Thank you for this honest advice. I've been afraid to face the possibility that he wasn't filing properly all those years. Do you know if I could be held responsible for penalties if he didn't file correctly, even though I thought he was handling it?

Unfortunately, when you sign a joint return, you're equally responsible for the accuracy of everything on it - it's called "joint and several liability." If returns weren't filed or were filed with errors, you're generally both on the hook for any resulting penalties or taxes. There is relief available though. The IRS offers "Innocent Spouse Relief" specifically for situations where one spouse wasn't aware of issues on a joint return. There's also "Separation of Liability Relief" and "Equitable Relief" depending on your circumstances. You'll need to file Form 8857 to request this relief once you know exactly what you're dealing with.

Another tip - check your bank accounts for any tax-related payments or refunds from previous years. If you got a refund deposit or made a payment to "US Treasury" or "IRS," that's evidence a return was filed that year.

Thanks for this important clarification. Yes, I'm very careful about the exclusive use requirement. The desk and computer I mentioned are used ONLY for my LLC work - never for personal stuff or my day job. I have separate equipment for those purposes. For the meals, that makes sense. If I'm just grabbing food alone because I'm hungry while out visiting a client, it sounds like that's not deductible. But if I'm actually meeting with the client over a meal to discuss business, then it would be 50% deductible. I'll make sure to document the business purpose for any meals I try to deduct.

But doesn't using a business credit card for subway fares mean they'd need to actually set up a business account with the transit system? Most subway systems let you tap any credit card now, but it just shows up as "TRANSIT AUTHORITY" on your statement with no details about the specific trip.

You don't necessarily need a business account with the transit system. What I meant was, use your business credit card whenever you tap to pay for transit. Then separately, many transit systems let you create a personal online account where you can see your trip history regardless of payment method. You're right that the credit card statement just shows "TRANSIT AUTHORITY" - that's why I supplement it with the trip history from my transit account. Together, they provide complete documentation. The business card proves you paid for it, and the trip history shows the details of when and where you traveled.

Do you know if this still applies if you changed jobs mid-year? I worked for two different companies in 2024 and I'm not sure how to verify everything matches up correctly.

For multiple employers during the year, you'll need to check each final pay stub from each job against the corresponding W-2. The key is looking at the year-to-date totals on the last pay stub from each employer - these should match exactly with what's reported on each W-2. Pay special attention to Box 1 (wages), Box 2 (federal tax withheld), and Boxes 3-6 (Social Security and Medicare). If you switched jobs mid-year, your refund calculation gets more complex because withholding might not have been perfectly calculated across both jobs, but at minimum, the numbers on your documents should match your actual withholding.

I used Form 4852 two years ago when my former employer never sent my W-2. It was actually pretty straightforward - you just need your last pay stub with the YTD totals. My refund was delayed by about 3 weeks while the IRS verified everything, but otherwise no issues.

Thank you for mentioning this! My friend doesn't have any forgiven loans yet, but they do get a health insurance subsidy through the marketplace. How exactly would that factor into calculating their taxable income for the Roth conversion?

The health insurance subsidy itself (Premium Tax Credit) isn't counted as taxable income. However, the amount of subsidy your friend qualifies for is determined by their income - so the Roth conversion could potentially increase their income enough to reduce their subsidy amount. If they're near a subsidy cliff (where a small income increase results in a large subsidy decrease), they'll want to calculate very carefully. Converting too much might push them over a threshold where they lose more in health insurance subsidies than they gain in tax benefits from the Roth conversion.

This happened to me too! My state (NY) counted my entire research stipend as taxable even though federally it wasn't. Almost nobody mentions the state tax differences.

Ugh I didn't even think about state taxes! I'm in California - does anyone know how they handle capital gains? Is it just added to regular income?

California taxes all capital gains as ordinary income at your marginal tax rate, which can go as high as 13.3% for high-income earners. There's no special capital gains rate like there is federally. So your $32,000 in gains will be taxed at your regular CA income tax rate. For other readers: States vary widely in how they handle capital gains. Some like Nevada, Florida, Texas, Washington, and Wyoming have no state income tax at all, so no capital gains tax. Others like New Hampshire only tax investment income.

Absolutely worth it! You can offset capital gains completely with capital losses, and if your losses exceed your gains, you can deduct up to $3,000 against ordinary income. Any remaining losses can be carried forward to future years. Just be careful of wash sale rules if you plan to buy back similar investments within 30 days.