Do you know if Texas requires a separate form? I've got an LLC there but can't figure out if I need to do anything special for the state since they don't have personal income tax, but do have that franchise tax thing.

Texas is a bit different since they don't have personal income tax. For a single member LLC in Texas, you're right about the franchise tax. If your LLC's revenue is over the threshold (currently $1,230,000), you need to file a franchise tax report by the due date or request an extension. For the extension in Texas, you'd file Form 05-164 and make any required payment. Even if you're below the no-tax-due threshold, you may still need to file a "No Tax Due Report" by the deadline or request an extension. The Texas Comptroller's website has detailed information specific to your situation.

I tried TurboSelf last year for my LLC extension and it was okay but not great. It handled the basic Form 4868 fine, but wasn't very helpful with calculating a good estimated payment amount. I ended up overpaying by almost $2,000 because it used a very conservative calculation method. Their support was also really slow to respond when I had questions about how to properly categorize some business expenses that would affect my payment amount. I think there are better options out there specifically for small business owners.

Thanks for mentioning this! Do you know what the threshold is for when filing becomes mandatory vs. optional for investment income? Also, with the rental property, can I deduct things like property management fees to my cousin who handles it?

The filing threshold depends on your specific situation and income types. Generally, if you only have investment income subject to proper withholding at source (usually 30% or treaty rate), and no effectively connected income, you might not need to file. But there's no specific dollar threshold - it's based on whether the correct tax was already withheld. Regarding your property management fees - yes, you can absolutely deduct legitimate property management fees paid to your cousin. Just make sure the fees are reasonable (market rate) and documented properly with formal agreements and payment records. The IRS can scrutinize payments to relatives more closely, so keep good documentation showing these are genuine business expenses.

Does FreeTaxUSA handle rental income for non-residents too? I'm in almost the same situation as OP.

Thank you so much for this specific information! I didn't know there would be a second notice (CP87B). I'll tell my parents to start gathering all that documentation now. Do they need original documents or will copies work? And how long did the whole process take for you last year?

Copies of documents are fine - the IRS doesn't want your originals. Just make sure the copies are clear and legible. I recommend organizing everything by category (tuition, housing, etc.) with a cover sheet explaining what each document shows. For us, the entire process took about 12 weeks from receiving the first notice until the IRS resolved everything. We received the CP87A in February, got the CP87B about three weeks later, submitted our documentation in March, and received confirmation that our return was accepted (and the fraudulent claim rejected) by late May. Keep in mind the IRS is still dealing with backlogs, so your timeline might be longer. The most important thing is responding quickly once you get that CP87B notice with all your documentation organized.

This is really good advice. When my nephew had this happen, it messed up his financial aid for the next year because of the discrepancy. The school financial aid office was able to help sort it out but it took a while.

Can you still file Form 4852 if you've already received a W-2, but it's just missing the ISO income? And how do you calculate exactly how much should have been included? My company got acquired in 2024 too and I'm facing the exact same issue.

Yes, you can still file Form 4852 even if you received a W-2 that's incomplete or incorrect. The form specifically allows for situations where your employer issued a W-2 but it's missing information or has incorrect amounts. For calculating the ISO income, you'd take the number of ISO shares that were cashed out, multiply by the difference between your exercise price and the acquisition price per share. So if you had 1,000 ISOs with a $5 exercise price that were cashed out at $15 per share, you'd have $10,000 of ordinary income that should have been included in your W-2. You'd add this amount to what's already reported in Box 1 of your W-2 when completing Form 4852.

Thanks for mentioning the AMT angle - I hadn't even thought about that! So just to confirm, since my ISOs were automatically cashed out as part of the acquisition (not exercised and held), I shouldn't have to worry about AMT implications at all? That would be a huge relief. One more thing - should I be receiving any other tax forms for this transaction besides the W-2? Like a 1099-B or anything like that? I'm worried I'm missing something important.

Correct - since your ISOs were cashed out immediately as part of the acquisition (a disqualifying disposition), you won't face AMT implications. AMT issues with ISOs typically only arise when you exercise ISOs and continue to hold the resulting shares through the end of the calendar year. You typically wouldn't receive a 1099-B for this transaction since it was handled through the acquisition process rather than through a brokerage. The income should be reported on your W-2. However, for the portion you received in acquiring company stock, when you eventually sell those shares, you would receive a 1099-B for that transaction. Make sure you keep documentation of the value of those shares when you received them to establish your cost basis.

Doesn't that mean you're overwithholding though? Wouldn't you end up with a massive refund? I'm trying to get mine as close to zero as possible.

You're right that it might result in slightly overwithholding, but in my experience it wasn't a massive refund - just enough to feel safe. The reason is that not all your income is taxed at your highest bracket rate because of how tax brackets work. Only the portion above each threshold gets taxed at the higher rate. So while it's not perfectly calibrated, it's a simple approach that errs on the side of caution. I'd rather get a small refund than owe money and potentially face penalties.

I tried it and it worked pretty well! The key is you ONLY fill out that worksheet and put the extra withholding amount on your highest-paying job's W4 (Step 4c). For your other jobs, you just fill out the basic info but don't do any adjustments. The worksheet basically calculates the additional tax you need to withhold to make up for having multiple jobs, then concentrates it all on one paycheck. It seems weird at first but makes sense when you think about it.