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Don't forget that Robinhood's 1099-Bs are notorious for having incorrect cost basis info! I got audited in 2023 because of this. Double-check all your transactions, especially for crypto if you transferred any in from other wallets. Sometimes they show $0 basis when you actually paid something for the coins elsewhere.
Is there an easy way to fix this? I transferred some ETH from Coinbase to Robinhood in 2022 and I'm worried my 1099 is showing zero cost basis for those.
You'll need to manually adjust the cost basis on Form 8949. There's a column specifically for corrections. Just enter the correct amount you originally paid and include a brief explanation code (usually "B" for basis adjustment). Keep all your receipts and transaction records though! If you get audited, you'll need to prove your actual cost. For your ETH transfers, you'll need the original purchase price from Coinbase. The annoying part is Robinhood won't know that info, so your 1099 will likely show $0 basis. That's why many crypto traders end up significantly overpaying on taxes if they don't make these adjustments.
Has anyone had issues with Robinhood's 1099-B for wash sales spanning across both crypto and stocks? I know wash sale rules technically dont apply to crypto but Robinhood seems to be applying them anyway on my forms.
Has anyone used TurboTax to handle furniture depreciation for rental properties? I'm trying to figure out if the software can track individual asset depreciation schedules or if I need something more specialized.
TurboTax does have a rental property section where you can add depreciable assets, but it's pretty basic. It doesn't handle tracking the disposal of individual furniture items well over multiple years. I switched to TaxAct which has slightly better rental property features, but still had to maintain a separate spreadsheet for tracking my furniture items.
Thanks for that info! Sounds like I might need to keep a separate tracking system regardless of which tax software I use. I'm guessing none of the consumer tax programs really handle the complexity of multiple furniture items with different depreciation schedules and disposal dates.
One thing nobody mentioned yet - if your foreign country charges any kind of property tax on the furniture itself (some countries do this separately from real estate), you might be able to claim the Foreign Tax Credit for those taxes. It's another form to file but could offset some of your US tax liability. Also, make sure you're converting all your furniture costs and depreciation calculations to USD based on the exchange rate when you purchased the items, not current rates. This tripped me up for years with my rental in Thailand!
I'm surprised nobody has mentioned ATX. It's what I use for my small tax business, and it's much more affordable than TaxAct. Think it was around $800 for the basic package that covers all individual returns including Schedule C. The interface isn't super modern but it's functional and their support is decent. They also have a pay-per-return option if you're just starting out.
Does ATX include all the forms I'd need for basic 1040s with some small business clients? And do they offer any kind of training or is it mostly learn-as-you-go?
Yes, the basic package includes everything you'll need for 1040s including all schedules (A, B, C, D, E) and common small business forms. They actually have pretty good built-in help content - when you're on a specific form, you can access relevant IRS instructions and explanations right there. They do offer some training webinars too, usually around the beginning of tax season. The learning curve isn't too steep if you already have some tax knowledge. Their customer service can help with software questions, but they won't give tax advice (no software company really does that for liability reasons).
One thing to consider - whatever software you choose, factor in the cost of tax research resources too! I learned this the hard way. You'll inevitably get client situations where you need to look up regulations or rulings. Tax Act Pro is decent for the price, but I ended up subscribing to TheTaxBook online ($90/year) for research. Made a huge difference in my confidence level with more complex returns.
Whatever path you choose, make sure you have proper E&O (Errors and Omissions) insurance before preparing a single return. One bad mistake on a high-value client can bankrupt you without it. Also, think about your client focus. Do you want to do mostly 1040s? Or focus on small businesses? Each requires different expertise and software. I found focusing on small contractors and self-employed folks to be my sweet spot - they need more help than simple W-2 filers and are willing to pay for expertise.
Any recommendations for good E&O insurance providers specifically for tax preparers? My quote from [insurance company] seemed crazy high.
Check out Insureon or NAEA's member insurance program if you're an Enrolled Agent. I've found the NAEA rates to be quite reasonable. Also look at Landy Insurance Group - they specialize in coverage for tax professionals and understand the specific risks. Make sure your policy covers representation during audits, not just errors. The difference in premiums isn't huge but the protection is significant. My premium is around $1,200/year for $1M in coverage, which is well worth the peace of mind.
Anyone considering buying or starting a tax practice needs to factor in the massive changes coming with technology. AI and automation are already changing the industry. The basic 1040 market is getting squeezed by free/cheap DIY options. The real value is in advisory services, tax planning, and helping with complex situations. If I were starting today, I'd focus on becoming an expert in specific niches (crypto taxes, real estate investors, expat taxes, etc) rather than trying to compete on volume of simple returns.
That's a really good point about specializing. I've been wondering if the traditional tax office model will even exist in 10 years with all the AI stuff happening. Do you think it's still worth buying an existing practice with all these changes coming?
Lara Woods
Been trading full-time for 4 years now and have used both regular CPAs and trading specialists. Here's my take: If you're doing 100+ trades a year, particularly with options or futures, a trading specialist is usually worth it. Regular CPAs often mess up wash sales, don't understand the nuances of trader tax status qualification, and miss specialized deductions. That said, $3300 as a MINIMUM seems steep. I use a trading tax specialist who charges $2100 flat for my returns which include trading (500+ trades annually), rental property, and W-2 income. They only charge extra if I need specialized consultation on specific tax strategies. I'd keep shopping around. There are reputable trading tax specialists with more transparent pricing models.
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Nathan Kim
ā¢Thanks for sharing your experience! Can you tell me roughly how many trades you do annually and what kinds of securities? I'm doing about 300-400 trades a year, mostly stocks and some options. Also, did your specialist help you with trader tax status qualification or are you filing as an investor?
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Lara Woods
ā¢I do about 500-600 trades annually, primarily options on indices and individual stocks, with some futures contracts mixed in. My volume increased significantly over the past two years. My specialist was crucial in helping me properly document and qualify for trader tax status. They guided me through maintaining a separate trading business entity, proper record-keeping for establishing trading as my primary business activity, and documentation of my trading hours and strategy. Without their help, I likely wouldn't have met the requirements convincingly enough for the IRS standard.
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Adrian Hughes
Something nobody has mentioned yet - ask if they offer an "audit defense" guarantee with their service. Many trading tax specialists who charge premium rates include this, meaning they'll represent you at no additional cost if you're audited based on returns they prepared. This can be SUPER valuable for traders since trading activity, especially if you're claiming trader tax status, can trigger more scrutiny. When I switched to a trading specialist (I pay about $2800 annually), the peace of mind from knowing they'll handle any audit issues without charging me more was worth the higher upfront cost. Just make sure to get that audit protection in writing and understand exactly what it covers!
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Molly Chambers
ā¢100% this. Got audited 2 years ago specifically about my trading activity and trader tax status qualification. My specialist handled EVERYTHING with the IRS without charging a penny more. My buddy who went with a cheap general CPA ended up paying the CPA another $3k just to handle the audit communication. Audit protection is essential for active traders.
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