What's the 941-X form? My payroll company said they'd handle everything but now I'm worried they might miss something.

Form 941-X is the Adjusted Employer's Quarterly Federal Tax Return that you need to file to claim the ERC retroactively. It's essentially an amendment to your original quarterly tax filings. Most payroll companies are good with regular payroll processing but many don't have specialized experience with ERC claims on the 941-X. The form requires specific line items to be completed in a certain way to properly claim the credit. I'd recommend asking your payroll company specifically about their experience processing ERC claims via 941-X and what their success rate has been. If they seem vague or uncertain, you might want to consider a specialist firm instead.

I heard they resumed processing in January 2024 but they're going through claims much more slowly and with more scrutiny. Has anyone had an ERC claim processed successfully this year?

What specific things do you think software would miss in my situation? I'm trying to get a sense of what the actual value would be beyond just filling in forms correctly.

Software often misses timing strategies for realizing capital gains and losses that could significantly impact your tax burden. With your large gain, spreading recognition across tax years might have been beneficial, but that opportunity may have passed depending on how the sale was structured. Software also tends to be limited in integrating business expenses with personal tax strategy. With your wife's solo business, there are potential entity structure considerations and retirement planning opportunities beyond just the solo 401k that might optimize your overall tax situation. The interplay between her business income, your capital gains, and your retirement planning needs a holistic approach that most software simply isn't designed to provide.

I used TaxAct for a similar situation (sold rental property with big gains) and it handled everything fine. Way cheaper than TurboTax but still walks you through all the capital gains stuff step by step. Their investor edition is specifically designed for this kinda thing.

That's a really good point I hadn't considered. So you're saying that based on the residency test, my sister might not actually be eligible to claim my niece anymore since she's been living with me for most of the year? I definitely don't want either of us to get audited. Do you know if there's any exception to this residency test? Like if there's some kind of temporary arrangement or something? We didn't really think about the tax implications when my niece came to stay with me.

Yes, that's exactly what I'm saying. The residency test is pretty clear - a qualifying child must live with the taxpayer for more than half the year. With your niece living with you for 9+ months, your sister likely doesn't meet this requirement anymore. There are some exceptions to the residency test, but they're limited to specific situations like temporary absences (medical care, education, vacation, etc.), children of divorced or separated parents with a formal agreement, or kidnapped children. From what you've described, it doesn't sound like any of these exceptions would apply in your situation. I'd recommend having an honest conversation with your sister about the tax situation. The IRS would consider you to have the stronger claim to be the qualifying taxpayer for your niece based on the residency test.

This is the right answer! The residency test is super important for determining who can claim a dependent. If the niece lives with OP for most of the year, the sister technically shouldn't be claiming her unless there's a special exception. In my experience, the tax benefits for the person who has the child living with them (HOH status + child tax credits) are usually much better than just claiming a dependent who doesn't live with you. Might be worth both sisters calculating their taxes both ways to see what makes the most financial sense for the family as a whole.

Thanks for this suggestion! I checked and sadly freetaxusa doesn't have direct API integration with Robinhood for crypto yet. I did contact Robinhood support about the missing info, and they said that if my crypto activity didn't meet certain thresholds, it wouldn't be included on the 1099 but I'm still required to report it. Super annoying! Do you know if requesting the corrected 1099 takes a long time? I'm trying to file soon.

Requesting a corrected 1099 can definitely take some time, usually 2-3 weeks in my experience. But honestly, it might not help in your situation. If your crypto activity didn't meet their reporting thresholds, they're technically not required to include it on a 1099, so a "corrected" form would likely be identical. Your best bet is probably to download the transaction history yourself and manually calculate everything, or use one of the crypto tax services mentioned by others. If you're in a rush to file, you could also consider filing for an extension to give yourself more time to sort this out properly. Just remember an extension gives you more time to file, not more time to pay any taxes due.

This is terrible advice. ALL crypto transactions need to be reported regardless of amount. The IRS has been cracking down on crypto specifically and the question about virtual currency is right on the front page of Form 1040. Ignoring it is literally asking for an audit.

That's a really smart idea! Do you make the transfers manually or have you set up some kind of automation? I'm worried I'll forget if I have to do it myself every time.

I started out making manual transfers, but that got annoying real quick. Now I have automatic transfers set up through my bank. Most payment platforms like PayPal and Stripe let you split incoming payments automatically. I have mine set to send 30% directly to my "tax" account and 70% to my regular account. If your platform doesn't offer split payments, see if your bank has automation features. Many banks now let you create rules like "when a deposit comes in from YouTube, transfer 30% to savings." Makes it totally hands-off which is perfect for absent-minded people like me!

I've had good luck with FreeTaxUSA for my content creation business. It handles Schedule C well and costs way less than TurboTax. Just make sure you track all your expenses throughout the year - that's the part most new creators mess up.