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Another free option to consider is Cash App Taxes (formerly Credit Karma Tax). I've used it for the past three years and it handles capital gains/losses, including carryovers. Completely free for federal and state regardless of complexity. The only major limitations are that it doesn't support multiple state filing, foreign income, or undistributed long-term capital gains. But for most college students it's perfect.
Does Cash App Taxes handle 1099-MISC forms? I did some freelance design work and got one of those, plus I have some investment stuff to report.
Yes, Cash App Taxes handles 1099-MISC forms without any issues. I've used it for freelance income alongside investment reporting for years now. The interface for entering 1099 information is actually pretty straightforward, and they support multiple 1099s if you had several clients. They also walk you through any deductible expenses related to your freelance work, which can significantly reduce your taxable income from those gigs.
I was in the exact same boat last year! Had to report stock losses and TurboTax wanted $120 for their premium package. Switched to FreeTaxUSA and paid $0 instead of $120. One tip for anyone with investment stuff: gather ALL your documents before starting. My 1099-B had substituted cost basis info that confused me and I had to start over. But even with that hassle, FreeTaxUSA was way better than paying TurboTax's ransom fee lol.
Don't forget to check if your state offers free filing too! The IRS Free File program is just for federal taxes. Some states have their own free filing programs or partnerships with tax software companies. For example, I live in California and was able to file both federal AND state taxes for free through the CalFile program even though I made just over the $72,000 limit for the federal program. Each state has different rules.
Do you know which states offer free filing? I'm in Ohio and always end up paying for state filing even when I get the federal for free.
I don't have a comprehensive list for all states, but I know Ohio has something called Ohio I-File which is a free electronic filing service. It's separate from the IRS Free File program though, so you'd need to go directly to the Ohio Department of Taxation website to access it. Many states actually do offer some form of free filing, but they don't advertise it well. Check your state's tax department website and look specifically for terms like "free file" or "e-file." Sometimes you need to dig around a bit to find the free options.
I tried the Free File program last year and it was a disaster for me. Started with TurboTax through the IRS link, got halfway through, and then it said I needed to upgrade because I had HSA contributions. Tried another service, same thing happened when it saw I had some stock sales. Ended up paying anyway. š”
Another option: check if the company is large enough to have a vendor management or accounts payable department. Sometimes the people sending these requests are just following a script and don't know there are alternatives. I've had success emailing AP departments directly with a completed W9 and a polite explanation that I prefer not to use third-party systems due to privacy concerns. About 75% of the time, they'll just accept it and process it manually. The other 25%, they insist on their system, and then you have to decide if the work is worth it.
This is a great suggestion. Do you typically just call their main number and ask for accounts payable? I'm dealing with a medium-sized marketing agency if that helps.
For medium-sized agencies, I usually check their website first for direct contact info for their finance team. If that doesn't work, yes, calling the main number and asking for accounts payable or vendor management usually works. Marketing agencies tend to be more flexible than large corporations in my experience. Just be polite but firm that you're happy to provide your tax information but prefer to use the standard IRS form. I usually say something like "for consistency in my record-keeping" rather than making it sound like I don't trust their system.
Has anyone tried just printing out the third party TOS, crossing out the parts you don't agree with, signing it, and scanning it back? That's what my accountant suggested when I ran into this. Send it with a note saying "I've agreed to the modified terms as indicated." The worst they can do is say no, and sometimes they just process it anyway because nobody actually reads what you send back.
I work in accounts payable and please don't do this. It creates a huge headache for us and will likely result in your documents being rejected or severely delayed. Most large companies have automated systems that flag modified forms for manual review, which puts your paperwork at the bottom of a very long queue.
Have you looked into the Credit Karma Tax platform (now called Cash App Taxes)? It's completely free for federal and state filing, even with complex returns. I switched from TurboTax to them two years ago and haven't looked back. It's not fully forms-based like you're asking for, but it gives you much more flexibility to jump between sections without forcing you through the entire interview process again. And you can't beat the price - FREE.
I've heard mixed things about Cash App Taxes - doesn't it have limitations on which forms it supports? I need to file some investment forms and I think I read somewhere that they don't support all of them. Have you used it with any complex investing situations?
You're right that it does have some limitations. It works for most common investment forms (1099-B, 1099-DIV, etc.), but doesn't support some of the more obscure forms. I have fairly standard investments and it worked fine for me. They don't support foreign income, multiple state filings, or K-1 forms for partnerships. If you need any of those, it wouldn't work for your situation. Their website has a complete list of supported forms that's worth checking against your specific needs before you invest time in entering all your data.
For California residents, don't forget about CalFile! It's the state's free e-filing system for CA state taxes. Obviously doesn't help with federal, but at least you can save money on the state portion. I combine CalFile for my state return with a cheaper option like FreeTaxUSA for federal. That way I'm only paying for one return instead of two.
CalFile is great but they have income limits and other restrictions. Worth checking if you qualify first: https://www.ftb.ca.gov/file/ways-to-file/online/calfile/qualifications.html Not everyone will be eligible unfortunately!
Dylan Campbell
Some important nuances your relatives should consider regarding the S-Corp situation: 1. If they keep the S-Corp but change the main business activity from operating a business to holding rental property, they need to be careful about the "passive investment income" rules. S-Corps that previously operated active businesses but switch to primarily generating passive income (like rent) can face additional taxes if they have accumulated earnings and profits from C corporation years. 2. They should also consider whether keeping the S-Corp structure makes sense for rental property. There are often better entities for holding rental real estate, like an LLC taxed as a partnership or even direct ownership, depending on liability concerns and their specific situation. 3. The "step transaction doctrine" would likely apply if they create an LLC, buy property, then have the S-Corp buy it right after the asset sale. The IRS might treat it as a single transaction and disallow 1031 treatment.
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Jamal Harris
ā¢This is super helpful. They've had the S-Corp for about 20 years, and it was always an S-Corp (never a C-Corp), so maybe the passive income concern isn't an issue? Do you think it would be better for them to just dissolve the S-Corp after the asset sale and create a new LLC specifically for the rental property? Or would that trigger immediate taxation on the asset sale proceeds?
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Dylan Campbell
ā¢You're right that the passive income concern wouldn't apply if they've always been an S-Corp, so that's good news. That issue primarily affects companies that converted from C to S status. Creating a new LLC after dissolving the S-Corp could be a better long-term solution. However, the dissolution would still trigger taxation on the asset sale proceeds - you can't avoid that tax by changing entities afterward. The tax is due when the sale occurs while still in the S-Corp. If they're set on the rental property approach, they might consider selling the business assets, distributing the after-tax proceeds to themselves personally, and then purchasing the rental property in their own names or through a new LLC. This gives them a clean break from the business entity and often provides better tax treatment for rental properties, especially regarding potential future benefits like step-up in basis for heirs.
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Sofia Torres
Just to clear up some confusion about 1031 exchanges specifically - there are two key points that would make this challenging: 1. The "held for investment" requirement: The property being sold must be held for investment purposes or used in a trade or business. While their business property likely qualifies, changing the use from business operations to rental income might be problematic. The IRS looks at intent, and they might question whether the original property was truly "held for investment." 2. Timing issues: A 1031 exchange requires you to first sell your property, then acquire the replacement property within specific timeframes. You can't acquire the replacement property first (which is what the LLC scenario would be attempting to do). The reverse 1031 exchange does exist, which allows buying the new property before selling the old one, but it's complex and requires a specialized Exchange Accommodation Titleholder to temporarily hold title to one of the properties.
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Dmitry Sokolov
ā¢Would the reverse 1031 exchange work in their situation? I'm curious because I'm facing a similar issue where I need to acquire a new property before my current one sells.
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