Thank you for sharing your experience. Did you go through the OIC process yourself? If so, how long did it take from submission to getting a decision?

I did go through the OIC process myself. The entire process took about 8 months from when I submitted my application to receiving final approval. The initial review took about 3 months, then they came back asking for additional documentation about some of my expenses and assets which took another 2 months of back and forth. The final negotiation and approval took another 3 months. During this time, collections activities were suspended which was a huge relief. One important tip: be extremely thorough and accurate with your financial disclosure forms (433-A and 433-B if you have a business). Any discrepancies will delay the process significantly.

This is risky advice without knowing more details. Tax debt is often NOT dischargeable in bankruptcy unless it meets very specific criteria: - The taxes must be income taxes - The due date for filing the tax return was at least 3 years ago - You filed the tax return at least 2 years before filing bankruptcy - The tax assessment is at least 240 days old - You didn't commit fraud or willful evasion Chapter 7 also has significant long-term consequences. OP should definitely consult with both a tax professional AND a bankruptcy attorney before considering this route.

Does the donation have to be cash? I have some old furniture and clothes I was thinking about donating. Would that count too?

Yes, non-cash donations like furniture and clothing can also count as charitable contributions. You'll need to determine the fair market value of the items (what they would sell for in their current condition) and get a receipt from the church or charity. If your total non-cash donations exceed $500, you'll need to fill out Form 8283 and attach it to your tax return. For really valuable items worth over $5,000, you might need a professional appraisal. Just remember that the same rule applies - these deductions only benefit you if you're itemizing instead of taking the standard deduction.

Yes, there's a limit. Generally, you can deduct charitable contributions up to 60% of your adjusted gross income (AGI) for cash donations to public charities like churches. For appreciated assets like stocks held more than a year, the limit is 30% of AGI. Different limits apply to private foundations. Any contributions exceeding these limits can be carried forward for up to 5 years. But remember what others have said - this only matters if you're itemizing deductions instead of taking the standard deduction.

Thanks for clarifying! 60% is way higher than I'd ever donate anyway so I guess that's not a concern. Still trying to figure out if itemizing would even make sense for me. Probably not based on what everyone is saying here.

I'm worried a payment plan wouldn't be affordable given the total amount I owe. With $175k in tax debt, even spread over 6 years, that's almost $2500 a month not including interest. Is there any flexibility on the payment amounts? Did they look at your actual expenses when determining what you could pay?

They absolutely look at your expenses, but they use their own standards for what's "reasonable" which can be frustrating. For example, they have limits on housing costs based on your county. There's also something called a Partial Payment Installment Agreement (PPIA) where you pay what you can afford based on your financial situation, even if it won't fully pay off the debt before the collection statute expires. It's less drastic than an OIC but more flexible than a standard payment plan. In my case, I'm paying $400/month which won't cover the full amount, but it was what the IRS determined I could afford.

This is risky advice. Tax debts have very specific rules for discharge in bankruptcy. The taxes need to be from returns due at least 3 years ago, filed at least 2 years ago, and assessed at least 240 days ago. Plus, fraud or willful evasion makes them non-dischargeable. OP shouldn't count on bankruptcy without consulting a bankruptcy attorney who specializes in tax issues.

Is the home office deduction really worth it? I heard it can trigger audits. Also, for driving - can I just estimate how much I drove or do I need like a detailed log?

The home office deduction being an audit trigger is mostly an outdated myth. The IRS has simplified this deduction in recent years. As long as you have a space used "regularly and exclusively" for business, it's a legitimate deduction. Just be honest about the percentage of your home it represents. For mileage, estimates won't cut it if you're ever audited. You need a log with dates, starting/ending mileage, and business purpose. Several free apps can track this for you automatically. The standard mileage rate for 2024 is pretty generous, so this can be a significant deduction if you drive frequently for business.

Try Wave Accounting - it's free and way simpler than QuickBooks. I'm not super financially savvy and found it pretty easy to use for my small shop. The reporting features make tax time so much easier.

But isn't there some education credit we can claim against grant money? I remember someone telling me you can deduct research expenses or something?

There's a difference between tax credits for education and how you handle grant money. You might qualify for the American Opportunity Credit or Lifetime Learning Credit based on your educational expenses, but that's separate from how you report your grant. For research expenses, if your grant is specifically for research and you have expenses directly related to that research, those expenses may offset the taxable portion of your grant. Keep all receipts for lab supplies, research materials, travel to research sites, etc. The rules get complicated though, so documenting everything is important. The key distinction is whether the grant required you to perform services (like research work) or was simply awarded to support your education.

I used FreeTaxUSA instead of TurboTax for my fellowship grant. There's a specific section for scholarships and grants not reported on a tax form. Much easier than TurboTax for this situation!