Thanks for sharing your sister's experience. My taxes are definitely not straightforward though - I have the photography business with lots of expenses and deductions, plus I did some contractor work with 1099s, and I have some investment income. Do you think the online services can handle that level of complexity? I'm worried about missing deductions or making mistakes.

For your situation with a photography business, contractor income, and investments, most DIY tax software might be challenging to use effectively. The business portion with Schedule C deductions can get complex, especially for correctly categorizing photography equipment, travel, home office, etc. In your case, I'd recommend using your documentation to find a new accountant ASAP. Look for someone who specializes in small business taxes and has experience with creative professionals. My brother-in-law is a musician and found an accountant through a local small business association who understands the unique deductions for creative professions.

Be careful with chargebacks though. A lot of accountants will blacklist you if you do this, and they talk to each other. Might be better to try negotiating first.

What number did you call? I tried their main support line last week and was on hold for over an hour before giving up.

Thanks for the advice. Do you think if he files an amended return now before any investigation happens, would that help minimize the damage? Also, should he report the tax preparer?

Filing an amended return quickly will definitely help minimize the damage. The IRS is generally more lenient when taxpayers voluntarily correct errors before being contacted about an examination. He'll still have to pay back the incorrect refund amount, but may avoid or reduce the fraud penalties. And yes, he should absolutely report the tax preparer. He can file Form 14157 (Complaint: Tax Return Preparer) with the IRS. Tax preparers who knowingly file false returns can face significant penalties themselves, including potential criminal charges and being barred from preparing returns.

This is a good point. I sold some stuff on eBay last year and got a 1099-K even though it wasn't a business. Maybe his preparer is counting something like that?

What kind of detailed records do you recommend keeping? Is a credit card statement enough or do I need actual receipts for everything? I'm terrible at keeping track of paper receipts.

Credit card statements are a good start, but they're not enough on their own. The IRS wants to see the business purpose of each expense, which doesn't show up on credit card statements. I use a combination of methods - I take photos of paper receipts using an app that stores them digitally, save PDF receipts from online purchases, and maintain a spreadsheet where I note the business purpose of each purchase. For software subscriptions, I note what each one is used for in my business. The key information you need for each expense is: date, vendor, amount, what was purchased, and specific business purpose. Digital records are perfectly fine - you don't need to keep paper copies as long as your digital records show all this information.

What's this $2,500 threshold you mentioned? Does that mean I can deduct equipment purchases up to $2,500 immediately without depreciating them? That would be super helpful to know!

Thanks for the professional perspective! So if the form is filed and the IRS doesn't respond within the 18 months, does that mean they can't come after anyone later if they find an issue? And does filing this form increase the chances of getting audited compared to not filing it?

If the IRS doesn't assess any additional tax within the 18-month period, they generally can't come after the estate or the personal representative after that time has elapsed. There are exceptions for fraud or significant understatements of income, but for a straightforward estate like you described, those wouldn't apply. Filing Form 4810 doesn't increase audit risk in my experience. The IRS doesn't view it as a red flag - it's a standard administrative request. They process thousands of these forms, and they don't trigger special scrutiny. Many tax professionals consider it good practice to file this form precisely because it limits liability exposure.

Massachusetts resident here. When we settled my grandmother's estate last year, our attorney filed the Form 4810 for federal purposes while acknowledging that MA still maintains their own 3-year period for state tax purposes. The two timeframes operate independently - shortening the federal period doesn't affect the state period at all.