That's a great point I hadn't considered! Do you know where I would find information about my state's specific rules for medical deductions? Is there a website that compares all the different state rules?

The best place to check is your state's department of revenue or taxation website. Just google "[your state] department of revenue medical expense deduction" and you should find the official information. Each state has different rules, and they don't always match federal guidelines. Don't bother with websites that compare all states - they're often outdated. Your state's official tax website will have the current rules. You can also download your state's income tax forms and instructions, which usually explain the medical deduction rules in detail.

The HSA suggestion isn't great for someone at this income level. You need a high-deductible health plan to qualify, and those can be risky for lower income folks. Plus HSAs don't typically work with dental unless it's medically necessary.

Thank you for mentioning this. I'm hoping we can prove we don't owe this money, but it's good to know there are options if we end up having to pay something. Do you know if the payment plans have reasonable monthly minimums? I've heard horror stories about the IRS demanding huge monthly payments.

The minimum monthly payment is basically determined by the total amount owed divided by the number of months in your agreement (up to 72 months maximum for the standard plan). For your $12k situation, that would be around $167 per month if you stretched it to the max timeframe. The IRS does consider your financial situation though. If you can demonstrate that you can't afford the standard payment, you can apply for what's called a "Partial Payment Installment Agreement" where they may accept lower monthly payments based on your financial situation. This requires filing Form 433-F (Collection Information Statement) to show your income, expenses, and assets.

Great point! I got a fake IRS letter last year that looked SO convincing. The only thing that tipped me off was that they wanted payment via gift cards (lol). Real IRS letters don't ask for gift cards or wire transfers.

Thanks for bringing this up! They did give me a small severance package (about $3,200). I hadn't even thought about how that would be taxed. I haven't applied for unemployment yet, but I probably will soon. Do they automatically withhold taxes from unemployment or do I need to request that?

Yes, your severance package will be included on your W-2 along with your regular wages. The company will typically withhold taxes from it just like they do from regular paychecks. For unemployment benefits, they don't automatically withhold taxes in most states unless you specifically request it. You can fill out a form (usually Form W-4V) to request voluntary withholding of 10% for federal taxes. If you don't have taxes withheld from unemployment, you might need to make quarterly estimated tax payments to avoid a penalty when filing next year, or you could end up with a larger tax bill than expected. Many people are surprised by this come tax time, so it's good you're thinking about it now!

You're right, there are income thresholds. For 2025, a single person under 65 needs to file if they earn $13,850 or more. But you were smart to file anyway - if you had any taxes withheld from your paychecks, filing is the only way to get that money back!

I didn't know about Informed Delivery! Just checked and my post office does offer it, but it takes a few days to set up so probably won't help with this letter. But thanks for the TAS number - I'll definitely call them if I can't work something out with the regular IRS line. I'm definitely in hardship territory right now, so maybe they can help me out.

Is this true about the appeal clock starting at attempted delivery? That seems really unfair. What if you're on vacation or something? How would you even know they tried to deliver it?

Did you report each transaction individually or did you consolidate them? I have hundreds of trades and wondering if I need to list every single one or if I can summarize somehow.

I reported each transaction individually because that's the technically correct way to do it. However, if you have hundreds of trades, there is an alternative. You can attach a separate statement to your return that includes all the required information (date acquired, date sold, proceeds, cost basis, gain/loss) and then enter the totals on Form 8949. On the Form 8949 itself, you would check Box C (not reported on Form 1099-B) and write "See attached statement" in the description column. Just make sure your statement has all the same information that would be required on the form itself, organized in a similar format.

Staking rewards are typically treated as ordinary income at the fair market value when you received them, not as capital gains. You'd report these on Schedule 1 as "Other Income." When you eventually sell the tokens received from staking, that would be a capital gain/loss transaction. Your cost basis would be the value at which you initially reported the income (when received).