Thank you so much for that info! That's a huge relief - I was worried I had missed something important. So just to be 100% clear, if I used the e-file system through my tax software for the 1099-NECs, I'm completely done with that part? Nothing else to mail in?

That's correct, you're completely done with that part! The e-filing system handles everything that the 1096 would normally cover. Just make sure you keep records of your e-file confirmation for your own records. The only paper forms you still need to provide are the recipient copies of the 1099-NECs, which should be given to your contractors/vendors (though many e-file systems will mail these for you as well if you select that option).

The IRS has actually been trying to move more toward electronic filing! They've increased the e-file threshold requirements over the years. I think for 2025 filing season, businesses that need to file 10 or more information returns are required to e-file. But yeah, the paper forms are confusing. I think they keep them because some small businesses or elderly business owners still prefer paper. The whole tax system needs modernization.

That's good to know about the e-filing push. Still, 10 forms seems like a high threshold when the process is so much easier electronically. I only have to file 3-4 1099s each year, so I'm not required to e-file, but I'm definitely going to look into it for next year because these paper forms are driving me crazy. And you're right about the tax system needing modernization. It feels like we're using 1980s processes in 2025!

Thanks for explaining the difference between capital account and outside basis! That clears up a lot. So even though my capital account shows -$7,900 at the end of this year, my outside basis is still just zero? Do I need to file any special forms to track these suspended losses or is it just something I need to remember for next year?

Exactly right - your capital account can show -$7,900, but your outside basis remains at zero (it can't go negative). The difference between those numbers represents your suspended losses. There's no specific IRS form for tracking suspended losses - it's just something you need to maintain in your personal records. I recommend creating a simple spreadsheet that shows: 1) Your beginning basis each year 2) Increases to basis (contributions, income items) 3) Decreases to basis (distributions, loss items) 4) Ending basis 5) Cumulative suspended losses When you file next year, you'll need this information to know how much of any losses you can claim. If the partnership becomes profitable, those profits will increase your basis and allow you to start using those suspended losses.

Are you sure about the suspended losses carrying forward indefinitely? I thought they expired after a certain number of years like net operating losses do. Can anyone confirm this?

Thank you so much for this perspective! Do you think I should approach my direct supervisor first or go straight to HR/payroll? I'm worried about coming across as confrontational, but this is such a huge amount of money for me.

I would recommend going directly to HR/payroll rather than your supervisor. This is a payroll administration issue, not a management issue, and your supervisor likely won't have the authority or expertise to address it properly. When you approach HR/payroll, frame it as seeking their help to resolve an unfortunate situation rather than placing blame. Bring all your documentation and explain that you've discovered this discrepancy between your properly completed W4 and what was actually implemented. Most payroll professionals will recognize this as a serious error on their part and will want to make it right.

That's actually really good advice. I work in benefits administration and can confirm many larger companies have policies like this but don't advertise them. It's definitely worth checking your employee handbook or benefits portal.

Wait, so if I have to report foreign accounts on Schedule B of my tax return, that part isn't extended automatically with the FBAR extension? That's confusing since they're related. Can you clarify what forms need separate extension requests?

That's right - they're definitely related but handled by different agencies. The FBAR (FinCEN Form 114) goes to FinCEN, not the IRS, which is why it has its own separate deadline and extension rules. Your tax return (1040 and all schedules including Schedule B where you check the box about foreign accounts) goes to the IRS and follows regular tax return deadlines. So you need Form 4868 to extend your tax return filing. Also, Form 8938 (Statement of Foreign Financial Assets) if required, goes with your tax return and would be covered by the Form 4868 extension, not the automatic FBAR extension.

Thanks for bringing this up! Does anyone know if they still require 6 years of back FBARs for the Streamlined program? And do you need to amend all your tax returns too, or just file the missing FBARs?

Thank you all for the responses! I went back and checked my filed return, and I did correctly report that I had health insurance coverage for all 12 months last year. So it sounds like I don't need to do anything with these 1095-B and 1095-C forms other than keep them with my records?

That's exactly right! Just keep them with your other tax documents in case of an audit, but there's no need to amend your return if you correctly reported your coverage status. The 1095-B and 1095-C are basically just verification documents - they don't directly affect your tax calculation like income forms do.

This is so true! I filed an amended return last year and the "Where's My Amended Return" tool just showed "processing" for 9 months straight. The IRS is completely overloaded.