My accountant tried to charge me $1500 extra for crypto this year too! I ended up using CoinTracker to generate my own 8949 and then just gave my accountant the final numbers for Schedule D. Cut my bill by like 60%. One thing to watch for - make sure whatever software you use calculates your gains using the same method your accountant has been using (FIFO, LIFO, etc). Switching methods midway can cause issues.

Has anyone tried just creating a separate LLC for crypto trading activities and filing that on its own tax return? I've heard some people doing this to keep the crypto complexity separate from their personal taxes.

Just got thru this exact same situation!! Missed filing 2023 due to a family health crisis. My advice is DO NOT IGNORE THE IRS NOTICES when they start coming. I made that mistake and ended up with a substitute return where the IRS calculated my taxes without any of my deductions or credits, and it was WAY higher than what I actually owed. File ASAP even if you can't pay right now. The failure-to-file penalty is much bigger than the failure-to-pay penalty, so at least stop that one from growing!!!

If you're really overwhelmed, consider getting professional help from a tax attorney or an Enrolled Agent (EA) rather than just a regular tax preparer. They can represent you before the IRS if needed and might be able to negotiate penalty reductions. I spent about $800 on an EA when I had 3 years of unfiled returns, and they saved me over $3,000 in penalties through abatement requests and proper filing strategies. Sometimes spending money on professional help actually saves you more in the long run.

I'm a landlord who got hit with this exact same issue. The key is understanding the difference between non-passive and passive income. Your father-in-law's salary/business income is non-passive, while rental income is considered passive (unless he qualifies as a real estate professional). The tax code only allows you to offset passive losses against passive income unless you meet specific exceptions. For high earners (over $150k), those exceptions get phased out completely. Here's the really frustrating part - the losses don't disappear forever. They get suspended and carried forward until either: 1) He has passive income to offset them against, or 2) He sells the property. So he's still getting dinged with higher taxes now even though these are legitimate expenses.

Has your father-in-law done any grouping elections for his properties? My CPA had me file a statement with my return to group all my rental activities as a single activity for passive loss purposes. This doesn't get around the income limitations, but it can help if some properties make money while others lose money.

Something nobody's mentioned yet - if you're in a high property tax state like NJ, NY or CA, the $10k SALT cap (State And Local Tax deduction limit) really affects whether mortgage interest helps you. My property taxes alone are $14k, but I can only deduct $10k of that. So even with $12k in mortgage interest, my itemized deductions barely exceed the standard deduction for married filing jointly. Before the 2017 tax law changes, having a mortgage was a no-brainer tax benefit for most homeowners. Now it really depends on your specific situation.

Remember that even if mortgage interest isn't giving you a tax benefit now, if interest rates rise and your income increases, that could change in the future. I've seen ppl pay off mortgages then regret it when their tax situation changed a few years later and they could have benefited from the deduction. Also don't forget about inflation! $300k debt today will feel like much less in 15-20 years with normal inflation.

Adding to the discussion on income-only taxation - one major issue not considered is wealth inequality. Income tax only targets active earnings, but much of the wealth held by the ultra-rich isn't in regular income but in appreciating assets like stocks, real estate, etc. This is why many economists argue for some form of wealth taxation alongside income taxes. If we eliminated property taxes, capital gains taxes, etc., we'd basically be giving a permanent tax holiday to those who live primarily off assets rather than wages. Also, consumption taxes can actually be beneficial for economic stability because they provide a more consistent revenue stream during recessions when incomes might fall dramatically. No perfect system exists, but a balanced approach with simplified versions of different tax types probably makes more sense than going all-in on just income taxation.

Having lived in 6 different countries, I've experienced many tax systems firsthand. The simplest wasn't necessarily the best. In Singapore, they have very straightforward taxes, but it created other societal issues. In the Nordic countries, taxes are high but extremely transparent in how they're calculated and spent. The problem with income-only taxation is it misses huge parts of economic activity. For example, tourism: visitors consume resources but would pay zero under income-only systems. One approach I liked was in New Zealand, where they have a fairly simple GST (goods and services tax) applied broadly with very few exemptions, combined with a progressive income tax. The simplicity wasn't from having just one tax, but from having few exemptions and very clear rules.