17 But realistically, would the IRS really come after someone for not reporting a tiny amount like $50 or $100? I mean, they must have bigger fish to fry, right?

9 While the IRS certainly focuses more resources on larger discrepancies, their automated matching system doesn't discriminate based on amount. I've had clients receive notices for discrepancies as small as $83. The issue isn't that they're "coming after you" for small amounts - it's that their system automatically flags mismatches. Once flagged, it can trigger notices, potential penalties, and interest on the unpaid tax. The headache of dealing with IRS correspondence typically far outweighs the small amount of tax you might owe on minor income. Plus, establishing a pattern of accurate reporting helps if you're ever selected for audit for other reasons. Better to report everything properly than risk complications over small amounts.

10 If you sold personal items for less than you originally paid for them (like used furniture), that's not considered taxable income - it's actually a personal loss. You only need to report income from selling things if you made a profit compared to what you originally paid. For example, if you bought a couch for $800 and sold it used for $300, that's not taxable income because you sold at a loss. But if you bought items specifically to resell them at a higher price, that would be taxable no matter the amount.

Thanks for bringing this up! We do have the au pair through an official agency program, so they handle a lot of the employment paperwork. But I wasn't sure if we needed to do anything additional for tax purposes. Do you know if we still need to file a Schedule H if the agency is involved?

Even with an agency involved, you'll typically still need to file Schedule H as the host family is usually considered the legal employer. The agency facilitates the match and handles visa sponsorship, but they don't typically handle the employment taxes. You should check your contract with the agency, but in most cases, you need to be withholding Social Security and Medicare taxes and paying the employer portion. The good news is that properly documenting this employment relationship strengthens your case for any related tax deductions or credits you're claiming.

I've done it, but ONLY for the portion related to medical care for my son with autism. We had our developmental pediatrician write a letter specifically stating that our au pair was implementing his therapy plan at home, and we documented the hours spent on those activities vs regular childcare. We deducted about 30% of our au pair costs as medical and took the dependent care credit for the rest. No audit issues for 3 years now.

4 So how long do you have to wait before you can buy the same stock again and still claim the loss? Is it exactly 30 days?

21 Yes, it's exactly 30 days before or after the sale. So to be safe, you need to wait a full 31 days before repurchasing the same or substantially similar securities if you want to claim the capital loss. It's important to note this applies across accounts too - so selling in your regular account and buying in your IRA within that window would still trigger the wash sale rule. And it's not just identical stocks - the IRS considers "substantially identical" securities to fall under this rule as well, which can sometimes include options on the same stock or very similar ETFs.

8 You don't really have a choice. The tax code requires you to claim the $3,000 loss against your current year income, and then carry forward the remaining $9,000 to future years. You can't voluntarily "save" the entire $12,000 for future years when you might be in a higher bracket.

That's a really good point about the 1099s. He mostly worked for cash but did have some corporate clients who probably reported payments. For the QBI deduction, would that apply even though he didn't file on time? It seems like a huge benefit to miss out on.

The QBI deduction absolutely applies even for late filed returns! The deduction is tied to the tax year, not when you file. Just make sure when you prepare the 2018-2024 returns that you calculate and claim this deduction - it's basically free money that reduces self-employment tax liability by allowing you to deduct up to 20% of qualified business income. As for the 1099 situation, this is actually why I suggested filing everything at once rather than staggering. The IRS computer system will match reported 1099 income with filed returns, and if you file incomplete years while leaving gaps, it can trigger automated notices for the missing years.

Did you have to pay all the back taxes at once? That's what scares me - I'm in a similar situation and worried I'll owe tens of thousands I don't have.

Thanks, but they are definitely taking out Social Security and Medicare, plus state tax for Michigan. It's just the federal income tax that's missing. I think I must have messed up my W4 somehow. Going to talk to HR tomorrow!

That's good then! Definitely just a W4 issue. When you talk to HR, ask them to calculate how much federal tax you should have paid year-to-date so you can plan ahead for what you'll owe. Also ask about updating your W4 to include extra withholding on Line 4(c) to make up some of the difference over your remaining paychecks.

This is misleading advice. Even at lower income levels, federal tax can be significant. Standard deduction for 2025 is projected around $13,850 for single filers, but if OP is making even $35K, they'd still owe about $2,300 in federal tax. That's not a small amount to come up with all at once!