I had no idea about these caps! I'll definitely look into that for our state. Do you know if these exemptions are something we can apply for retroactively? We bought in 2022 but never filed for any exemptions because we didn't know about them.

In most places, you can apply for exemptions like homestead retroactively, but usually only for the current tax year and maybe the previous year. It varies by location though. When you call your assessor's office, specifically ask about retroactive applications for exemptions. Also, if this is your primary residence and you've lived there since you purchased in 2022, make sure the county knows that. Sometimes they assess at a higher rate if they think it's a rental or second home. Just having the property correctly classified can make a big difference in your tax bill.

Good point. When I bought my house, the previous owner was a veteran with a disability exemption. My taxes were way higher than what they had been paying, but there was nothing wrong with the assessment itself. Just the exemptions changing.

That's really interesting and something I hadn't considered. The previous owners were an older couple who had lived there for about 15 years, so they might have had some exemptions we don't qualify for. I'll definitely ask about this when I contact the assessor's office!

That's really helpful - I just checked my 1099-B and you're right, the cost basis shown is way off! So I need to use Form 8949 and check box "B" to make this correction? Do I need to include any supporting documentation with my return to explain the adjustment?

You don't need to include any additional documentation with your return to explain the adjustment. The IRS is familiar with this situation for RSUs. Just make sure you keep records of your RSU grant documents, vesting schedules, and the fair market value on vesting dates in case you're ever audited. When completing Form 8949, you'll enter the information from your 1099-B in columns a through e, then in column f enter code "B" (for basis adjustment), and in column g enter the difference between your correct basis and what's reported on the 1099-B. This effectively adjusts the basis to the correct amount for calculating your gain or loss.

How far back can you amend returns for this kind of mistake? I think I might have done the same thing for the past 3 years 😬

What's the 941-X form? My payroll company said they'd handle everything but now I'm worried they might miss something.

Form 941-X is the Adjusted Employer's Quarterly Federal Tax Return that you need to file to claim the ERC retroactively. It's essentially an amendment to your original quarterly tax filings. Most payroll companies are good with regular payroll processing but many don't have specialized experience with ERC claims on the 941-X. The form requires specific line items to be completed in a certain way to properly claim the credit. I'd recommend asking your payroll company specifically about their experience processing ERC claims via 941-X and what their success rate has been. If they seem vague or uncertain, you might want to consider a specialist firm instead.

I heard they resumed processing in January 2024 but they're going through claims much more slowly and with more scrutiny. Has anyone had an ERC claim processed successfully this year?

What specific things do you think software would miss in my situation? I'm trying to get a sense of what the actual value would be beyond just filling in forms correctly.

Software often misses timing strategies for realizing capital gains and losses that could significantly impact your tax burden. With your large gain, spreading recognition across tax years might have been beneficial, but that opportunity may have passed depending on how the sale was structured. Software also tends to be limited in integrating business expenses with personal tax strategy. With your wife's solo business, there are potential entity structure considerations and retirement planning opportunities beyond just the solo 401k that might optimize your overall tax situation. The interplay between her business income, your capital gains, and your retirement planning needs a holistic approach that most software simply isn't designed to provide.

I used TaxAct for a similar situation (sold rental property with big gains) and it handled everything fine. Way cheaper than TurboTax but still walks you through all the capital gains stuff step by step. Their investor edition is specifically designed for this kinda thing.

That's a really good point I hadn't considered. So you're saying that based on the residency test, my sister might not actually be eligible to claim my niece anymore since she's been living with me for most of the year? I definitely don't want either of us to get audited. Do you know if there's any exception to this residency test? Like if there's some kind of temporary arrangement or something? We didn't really think about the tax implications when my niece came to stay with me.

Yes, that's exactly what I'm saying. The residency test is pretty clear - a qualifying child must live with the taxpayer for more than half the year. With your niece living with you for 9+ months, your sister likely doesn't meet this requirement anymore. There are some exceptions to the residency test, but they're limited to specific situations like temporary absences (medical care, education, vacation, etc.), children of divorced or separated parents with a formal agreement, or kidnapped children. From what you've described, it doesn't sound like any of these exceptions would apply in your situation. I'd recommend having an honest conversation with your sister about the tax situation. The IRS would consider you to have the stronger claim to be the qualifying taxpayer for your niece based on the residency test.

This is the right answer! The residency test is super important for determining who can claim a dependent. If the niece lives with OP for most of the year, the sister technically shouldn't be claiming her unless there's a special exception. In my experience, the tax benefits for the person who has the child living with them (HOH status + child tax credits) are usually much better than just claiming a dependent who doesn't live with you. Might be worth both sisters calculating their taxes both ways to see what makes the most financial sense for the family as a whole.