 1099-B, so I wasn't sure if I needed to do something with Box 9 on the 1099-DIV separately or if it was already factored into the sale proceeds on the 1099-B.

That makes sense - in this case, you need to be careful not to double-report the income. If the liquidation is already reported on your 1099-B as a sale, you should use that to report the transaction on Schedule D. The amount in Box 9 of your 1099-DIV is informational to help you understand why the sale occurred. Double-check the 1099-B to make sure the basis is reported correctly. If the REIT was bought out, you'll want to make sure your gain/loss calculation is accurate. Sometimes in these situations, you might need to make adjustments if the basis on the 1099-B doesn't properly account for all your previous investments and reinvested dividends.

What's the easiest way to keep track of these basis adjustments over multiple years? My broker doesn't seem to do it automatically.

That's really helpful to hear from someone who's already doing something similar! Did you find it complicated to switch from partnership to LLC after you'd already started? I'm worried about setting up something and then having to change it later.

It wasn't too bad switching from partnership to LLC, but definitely created some extra paperwork I could have avoided by starting with the LLC. I had to formally dissolve the partnership, file new paperwork for the LLC, get a new EIN, open new business bank accounts, and update all my insurance policies and client contracts. The whole process took about a month and cost around $500 including state fees and having my accountant update everything. Would have been much simpler to just start with the LLC from day one. The annual maintenance is super easy though - just a simple form and fee in my state. Your state might be different, so check your secretary of state's website for the specific requirements.

I use it for my handyman business and it's great for tracking mileage automatically. The app uses GPS to track your trips and you just swipe business vs personal. At the end of the year it calculates all your mileage deductions automatically. Definitely worth it if you're driving a lot for business.

Thanks for this suggestion! If I were to set up a separate entity for future flips, would I be able to deduct things like a truck if it's used both for my current business and for property management/flips? Or does it need to be exclusively used for the real estate work?

You can definitely deduct a vehicle that's used for both businesses, but you'll need to track and allocate the usage between them. Most people use mileage logs to document how much the vehicle is used for each business purpose. The deduction would be split proportionally between your businesses based on actual use. So if 60% of your business mileage is for your current LLC and 40% is for real estate activities, you'd allocate the deduction accordingly on each business return. Just make sure you have good documentation in case of an audit - the IRS looks closely at vehicle deductions when they're split between different activities.

1031 exchanges typically don't work for house flips though. The property needs to be held as an investment property, not primarily for resale. Most flips are considered "dealer property" or inventory by the IRS, not investment property.

You're absolutely right, and that's an important distinction I should have mentioned. Flips are generally considered dealer property/inventory by the IRS, not qualifying investment property for 1031 purposes. A better approach for someone regularly flipping houses would be to establish a proper business structure and accounting system that maximizes legitimate deductions against the ordinary income from flipping activities. Alternative tax strategies might include opportunity zone investments or setting up a defined benefit plan if the flip income is substantial enough.