That's a great idea! I hadn't thought of checking her bank statements. Do you think the amount would be specifically labeled as "car tax" or would it just show as a payment to the county?

It probably won't say "car tax" specifically. In my dad's case, it just showed as a payment to the county treasurer with a reference number. But if you can match the amount and approximate date (usually due the same time each year), that can be enough. Your tax preparer mainly needs the amount paid for deduction purposes. If your mom paid by check, there might even be a memo line notation, or you could look at the back of the canceled check image to see how it was processed. Sometimes the county puts identifying numbers on those.

This is what saved me when dealing with my grandpa's taxes! His accountant had backups of almost everything, including property tax statements going back nearly a decade. Worth a phone call at least.

I hadn't thought of that either! I'm not sure if she used the same preparer before, but it's definitely worth asking. Thanks for the suggestion!

Wouldn't creating a business entity and then donating back the profits create more paperwork and possibly more taxes than it saves? Seems like you'd have to report all the income first, pay self-employment taxes on it, and then get a deduction for the donation. Am I missing something?

You raise a good point about the additional paperwork - it definitely creates more administrative work. However, it can still be advantageous in certain situations. The business entity allows you to deduct all legitimate expenses related to the orchard maintenance (equipment, supplies, utilities, property taxes, etc.) against the income. These are deductions you might not otherwise get. While you would pay self-employment tax on the net profit, if your expenses are significant, the net taxable amount could be minimal.

Did you have to get a professional appraisal for that educational easement? And was there a minimum time commitment? I'm curious because I have property I'd consider for something similar but don't want to be locked in for decades.

That's a really good point I hadn't even considered. I've lived in the same state this whole time, but I should definitely look into their policies. Is there an easy way to find out about state voluntary disclosure programs?

The easiest way is to just google "[your state] tax voluntary disclosure program." Most state tax department websites have a section for this. Some states are surprisingly forgiving if you come forward voluntarily. Be aware that some states have shorter lookback periods than the IRS. For instance, my state only required me to file 3 years back, even though federally I had to do 6 years. Some state programs will waive penalties but not interest on what you owe.

Did you file all 7 years at once or space them out? I heard you should do the most recent ones first.

Thanks for bringing this up! So if I paid them through PayPal Business, do I still need to issue a 1099-NEC? I thought the threshold for 1099-K was really high, like $20,000? Or did that change recently?

The 1099-K threshold has been a moving target the past few years. Originally it was dropping to $600 for 2023, but then they delayed it. For 2025 taxes, the threshold is $5,000 - so if your contractor received more than that through PayPal Business, then PayPal should issue them a 1099-K. You still have the option to issue a 1099-NEC if you want to be extra cautious, but technically you're not required to if the payment was made through a payment processor that will issue a 1099-K. Just make sure you keep good records of how each contractor was paid, in case of questions later.

Oh no, that sounds stressful! Did you end up owing more after the audit? I'm terrified of audits because my bookkeeping is... let's say "creative" lol.

19 This is great advice. My mother got a letter because she forgot about a small stock sale that generated a capital gain. The brokerage reported it to the IRS but she forgot to include it on her return. Does your grandmother have any investments or retirement accounts?

7 Both great questions! For unusual income, she did sell some stocks last year after my grandfather passed away. She's not very financially savvy and has been relying on their longtime accountant who's getting up there in age himself. Regarding prior notices, that's actually very possible. She doesn't open all her mail right away and sometimes sets aside things she doesn't understand. I'm going to visit her tomorrow and go through her mail from the past few months to see if there were earlier notices. The investment angle seems most likely based on your experiences. I'll definitely check on that specifically when I see the letter. Thank you both for the helpful suggestions!

6 Those gift card scams are terrible! My neighbor fell for one of those and lost $2000. Definitely check the payment methods requested. The real IRS offers multiple payment options and NEVER asks for gift cards, wire transfers, or cryptocurrency.