Can you still claim the capital loss deduction if it was from wash sales though? I thought those were disallowed?

Good question about wash sales. The wash sale rule disallows the loss specifically on transactions where you buy back the same or substantially identical security within 30 days before or after selling at a loss. However, that disallowed loss gets added to the cost basis of your replacement shares. Looking at the original post, they still had a net capital loss of $870 AFTER accounting for wash sales. The wash sale amount ($27,125) was already factored into their calculations. So they can still claim that $870 loss against their income. If they hadn't repurchased those shares, their loss would have been much larger!

Yes! I ignored a 1099-B with losses last year thinking "why bother if I'm not owing more?" Got a CP2000 about 4 months later. The IRS computer only sees "unreported income" from the proceeds, not the net result. Had to respond with a complete Schedule D showing the loss calculation. Major headache that could have been avoided by just amending right away.

Do they have a good audit protection plan? That's the only reason I've kept using TurboTax. I'm always paranoid about getting audited.

They definitely do! Their "Deluxe" version includes audit assistance, and it's still way cheaper than TurboTax. It's not audit "protection" in the sense that they don't represent you in person, but they provide guidance on what documents you need and how to respond to IRS notices. I actually had a letter from the IRS questioning one of my deductions last year, and their audit assistance team walked me through exactly what to send and how to word my response. The whole thing was resolved with one letter. For the price difference, I think it's totally worth it, but if you want someone to physically represent you in an audit, you'd need to go with a CPA anyway.

I used it last year! It's legit free, but there are some limitations. It doesn't handle multiple state returns, foreign income, or some less common tax situations. If you have a straightforward return though it works perfectly fine. Only weird thing is that it's in the Cash App now which feels strange for tax software lol.

1 That's a great idea! I just searched my email and found a confirmation from when I first set it up. It shows the last four digits of the account (ended in 4832). Now I know it's coming out of my checking account, not my savings. Thanks for the suggestion - such a simple solution I hadn't thought of!

2 I did this for my own 1099 payments and it worked perfectly. Just had to log into both bank accounts online and search for "TurboTax" in the transaction history.

That's a really good point I hadn't considered. Do you know how I can verify this? Does the QOF send investors some kind of annual compliance statement, or do I need to specifically request this information?

Most reputable QOFs will send investors an annual statement confirming they've maintained compliance with the 90% asset test and other requirements. If you're not receiving this, definitely request it directly from your fund manager. Some funds also provide access to a secure investor portal where they post compliance documentation. The key documents to look for are their biannual asset test certifications (they have to test compliance every 6 months) and any communications with the IRS about their QOF status. I'd recommend setting a calendar reminder to check this twice a year. It's much better to identify compliance issues early rather than discovering a problem years later when it's too late to take corrective action or move your investment to a compliant fund.

Is there any way for individual investors to confirm their QOF is actually registered properly with the IRS? I'm in a smaller fund and wondering if there's some public registry we can check.

There's no public registry that investors can check directly. QOFs self-certify by filing Form 8996 with their tax returns. As an investor, the best you can do is request a copy of the fund's most recent Form 8996 filing and their biannual asset test documentation. A legitimate QOF should have no problem providing these documents to investors. If your fund is reluctant to share this information, that could be a red flag. You could also request confirmation that they've filed the necessary paperwork with the IRS each year to maintain their QOF status.

Thanks for mentioning this! I looked it up but couldn't find a Form 8836 specifically for dependent disputes. Are you sure about the form number? I found some information about attaching a statement to my return, but not a specific form.

I apologize for the confusion! You're right - I made an error on the form number. There isn't a specific Form 8836 for dependent disputes. What I was thinking of is that in disputed dependent situations, the IRS may ask you to complete a "Dependency Exemption Questionnaire" during an examination, but this isn't something you can file proactively. My mistake came from mixing up IRS procedures. What you can do proactively is keep detailed records of support provided and be prepared to substantiate your claim if questioned. Some tax professionals also recommend attaching a statement with your return explaining the support situation in potentially disputed cases, though this isn't required.

Would the uncle have to prove he DIDN'T live with OP? Or would OP have to prove the uncle DID live with them? I'm confused about who has the burden of proof here.