5 Would the accountant be liable for any of the penalties since they're the ones who made the mistake? I'm dealing with something similar where my accountant completely missed reporting my crypto transactions.

19 The accountant generally wouldn't be directly liable to the IRS for the penalties, as the ultimate responsibility for tax compliance falls on the taxpayer. However, you may have a potential claim against the accountant for professional negligence or malpractice. For your crypto situation, that's a bit different. Cryptocurrency reporting requirements have evolved rapidly, and there's been some confusion among tax professionals. Still, if your accountant knew about your crypto transactions and failed to report them properly, you should document this thoroughly when requesting abatement, and consider whether their error rises to the level of professional negligence.

1 That's really helpful! I'll definitely look into Revenue Procedure 84-35. Does this apply even if we technically filed Schedule C forms instead of partnership returns? All of our income was definitely reported on our personal returns - we paid all the taxes we owed, just on the wrong forms apparently.

Do you know if there's a secondary market for these credits if someone needs to cash out early? Like if I buy them but then need the money back before using all the credits - can I resell them?

Yes, there is typically a secondary market for unused transferable tax credits, though it varies significantly by state. In Louisiana, for example, you can resell unused film credits, but you'll likely take another haircut on the price - meaning you'd sell at an even deeper discount than what you paid. The marketability also depends on the credit type and remaining utilization period. Credits with longer remaining lifespans and from more established programs (like historic preservation) tend to be more liquid than newer or more niche credit programs. Some states also have restrictions on how many times a credit can be transferred, so you'd need to check your specific state's rules.

What documentation did you receive when you purchased the credits? I'm considering buying some but don't know what paperwork to expect or what should raise red flags.

For my purchases, I received several key documents that you should absolutely expect if you go forward with buying credits. For the NJ solar credits, I got the original credit certificate from the state showing the amount and validity period, a notarized transfer document signed by the original credit recipient, and confirmation from the state tax authority that the transfer was recorded in their system. For the GA film credits, the documentation was similar but also included the production company's certification letter from the film commission. When purchasing any credits, you should always get written verification from the state that the credits exist and haven't been previously transferred or used. Some states have online systems where you can verify this information directly. The biggest red flags would be reluctance to provide proper documentation, pressure to complete the transaction quickly without verification, or inability to explain the origin and certification of the credits.

That's not right. Form 8379 is for when your spouse's past-due obligations (like child support) are affecting your portion of a joint refund. This is a different situation with two separate returns claiming the same dependent.

You're absolutely right, I got the forms mixed up. Form 8379 is for injured spouse allocation, not dependent disputes. What I should have suggested is that OP needs to file a paper return claiming the child as entitled, along with all supporting documentation. There isn't actually a specific form for this situation - the paper filing itself is the process. Thanks for the correction!

You can't actually "cancel" a tax return once it's been accepted by the IRS. The only option at that point is to file an amended return, which is what OP's partner already did.

I didn't know that! I thought you could cancel within a certain timeframe if you made a mistake. Thanks for the correction. I guess the paper return is really the only option then, like others have suggested. Definitely file before the deadline, even if it means sending in an incomplete return with a note that you'll provide additional documentation.

That makes sense. I guess I'll just wait for the form rather than risk an issue. Do you know if a small discrepancy like this would actually trigger an audit though? I've always been paranoid about that.

A small discrepancy by itself is unlikely to trigger a full audit. What typically happens is the IRS's automated system might flag the return and send you a CP2000 notice (a proposed tax adjustment) if they notice the mismatch. Even though the amount is small, you'd potentially end up paying the tax owed plus interest and maybe a penalty. The hassle of dealing with IRS notices usually isn't worth saving a few dollars in taxes. Better to just report everything accurately from the start and save yourself the stress.

Same here! I've already got my forms from Schwab and E*Trade but nothing from Robinhood yet. They seem to always wait until the last possible minute. Last year mine came on February 16th, literally two days before the deadline.

How detailed do these records need to be? Like do I need to track each expense category separately for the carryover or just the total loss amount each year? I've been just writing the total on a notepad file on my computer...

You should definitely track more than just the total. At minimum, track each property separately if you have multiple rentals, the total loss for each property each year, how much was allowed to be deducted (if any), and the running balance of disallowed losses. I also recommend keeping a copy of the complete Schedule E and Form 8582 for each year, not just the totals. During my audit, the IRS wanted to see the connection between what was reported on Schedule E and what flowed to Form 8582, including all allocation calculations. I had some losses that were partially allowed due to passive income from other sources, and they scrutinized how I calculated those allocations.

Short-term rentals can actually be treated differently in some cases! If your average rental period is 7 days or less, the IRS may consider it a "business" rather than a rental activity. This means it might be reported on Schedule C instead and subject to different passive activity rules. The material participation standards would apply instead of the rental real estate rules.