Oh crap, I had no idea there was a 3-year deadline on refunds! That's really good to know. Do you think we should use a tax service like Jackson Hewitt at this point or just try to do it ourselves with tax software?

For a simple tax situation, tax software should work fine and save you money compared to Jackson Hewitt. Something like TurboTax or FreeTaxUSA can handle late filings easily. If her taxes are more complicated (self-employment, multiple income sources, investments, etc.), then a professional service might be worth the cost. They sometimes catch deductions or credits you might miss on your own. But for basic W-2 income, the software should be more than adequate and much cheaper.

Exactly! IRS is the worst bank ever... they take your money all year and don't even pay interest when they owe you a refund, but they sure charge interest when you owe them 😑

What about medical expense deductions? My husband has a lot of medical costs but I don't. Does filing jointly or separately matter for that?

Medical expense deductions are definitely impacted by filing status. For 2025, you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). If you file separately, only your husband's medical expenses and AGI would be considered for his return. Here's a simple example: If your husband's AGI is $40,000 with $10,000 in medical expenses, and yours is $80,000 with minimal medical expenses, filing separately would let him deduct anything over $3,000 (7.5% of $40,000). So he could deduct $7,000. But filing jointly with a combined AGI of $120,000 means you'd only deduct expenses over $9,000 (7.5% of $120,000), reducing your deduction to just $1,000. In cases with large medical expenses, running calculations both ways is definitely worth it.

I've used FreeTaxUSA for the last few years - it's free for federal and like $15 for state. It handles all the married filing jointly stuff perfectly and lets you compare filing jointly vs separately to see which saves more. WAY cheaper than TurboTax and does basically everything the paid version does.

Thanks, this is exactly what I needed to know! For tracking business vs personal use, would a simple log be sufficient or do I need something more formal? I probably use it about 85% for the Amazon business and 15% for personal browsing.

A simple log would work fine, but be consistent with it. I recommend creating a spreadsheet where you track hours of use and categorize them as business or personal. Do this for a representative time period (at least a few weeks) to establish your usage pattern. The key is having something contemporaneous - meaning you're tracking it as you go, not trying to recreate it later if you get audited. Also take screenshots of your work on the computer for the business as additional evidence. The IRS is particularly interested in seeing that high-cost assets claimed as business expenses are actually being used for business purposes.

I think the "hobby loss rule" is that you need to show a profit in 3 out of 5 consecutive years to automatically be considered a business. Otherwise you need other evidence that it's a legitimate business attempt.

Good point! I just double-checked my statements and there was actually a small cash payment of $37.42 for a fractional share. But the CP2000 is claiming I owe taxes on the entire value of all converted shares, not just this tiny cash amount. Could this small cash payout be why the entire transaction got flagged?

Yes, that's exactly what probably happened! The cash-in-lieu payment triggered a report to the IRS, but then the entire transaction got mischaracterized. This is super common. Your response to the CP2000 should acknowledge this small taxable amount (the $37.42) but explain that the remainder of the transaction was a tax-free reorganization. Include your Morgan Stanley statements showing both the share conversion and the small cash payment. The IRS should adjust their proposed assessment to only tax the cash portion, which would be a much smaller amount than what they're currently claiming.

This is such a good point. I went through an acquisition with Exxon back in 2019 and completely lost track of my original basis. Had to pay an accountant $500 to reconstruct everything when I sold some shares last year. Save yourself the headache!

Do you know where I can find info about tax treaties? My in-laws are from India and I've wondered about this too.

You can find tax treaties on the IRS website - search for "United States Income Tax Treaties A to Z" and you'll find a list of all countries with treaties. For more detailed information, look for IRS Publication 901 (U.S. Tax Treaties). For India specifically, there is a tax treaty, but dependency rules are complex. The treaty mainly covers things like double taxation of income, but personal exemptions and dependent status are usually determined by the regular IRS rules I mentioned earlier.

Good point! I think the substantial presence test is 183 days (about 6 months) in a calendar year, so at 8 months she'd likely meet that. Would that make her ineligible as a dependent?