It depends entirely on your state and your income situation. If you earned income in the state, then yes, you generally need to file a state return. If you received only fellowship/scholarship money and none of it was for services (like teaching or research), then some states don't require a return. I learned this the hard way when I skipped filing a state return my first year, and got a letter from the state tax department the next year. Not worth the stress!

Thanks for clearing that up! So if I worked on-campus in the university bookstore last year, I definitely need to file a state return, right? My W-2 shows state taxes were already withheld.

I used Glacier last year and it was pretty straightforward for the federal return. The interface isn't as fancy as Sprintax but it gets the job done. For state returns, I ended up just filing directly through my state's department of revenue website since my situation was simple. Saved about $35 that way.

Is Wave better than just using a spreadsheet? I'm doing rideshare and food delivery and trying to track everything but getting overwhelmed.

I find Wave much better than spreadsheets for a few reasons. It automatically creates the right categories for taxes, connects to your bank account to import transactions (so you don't have to manually enter everything), and generates reports you can use for tax filing. The learning curve is pretty minimal compared to spreadsheets where you have to create your own formulas and categories. Plus, it's specifically designed for small businesses and self-employed people, so it knows what information you need for taxes. The basic version is free, which is all I need for my side gig income tracking.

That sounds really helpful! Do they help with the self-employment forms too? I've heard those are more complicated than regular W-2 employment.

I tried VITA last year and they refused to help with my Schedule C for rideshare driving. Said it was "out of scope" for their volunteers. Maybe it varies by location though.

How did you find your tax attorney? I'm in a somewhat similar situation (owe about $30k from business losses) and have been getting bombarded with ads from tax resolution companies that sound super scammy with their "we can settle for pennies on the dollar" promises.

I found our attorney through the state bar association's referral service. I specifically asked for attorneys specializing in tax controversy and resolution. This approach was much better than responding to those "pennies on the dollar" ads, which are usually misleading. The bar association gave me three names, and I interviewed all of them. I asked about their experience with cases similar to ours, their success rate with Offers in Compromise, and their fee structure. Our attorney charged a flat fee for the initial analysis of our situation, then another flat fee for preparing and submitting the Offer in Compromise. This was much more transparent than the percentage-based fees some places charge.

Thanks for mentioning this! Do you know what the income limits are to qualify for these clinics? And do they help with state taxes too or just federal?

Thanks for bringing up the Child Tax Credit - I hadn't even thought about that! Do you know if there are income limits for claiming it? And are there any other tax benefits I should look into as a new parent?

Yes, there are income limits for the full Child Tax Credit. For 2023, the credit begins to phase out at $200,000 for single filers and heads of household. If you earn more than that, the credit amount reduces by $50 for each $1,000 above the threshold. As for other benefits, definitely look into the Dependent Care Credit if you're paying for childcare so you can work. Also, check if your employer offers a Dependent Care FSA, which lets you set aside pre-tax money for childcare expenses. North Carolina may have additional state-level credits or deductions for dependents, so check your state tax forms too.

Do formula and diapers count as medical expenses too? I've been spending a fortune on those.

Did you have to file an amended return (1040-X) along with the 8949 forms when responding to the CP2000? I'm confused about whether I need to redo my whole tax return or just submit the missing forms.

You generally don't need to file a 1040-X when responding to a CP2000 notice. The CP2000 is just a proposed adjustment, not a final determination. You only need to submit the missing or corrected forms (in this case Form 8949 and Schedule D) along with your response to the notice. The IRS will recalculate your tax based on the information you provide. If they accept your explanation and documentation, they'll either send you a corrected CP2000 or a "no change" letter. Only if you discover additional issues not related to what the CP2000 mentions would you need to file an amended return separately.

Wait this is really helpful. I got a 1099-K from my exchange, not a 1099-B. Which box would I check then? Does that count as "not reported to the IRS"?

If you received a 1099-K, then your basis wasn't reported to the IRS. A 1099-K only shows the gross proceeds (total amount of sales) but doesn't include your cost basis information. In this case, you would check Box C for short-term transactions or Box F for long-term transactions since basis was not reported to the IRS. And you'll need to be extra careful to document your cost basis for each transaction, as that's what the IRS is likely questioning on your CP2000 notice.