What exactly counts as "active participation"? I handle most of the management stuff - finding tenants, dealing with maintenance calls, etc. But my brother handles most of the actual repair work. Do we both qualify?

Active participation is less stringent than material participation. For active participation, you need to make management decisions like approving tenants, deciding on rental terms, approving repairs, etc. You don't necessarily need to do the physical work yourself. Based on what you described, you would likely qualify since you handle the management aspects. Your brother would also likely qualify since he's involved in the actual maintenance work. Keep good records of the time you both spend and the decisions you make related to the properties. A simple log with dates and descriptions of rental-related activities is usually sufficient.

Is the QBI deduction still available? I thought that was part of the TCJA that was expiring soon?

I tried to create an account but it wouldn't verify my identity because I don't have a credit card or loan history (I mostly use cash and debit). Is there another way to check?

You can request your transcript by mail if the online verification doesn't work for you. Go to IRS.gov and search for "Get Transcript by Mail" or use Form 4506-T. It takes about 5-10 days to arrive. Another option is to call the IRS automated transcript line at 800-908-9946. You won't speak to a person, but you can request that they mail your transcript. If you absolutely need to talk to someone, try calling the main IRS number (800-829-1040) early in the morning right when they open - that's usually when wait times are shortest.

They said in the post they filed electronically with H&R Block. Reading comprehension lol

That's terrifying! Did you end up actually having to pay the full $10k penalty? Were you able to get it reduced at all? I'm freaking out now because my accounts were inherited from my grandmother and I honestly didn't realize I needed to report them since the interest was only like $300.

I was eventually able to get the penalty reduced to about $1,200 after going through a formal appeal process and demonstrating it was an honest mistake. The key was that I voluntarily amended my return before they discovered it. In your case, with such a small amount of interest and the fact that you're correcting it immediately, you might qualify for a complete penalty waiver under their "reasonable cause" exception. Make sure you include a detailed letter explaining that you inherited the accounts, were unaware of the reporting requirements, and are now voluntarily correcting the oversight as soon as you discovered it. The IRS is more understanding with inherited accounts since many people don't realize the reporting requirements apply to those too.

That's actually incorrect advice. Form 14653 is only for U.S. persons who have been living abroad. Based on the original poster's mention of filing a California state return, they likely don't qualify for the Streamlined Foreign Offshore Procedures. They would potentially qualify for the Streamlined Domestic Offshore Procedures, which uses Form 14654, not 14653. However, even that program is generally for taxpayers who have failed to report foreign accounts for multiple years, not just a single oversight on a recently filed return. For a simple correction of a recent return where foreign interest was omitted, a standard 1040-X amendment is usually the appropriate approach, along with filing any required FBAR forms.

Wait, that sounds exactly like what might have happened! How did you resolve it once you realized the mistake? Did you have to file an amended return or just explain it in a response to their letter?

I didn't need to file an amended return. I sent a formal response to the IRS letter that included a new correctly filled out Form 8949 with the proper checkbox marked, along with documentation showing my actual purchase prices and dates for the Doge. I also included a brief letter explaining that I made an error in checking the wrong box but that I had in fact reported all income properly. They accepted my explanation and adjusted the amount owed to match what I had originally calculated and paid. The whole process took about 2 months from when I sent my response to getting their confirmation.

Do you know if they're focusing only on the major exchanges like Robinhood and Coinbase, or are they somehow tracking DeFi transactions too? I did some swaps on Uniswap back then that I'm not sure I documented properly.

Does using IRS Direct Pay cost extra fees like when you pay with a credit card? I've always had my refunds direct deposited but never had to make a payment before.

No fees at all when using IRS Direct Pay! That's why I always recommend it over credit card payments which charge processing fees (usually around 2%). Direct Pay connects directly to your bank account for free. You'll get an immediate confirmation number when the payment is processed, which is super helpful for your records. Just make sure you select the correct tax year and payment type (in this case, probably "tax return" or "amount owed on return"). The system is actually pretty straightforward compared to most IRS stuff.

Did you ever find out what happens if you dont fix it? Will the irs eventually contact you or do they just mark you as not having paid?