I've heard you can deduct mileage for driving to job sites, but what if the work was at multiple houses in the same neighborhood? Do I track each trip separately or can I just estimate the total miles for all the jobs?

You need to track each trip separately for proper documentation. Keep a mileage log (there are free apps for this) showing the date, starting location, ending location, miles driven, and purpose of each trip. For multiple houses in the same neighborhood, each location is a separate job site. So if you drive from home to House A, then to House B, then back home, you'd record three legs: home to A, A to B, and B to home. The total mileage is deductible as long as each trip has a business purpose. Many people miss out on this valuable deduction because they don't keep good records, but it can really add up!

Your brother is giving you terrible advice that could get you in trouble. ALL income legally needs to be reported. The IRS has gotten much better at finding unreported income through bank deposit analysis and other means.

Thanks for pointing this out! I'm not sure how my policy works tax-wise. It was through my employer but I think I did pay some portion of the premiums each month before I went on disability. How would I figure out if I paid with pre-tax or after-tax dollars?

You can determine this by looking at your last paystub before going on disability. Look for the disability insurance premium deduction and check if it's listed under pre-tax or post-tax deductions. If you don't have your paystubs, contact your HR department or benefits administrator - they can tell you exactly how your premiums were structured. If you paid even a portion of the premiums with after-tax dollars, then a corresponding percentage of your benefits would be non-taxable. For example, if you paid 40% of the premium with after-tax money, then 40% of your benefits would be tax-free.

They sent me a 1099-R that shows the full amount in Box 1, and it looks like it has a code in Box 7. Not sure what that means though.

The code in Box 7 of your 1099-R is super important! It tells you how the distribution is being characterized. For disability payments: Code 3 typically means disability payments before minimum retirement age - these are usually taxed as regular income. Code 7 is for normal distributions, sometimes used for disability after reaching minimum retirement age. If there's a value in Box 5 (Employee Contributions/Designated Roth Contributions), that's the portion that ISN'T taxable because you already paid tax on it!

Does FTA work for all types of penalties? Like would it work for this specific CP 162 notice for partnership returns?

Yes, the First Time Abatement policy applies to the failure-to-file and failure-to-pay penalties for Form 1065 (partnerships), which is what CP 162 notices typically address. The FTA is available for most common penalties including these partnership return penalties. The key qualification is having a clean compliance history for the three years prior - meaning you filed all required returns and paid (or arranged to pay) all tax due. If your LLC is newer than three years, they'll look at your personal tax compliance history as the partner/member.

Better yet, e-file everything possible! I haven't mailed anything to the IRS in years. Extensions can be e-filed too, even for partnerships.

That's really helpful advice. What specific documentation did you end up needing? Just the stock purchase agreement or were there other forms the company needed to provide?

I needed several documents to satisfy the IRS. First, I had the company provide a letter stating the most recent 409A valuation and when it was conducted. Second, I had a formal stock purchase agreement with the buyer that included representations about the arm's length nature of the transaction. I also kept all email communications regarding the negotiation to show it wasn't pre-arranged. Additionally, I made sure the payment was properly documented with a wire transfer rather than cash or personal checks. Finally, I had my exercise documented through the company's equity management platform with timestamps showing when each transaction occurred.

Good point! Our company requires board approval for any stock transfers. Found that out the hard way when I tried to transfer some shares to my spouse last year.

I hadn't heard of a PPIA before - that sounds like it might be a good option for my situation. Does the 10-year collection statute still apply even with the large amount I owe? And what happens during those financial reviews every 2 years?

Yes, the 10-year collection statute of limitations applies regardless of the amount owed, though be careful because certain actions can extend that period. The clock starts from the date the tax was assessed, not from when you enter into the agreement. During the biennial financial reviews, the IRS will request updated financial information to determine if your financial situation has improved. If you're making substantially more money or have acquired significant assets, they may increase your monthly payment amount. Conversely, if your situation has worsened, you might qualify for a lower payment. This is why documentation of your expenses and financial situation is crucial throughout the process.

This is actually a really important point. Tax debt that's more than 3 years old CAN be dischargeable in bankruptcy under certain conditions. I consulted with a bankruptcy attorney for my own tax issues and while I ended up not filing, the consultation alone gave me leverage in negotiating with the IRS because I understood my options better.