Are you sure about that 3-year deadline? I thought if you're owed a refund, there's no penalty for filing late and you can do it anytime?

Yes, I'm 100% certain about the 3-year deadline for claiming refunds. The IRS gives you three years from the original filing deadline to submit a late return and still get your refund. After that window closes, any refund you were entitled to becomes government property - you lose it completely. This is different from owing taxes, where there's no deadline to file (though penalties and interest keep accumulating). But for refunds, it's a use-it-or-lose-it situation with a strict 3-year limit. Since 2022 taxes were originally due in April 2023, you have until April 2026 to claim any refund for that year.

That doesn't sound right. Most states only tax you for the portion of the year you were a resident. Did you try filing as a part-year resident?

Thanks for this! I'm a bit confused though - when I file the amended return for my 2023 taxes to claim the AMT credit I missed, do I also need to file Form 8801 for my 2024 return to track any unused credit? Or does the amended 2023 return take care of everything?

You'll need to file Form 8801 with your 2024 return to calculate how much of your AMT credit from 2023 you can use in 2024. The amended 2023 return establishes that you paid AMT and are entitled to the credit, but it doesn't automatically apply that credit to future years. Think of the amended 2023 return as creating the credit, and Form 8801 on your 2024 return as using (or tracking) that credit. If you can't use the entire credit in 2024, you'll file another Form 8801 with your 2025 return, and so on until you've used up the entire credit.

TurboTax Premier and above do handle AMT credits and carryforwards if you use it consistently year to year. The key is importing your previous year's return so it can pull in the AMT information. In your first year claiming the credit, you may need to manually enter some information from your prior year return if you didn't use TurboTax before.

Wait, so I need to file both Form 1098 AND Form 1099-INT? That seems redundant. Couldn't I just file one of them? And regarding the amortization - our agreement does specify an interest rate (5%), but not exactly how much of each payment is principal vs interest. Does that mean I need to create an amortization table?

Yes, you may need to file both forms as they serve different purposes. Form 1098 reports mortgage interest that the borrower has paid to you, which they can potentially deduct. Form 1099-INT reports interest you've paid to someone else. However, in your specific case, since this is mortgage interest being received by you (not interest you're paying out), you likely only need Form 1098, not 1099-INT. I apologize for the confusion. Since your agreement specifies a 5% interest rate but doesn't break down each payment, you should definitely create an amortization table. This will help you properly track how much of each payment is interest versus principal reduction. You need this to accurately report your interest income and to provide correct information to your family member for their potential deduction. Most spreadsheet programs have templates for creating these tables.

This is a really good point about installment sales! I did a seller-financed deal last year and completely missed filing Form 6252. Had to file an amended return. The property was actually a rental I sold to a tenant, so I had depreciation recapture to deal with too. That's a whole other can of worms!

Does anyone know if this would be different if I was selling things regularly? Like I sell my old electronics every year when I upgrade. Does that make it a "business" for tax purposes?

The distinction between hobby/personal sales and a business depends on several factors, not just frequency. The IRS looks at whether you're trying to make a profit, how much time you spend, how you conduct the activity, and if you depend on the income. If you're just selling your own used personal items (even if you do it yearly), that's generally not a business. You're just recouping some value from your personal property, especially if you're typically selling at a loss compared to what you paid. However, if you start buying items specifically to resell at a profit, that crosses into business territory.

I got a letter from the IRS last year about "unreported income" from a 1099-K. It wasn't a full audit, but I had to explain that it was from selling personal items at a loss. They accepted my explanation after I provided some documentation, but it was still stressful.

Thanks for mentioning this! I'm in Washington state so we don't have state income tax - would that make the sales tax deduction more valuable for me compared to someone in a state with income tax?

Yes, that makes a big difference! Since Washington has no state income tax, the sales tax deduction becomes much more valuable for you. Residents of states without income tax (like Washington, Florida, Texas, etc.) almost always benefit more from deducting sales tax. In your case, since you mentioned being a new homeowner with renovations and furniture purchases, you might actually be closer to making itemizing worthwhile than you think. Your property taxes alone could be substantial, and when combined with mortgage interest and your higher-than-average sales tax from major purchases, you might cross the threshold where itemizing beats the standard deduction.

This is oversimplified advice. It completely depends on your state's tax situation and individual circumstances. I have a modest mortgage but live in NJ with crazy property taxes, and itemizing saves me over $2000 compared to the standard deduction. Everyone's situation is different.