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Another approach that worked for me with multiple 8949 transactions: I used tax software (TurboTax in my case) to generate the forms and then just printed them out to send with my CP2000 response. The software handled the pagination and totals automatically. If you've already done your taxes for that year, you might be able to just go back and add the missing transactions, then print the corrected forms.
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.
Just to clarify something that confused me with crypto reporting - make sure you're checking the right box on Form 8949. For crypto: If your exchange provided a 1099-B with basis reported to the IRS: Box A (short-term) or D (long-term) If your exchange provided a 1099-B but basis NOT reported: Box B (short-term) or E (long-term) If NO 1099-B was provided (most common for crypto): Box C (short-term) or F (long-term) Getting this wrong was why I had to redo my forms when responding to my CP2000.
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.
Pro tip: Call the taxpayer advocate service instead of the main IRS line if you get confusing notices. They're usually much easier to reach and can often explain what's going on with your account better than the regular agents. Their number is 877-777-4778.
Do they handle all types of tax issues or just specific problems? I've got multiple notices I need help with.
The Taxpayer Advocate Service (TAS) is designed primarily for situations where you've tried normal IRS channels without success or are experiencing significant hardship. They don't handle routine questions about notices. For multiple notices, you're better off contacting the specific numbers listed on each notice first. TAS is more of a last resort when you're stuck in the system or facing serious consequences like wage garnishment or bank levies.
Just to add to what others have said - check the amounts carefully. I got a CP12 last year and almost ignored it thinking it was just confirming my refund, but it was actually saying I owed another $437 because they disallowed one of my education credits. The important number was at the very bottom of the second page!
Did you end up having to pay it? Or can you contest their decision?
Has anyone tried the free options? I've used FreeTaxUSA for the last few years and it's been great. It's free for federal and only like $15 for state. Handled my W-2, 1099, and stock sales no problem.
FreeTaxUSA is my go-to as well! So much cheaper than TurboTax and handles everything just as well. I've used it for self-employment income too and it walks you through all the deductions clearly. Definitely recommend it over paying hundreds for essentially the same service.
One thing nobody has mentioned yet - make sure you have your Individual Taxpayer Identification Number (ITIN) before filing. As a UK citizen without a US Social Security Number, you'll need an ITIN to file any US tax forms. Getting an ITIN can be its own whole process and might explain part of the fee the accountants quoted you. You need to either apply with your tax return (which delays processing) or go through a Certified Acceptance Agent who can verify your documents.
Oh wow I didn't even consider this. Do you know if that's something I'd have to do in person or can it be handled remotely? I'm based in Manchester so getting to a US embassy isn't super convenient.
You can handle it remotely! There are two main approaches: You can submit Form W-7 (ITIN application) along with your tax return and certified copies of your identification documents (typically your passport). This can be done by mail, but it means your refund will be delayed until your ITIN is processed. Alternatively, there are Certified Acceptance Agents (CAAs) in the UK who can verify your identity documents in person so you don't have to send original documents or certified copies. Many accounting firms that handle US tax matters are also CAAs, which might be another reason for the fees you were quoted.
Just wanted to add my UK perspective - I had a similar issue with dividend withholding on US stocks (should have been 15% under the treaty but they took 30%). I used a service called Taxback that specializes in these situations, cost me about £400 all in. Might be worth checking them out as another option.
How long did it take to get your refund? I'm wondering if these specialized services actually process things faster than just hiring a regular accountant.
Paolo Rizzo
Everyone's focusing on the HSA part, but don't forget to look into the Child Tax Credit too since you're claiming the child as a dependent. That can be worth up to $2,000 per qualifying child for 2023, which helps offset some of these costs. Also, check if your state has additional tax benefits for new parents.
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Sofia Hernandez
ā¢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?
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Paolo Rizzo
ā¢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.
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QuantumQuest
Make sure to keep every medical receipt related to the birth, not just the main hospital bill! My accountant told me things like prenatal vitamins, pregnancy classes, lactation consultants, and post-birth check-ups all count as medical expenses. Might help you reach that 7.5% AGI threshold for medical deductions.
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Amina Sy
ā¢Do formula and diapers count as medical expenses too? I've been spending a fortune on those.
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