Wait really? I did make quarterly estimated state tax payments throughout 2023 for my side business. So I can count both those AND the balance I paid in April 2023 for my 2022 taxes? That might actually push me over the standard deduction threshold!

Yes, absolutely! Any state income taxes you actually paid during calendar year 2023 can be included on your 2023 federal Schedule A. This includes both the balance due from your 2022 return that you paid in 2023 AND any estimated payments you made during 2023 for your 2023 taxes. Just be aware there's a $10,000 cap on the total state and local tax deduction (SALT cap), which includes income taxes, property taxes, etc. But for most people, this helps push their total itemized deductions above the standard deduction threshold.

Totally agree! I've been using H&R Block for years and they never explain this clearly. I've probably left thousands of dollars on the table over the years by taking the standard deduction when I might have benefited from itemizing. The tax prep industry benefits from keeping things confusing.

Thanks for agreeing with me on this! I feel like there should be some kind of requirement for tax software to actively check if itemizing would benefit you rather than just presenting it as an option. I'm definitely going to be more careful this year and run the numbers both ways. Between mortgage interest, charitable donations, and now understanding I can include state taxes paid, I might actually be better off itemizing for the first time.

Yes, I've been checking "Where's My Refund" for months for my 2022 return. It just says "Your tax return is still being processed" with no other information. I did move in late 2022, but I updated my address with USPS. Do I need to update my address directly with the IRS too?

Yes, you absolutely need to update your address directly with the IRS. The USPS mail forwarding doesn't automatically notify the IRS of your new address. This could definitely explain why you might have missed important letters about your 2022 return! You can update your address with the IRS by submitting Form 8822 (Change of Address). In the meantime, I'd recommend using one of the methods others suggested to contact the IRS directly about your 2022 return - especially now that we know you moved, there's a good chance they've been sending verification requests or other important notices to your old address.

Yes! I received my very delayed 2022 refund about 3 weeks after filing my 2023 taxes. The two systems operate independently so one doesn't affect the other. My 2022 return had some issues with education credits that needed manual review, but they eventually sorted it out without me having to call.

Thank you for mentioning the SECURE Act changes. Does this still apply if the IRA is first transferred to a trust, and then the trust distributes to these different types of beneficiaries? Or does moving it to a trust first eliminate these exceptions? One of the beneficiaries is my aunt's disabled sibling, so I'm wondering if there might be special provisions that could help in that case.

When an IRA is left to a trust, the ability to use these exceptions depends on how the trust is structured. If the trust qualifies as a "see-through" trust and the disabled sibling is an identifiable beneficiary, then yes, that portion of the IRA might qualify for the exception allowing for distributions over that beneficiary's life expectancy rather than the 10-year rule. This would require specific language in the trust that clearly identifies the disabled beneficiary's portion and likely a separate share for that beneficiary. The trust would also need to meet all the requirements to be considered a see-through trust under IRS regulations. This is definitely a situation where specialized estate planning advice is crucial, as properly structuring the trust could result in significantly better tax treatment for that portion of the IRA.

With Roth IRAs going to a trust, the key benefit that can be preserved is the tax-free nature of qualified distributions. Unlike traditional IRAs where distributions are taxable, qualified Roth distributions remain tax-free even when distributed to a trust or through a trust to beneficiaries. The main thing lost is the ability to stretch distributions over a long period - the SECURE Act's 10-year rule typically applies unless beneficiaries qualify for exceptions. But within that 10-year window, growth remains tax-free, which is still valuable. Generally, it's better to keep the Roth intact rather than distributing before death, as this maintains the tax-free growth for as long as possible within allowable limits.

Thanks for the advice! I'll definitely pay what I calculated I owe now. How long did your audit process take from start to finish? I'm worried this is going to drag on for months.

My audit took about 4 months total from first notice to final resolution. However, I made the mistake of sending my initial response by regular mail, and they claimed they never received it, which added about 6 weeks to the process. Once they actually reviewed my documentation, things moved relatively quickly - about 3 weeks for them to send a response accepting most of my explanation. There was one additional clarification they needed, which took another 3-4 weeks to resolve. The whole thing would have been much faster if I'd used certified mail from the beginning and if I'd paid the undisputed amount immediately.

That's bad advice. IRS charges both penalties AND interest, which can add up quickly. The failure-to-pay penalty is 0.5% of the unpaid taxes for each month, plus interest at the federal short-term rate plus 3%. You can always get a refund if you overpay, but you can't get penalties back as easily.

This is really helpful info! Does the First Time Penalty Abatement apply even if I've been filing regular personal taxes on time for years but this is just my first business tax return that's late?

Yes, that's exactly the situation where it typically applies! The IRS looks for a clean compliance history for the three years prior, so if you've filed your personal returns on time and paid what you owed, you'd likely qualify even though this is your first business return. The key is to file your late return first, pay as much as you can of the tax amount (even if not all), and then request the abatement. Don't request the abatement before you've filed the late return. Many people don't know about this program and end up paying penalties they could have avoided.

As a single-member LLC, you should file Schedule C with your Form 1040, not Form 1065. Form 1065 is for partnerships and multi-member LLCs. Since you're the only owner, the IRS treats your LLC as a "disregarded entity" for federal tax purposes, meaning you report all business income and expenses on Schedule C of your personal return. The exception would be if you elected to have your LLC taxed as a corporation (using Form 8832). But if you never made that election, then Schedule C is the correct form.