What about short term rentals like Airbnb? I have a vacation property I rent out and I'm taking QBI on it, but now I'm worried about the self employment tax thing.

Short-term rentals exist in a gray area that depends entirely on the level of services you provide. If you're just providing the basic rental with minimal services (cleaning between guests, basic amenities), it's still generally treated as rental income without SE tax. If you're providing substantial services like daily cleaning, breakfast, concierge services, guided tours, etc., then it starts looking more like a hotel operation and could trigger SE tax. The more your rental resembles a hotel experience rather than just a place to stay, the more likely you'll face SE tax. This is true even if you're using Airbnb or similar platforms.

Using a property management company actually strengthens your position that it's passive income not subject to self-employment tax. When you hire a management company, you're further removed from the day-to-day operations, which reinforces the passive nature of your investment. The management company might need to pay self-employment tax on their fees (depending on their business structure), but you as the property owner are just collecting passive rental income. This arrangement makes it very clear that you're an investor, not running an active business, so you can still potentially qualify for QBI without worrying about SE tax.

That's such a good point I completely overlooked! We're in California, so definitely have state taxes to deal with too. Would the process be similar for catching up on state returns?

The process for California is similar but has some key differences. You'll need to file the past state returns separately using California's specific forms for each tax year. California's Franchise Tax Board (FTB) has their own document retrieval system, penalties, and payment plans that are separate from the IRS. What's actually helpful is that California has an online system that's sometimes easier to navigate than the federal one. You can register for a MyFTB account to access wage information and other tax documents the state has on file. Their payment plans tend to be shorter than IRS plans though, usually 12-36 months instead of up to 72.

I'd be very cautious about those tax relief companies. What they're referring to is called an "Offer in Compromise" which is a legitimate IRS program, but most people don't qualify for it. These companies often charge thousands of dollars upfront with no guarantee of results. The IRS only accepts offers when they believe the amount offered is the most they can expect to collect within a reasonable time period. Your brother would need to prove significant financial hardship. Many of these companies take large fees and submit applications that get rejected anyway.

thanks for the info. he's been struggling with medical bills too so maybe he would actually qualify. do you know if people can apply for that offer in compromise thing without using one of those companies? I'm worried those radio ads are just scams like you're saying.

I'm having this exact issue! Filed as Married Filing Jointly last year but now I'm divorced and filing as Single. Getting rejected with IND-031-04. Did changing the filing status alone fix your problem or was there something specific your preparer had to do?

The filing status change itself wasn't actually the problem - it was how the AGI was being validated. When your filing status changes, you still need to use the exact AGI from your previous return, but the system sometimes gets confused about how to match your identity with the different status. My preparer had the IRS verify my identity using additional information beyond just the AGI - they confirmed my date of birth, address, and the last 8 digits of my previous year's return. After they manually verified me in their system, I was able to e-file without issues. The rep also mentioned that entering $0 as the prior year AGI sometimes works as a bypass when there are filing status changes, but that wasn't successful in my case.

This is actually really smart. I didn't even think to check my IRS online account. Where exactly in the account can you find your official AGI? I'm logging in now but there's so many different sections.

Look for the "Tax Records" section after you log in. Then select "Transcripts" and request a "Return Transcript" for 2021. The AGI will be clearly labeled on that transcript. If you don't see it right away, search for "Adjusted Gross Income" on the page or look for line 11 from Form 1040. Sometimes the IRS makes small adjustments to returns after processing them, which can create differences between what your tax software shows and what the IRS has on record. These adjustments might be for math corrections, misapplied payments, or other technical reasons. The transcript shows exactly what's in their system, which is what the validation is checking against.

Mining is actually taxed completely differently! When you mine cryptocurrency, the IRS considers the fair market value of the coins you receive as ordinary income on the day you receive them. You have to pay taxes on that value immediately, even if you don't sell the crypto. Then, if you later sell those mined coins, you'll also have a capital gain/loss based on the difference between the value when you mined them (already taxed as income) and what you sold them for. So mining essentially creates a two-step tax situation: income tax when mined + capital gains tax when sold. This is why many miners set aside around 30-40% for taxes.

Yes! Using a crypto debit card is considered selling your crypto and then using the proceeds to buy something. Each purchase creates a taxable event. The IRS sees it as if you sold your crypto for USD first, then made the purchase.

Is the process any different if the form was actually incomplete rather than just lost? The back of OP's notice mentions incorrect information. My situation is similar but I'm pretty sure I messed up a section of my foreign trust reporting.

For incomplete forms, the process is more complicated. The IRS is much less forgiving about errors than they are about delivery issues. If you knowingly submitted an incomplete form, you'll have a harder time proving reasonable cause. Your best option would be to immediately file a complete and correct form, then request abatement based on making a good faith attempt to comply, especially if this is your first time dealing with this form. Emphasize any complexity or confusion in the instructions that led to the error. If you relied on professional advice that resulted in the incomplete filing, that can also support reasonable cause.

I made this exact mistake - didn't request a collection hold. Even with my abatement request under review, they sent me to collections and I had to deal with a whole separate department. Definitely make sure they formally pause collections while this is being sorted out!