Is it possible to deliberately seek debt cancellation as a strategy? I have clients asking about this as if it's a financial hack.

You can strategically settle debts for less than you owe, knowing you'll get a 1099-C, but it's not the "free money" hack people think it is. Here's why: First, you'll pay income tax on the forgiven amount - often 22-24% for most people. Second, your credit score takes a massive hit that can last 7+ years, affecting everything from mortgage rates to insurance premiums. Third, you generally need to be significantly behind on payments before creditors will settle, which means months or years of collection calls, potential lawsuits, and stress. Some clients come in thinking debt settlement is a clever financial strategy, but for most people, the long-term costs outweigh the benefits. The clients who come out ahead usually had legitimate hardships and no real ability to pay the original debt, so the tax hit is better than bankruptcy.

Would the Qualified Principal Residence Indebtedness exclusion apply to business debts like that? Or just primary residence mortgages?

Thanks for the perspective! I did double-check my AGI from last year since I switched from paper filing to electronic. I actually had to dig out my old return to make sure I had the number right. Sounds like I just need to be patient for a couple more days.

Glad you verified that! Another tip is to create an account on the IRS website if you haven't already. Sometimes you can see the status of your return there before your tax software updates. The "Where's My Refund" tool won't help until your return is accepted, but having the account set up now will save you time later.

I've used both and noticed the same thing! I think TurboTax only updates their status a few times a day while some of the others check more frequently. The actual processing time at the IRS is probably the same.

Yeah I did get a confirmation email from TurboTax when I made the payment, but it was just saying they submitted it - not that the IRS actually received it. Should I be getting something directly from the IRS too?

Yes, you should have received a confirmation directly from the payment processor the IRS uses, not just from TurboTax. When you pay through TurboTax, they typically redirect you to an IRS-authorized payment processor, which should provide its own confirmation number. I'd recommend logging into your TurboTax account and checking the payment details section. There should be information about how your payment was processed and possibly a second confirmation number from the actual payment processor. If you can't find this, you might want to contact TurboTax support to get the payment confirmation details.

This is the right answer. I check my transcript every year. The transaction codes tell you everything - way more reliable than calling or using Where's My Refund.

Thanks! Yeah I've found the transcript to be the most reliable source of information. The IRS website isn't the most user-friendly, but once you learn how to read the transaction codes, it's actually pretty straightforward. For anyone looking for this information, you want the "Account Transcript" specifically, not the "Return Transcript" - they're different documents in the IRS system.

Oh no, I might have missed the deadline for 2020 then! Does the IRS ever make exceptions for people who didn't know about the 3-year rule? And just to clarify, even if I can't get a refund for the older years, I should still file those returns anyway, right?

Unfortunately, the IRS is very strict about the 3-year refund statute and doesn't make exceptions even if you didn't know about the rule. It's set by law, not IRS policy, so they can't bend it. Yes, you should still file all unfiled returns even if you can't get the refund anymore. This closes your file with the IRS and prevents future issues. While you won't get money back for those older years, filing completes your tax record and can help with things like loan applications, government benefits, or any situation where tax return information is needed. Better to have everything clean and complete than leave those old years hanging.

Free File Fillable Forms only work for the current tax year (so right now, only 2024). For prior years, you need to download the specific forms for those tax years from the IRS website and mail them in. I did this last year for my 2021 and 2022 returns. You can still use free tax software though! Most of the major companies (TurboTax, H&R Block, TaxSlayer) offer access to prior year returns on their websites. The catch is that you can prepare them for free, but they usually charge to file them. Since you have to mail prior year returns anyway, you can just print them out and mail them yourself without paying.

I used H&R Block last year with about $200k in RSUs and they completely missed some important details. The preparer didn't understand that I needed to report the sales of vested RSUs as capital gains transactions with the correct cost basis. Ended up filing an amended return later with a different tax service. Would not recommend for anything beyond basic RSU situations.

That's not correct for RSUs. The 83(b) election applies to restricted stock awards (RSAs), not restricted stock units (RSUs). With standard RSUs, you can't make an 83(b) election because there's nothing to elect - you don't actually receive the shares until they vest, so there's no ownership to claim early. Some companies offer early-exercisable options or RSAs where an 83(b) makes sense, but for standard RSUs, this isn't applicable. Important distinction that could cause tax issues if misunderstood.