18 Question about bunching - does this actually save money in the long run? Or does it just shift when you get the deduction?

3 Bunching can definitely save money in the long run! Let me explain with an example. Say you have $10,000 in medical expenses each year for two years, and the standard deduction is $12,900. If you take those expenses in separate years, you'd take the standard deduction both years ($12,900 × 2 = $25,800 total deductions). But if you could bunch $20,000 of expenses into one year, you'd itemize that year ($20,000) and take the standard deduction ($12,900) the next year, for a total of $32,900 in deductions across two years. That's an extra $7,100 in deductions!

1 I've been considering an HSA but I'm not sure if I qualify. Don't you need a high-deductible health plan for that? I have insurance through my employer but not sure what type of plan it counts as.

I filed an amended return last July because of a late K-1 and it took almost 6 months to process. The IRS is still catching up from the pandemic backlog. Just make sure you keep copies of EVERYTHING and consider sending it certified mail so you have proof of when you submitted it.

Unfortunately, the IRS still considers it your responsibility to report all income accurately, even when the delays are caused by third parties like partnerships sending late K-1s. The penalties and interest aren't meant to be punitive so much as to compensate the government for the time-value of the money you owed but didn't pay on time. That said, you can request an abatement of penalties (though not interest) by showing reasonable cause, which could include receiving documents late. You'd need to document your efforts to get the information timely and show you acted reasonably. Success with this approach varies, but it's worth trying if you face significant penalties.

Just be careful with this approach. The IRS looks closely at family businesses that suddenly put family members on payroll, especially kids in college who aren't clearly providing services. Make sure you have solid documentation showing actual work being performed, regular payments (not just lump sums), and pay that's comparable to what you'd pay a non-family member.

This is extremely helpful! We're paying about $42,000 per year for her tuition and housing. If we pay the school directly, that wouldn't count toward the gift tax limits at all? And we could still give her additional money up to the $36,000 combined annual exclusion for living expenses?

Exactly! Direct payments to educational institutions for tuition are completely exempt from gift tax. However, note that only tuition qualifies - not room and board, books, etc. Those would still fall under your annual gift exclusion. So yes, you could pay her tuition directly to the school (let's say $30,000) with no gift tax implications, PLUS give her up to $36,000 ($18k from each parent) for other expenses. That's a total of $66,000 you could transfer for her benefit without any gift tax reporting requirements.

11 Great point! I actually messed this up last year. Spent hours tracking investment interest and other itemized deductions only to have my tax software automatically take the standard deduction because it was higher. Felt like such a waste of time.

5 Excellent reminder! To add a bit more detail - even if you can't benefit from the deduction this year because you're taking the standard deduction, you should still complete Form 4952 to establish your carryforward amount for future years when you might itemize. Also worth noting that if you're in a high-tax state like California, New York, or New Jersey, you're more likely to benefit from itemizing since state and local tax payments (though capped at $10,000) plus your margin interest might push you over the standard deduction threshold.

2 Is there a specific way to document this? My brokerage account is kind of a mess with deposits, withdrawals, and margin usage all mixed together throughout the year.

Does Cash App Taxes handle self-employment income well? I have a small side business and have been using TurboTax Self-Employed, but it's so expensive.

Yes, Cash App Taxes handles self-employment income quite well for straightforward situations. It has all the Schedule C forms and walks you through business deductions, home office calculations, and quarterly estimated payments. Where it might fall short is if you have very complex business situations like inventory management, multiple businesses, or specialized industry deductions. For a side gig bringing in $4k like the original poster mentioned, it would be perfectly fine. I have a photography side business that makes about $12k annually and it works great for me.

Do you think a CPA is worth it for simpler returns? I just have a W-2 job and a mortgage, no complicated stuff.

I used a CPA last year and she missed a huge education credit I was eligible for. When I pointed it out she acted like I was being difficult. Going back to doing it myself this year.