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Home sold after father's passing - Do I need to file form 8594 for capital gains?
So my dad passed away last year and I was already on the title of his home since 2021 (wasn't inheritance, I was just added to the title while he was still alive). I ended up selling the house in November, and now I'm trying to figure out the tax situation with capital gains. While researching, I came across Form 8594 and I'm wondering if that's something I need to fill out? Does that sound right for my situation? I'm really confused by all this. If I do need this form, what documents should I gather before going to get my taxes done? I normally do our taxes myself (have been doing mine and my husband's for over 10 years), but this year feels way too complicated to handle on my own. Besides the house sale, my husband switched jobs, we took money out of his retirement account (used some for expenses during our rough patch), then put most of it into his new job's retirement plan, then took some out from there too. Been a financial rollercoaster like everyone else these days... I looked at Form 8594 and immediately felt overwhelmed! Any advice would be really appreciated.
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Please help me reconcile my understanding of tax laws after conflicting advice
I've been so confused lately about my tax situation after getting some really conflicting information. I'm self-employed (freelance web developer) making about $68,000 annually but I also inherited a rental property from my grandmother last year that brings in around $1,450 monthly. I've been reading through various tax guides and forums, and it seems like everyone has a different take on how I should be handling my taxes. Some sources say I should be making quarterly estimated payments on both income streams, others say the rental income isn't subject to self-employment tax. Then there's the whole question of what expenses I can legitimately deduct from each income source. I've never had to deal with rental income before, and I'm worried about messing up my 2025 filing. I'm especially confused about depreciation on the property and whether repairs I made count as improvements or maintenance. I spent about $7,200 fixing some plumbing issues and replacing the water heater. Does anyone have experience with both self-employment and rental property income? Any advice on how to properly reconcile these different income streams for tax purposes would be so helpful!
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One thing nobody's mentioned yet is that you should look into setting up an LLC for your rental property. I have 3 rental properties and keeping them in an LLC structure has saved me a ton in taxes plus gives liability protection. Talk to both a tax pro AND a lawyer though because there are specific ways you need to set it up for it to be beneficial tax-wise.
Does putting a rental property in an LLC actually save on taxes though? I thought LLCs are pass-through entities so the tax treatment is the same as individual ownership? Also doesn't it make the mortgage situation more complicated?
You're right that a single-member LLC is typically a pass-through entity and doesn't change the tax treatment by itself. I should have been more clear. The tax savings come from strategies you can implement once you have the proper structure in place, not just from having an LLC. The real benefits come when you combine the LLC with proper tax planning like implementing a management company structure or potentially electing S-corp taxation for your activities depending on your situation. And yes, transferring mortgaged properties into an LLC can trigger due-on-sale clauses in some cases, so that's exactly why I recommended consulting with both tax and legal professionals before making any moves.
Omg I'm in a similar situation and the thing that's saved me is keeping SUPER detailed records. Like I have separate credit cards for each income stream (freelance vs rental) and I use QuickBooks to track everything separately. One tip: take pics of all receipts for rental repairs with your phone and save them to a specific folder. My tax person said this has saved us HOURS during tax prep! And it's a lifesaver if you ever get audited.
What app do you use for storing receipts? I've been trying to find a good one that will organize by property and expense type.
Need help - just discovered I have to pay taxes on my scholarship and I can't afford it
I'm completely blindsided right now. Just got my 1098-T from my university and realized I might be in serious tax trouble. I'm on a full scholarship (need-based) and my 1098-T shows about $73,000 in box 1 (tuition and fees) and around $102,000 in box 5 (total scholarships/grants). No one ever explained that the portion of my scholarship covering room and board was taxable! The university requires first and second-year students to live on campus, so I didn't even receive this money - they just didn't bill me for housing and meals. From what I'm reading, this means I have taxable income of roughly $29,000 from the scholarship portion that went to room and board. I'm freaking out because I don't have thousands of dollars to pay these taxes! I did spend money on required textbooks and bought a laptop for school this year, which I think might be qualified education expenses, but that's only going to offset a small portion. What are my options here? Do I need to take out a loan just to pay taxes? Is there any way around this? The financial aid office never mentioned anything about tax implications when I accepted the scholarship. I'm a first-gen college student and barely understand how taxes work in the first place. Any advice would be so appreciated.
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Make sure to file Form 8863 for education credits! When I had a similar situation with my scholarship, I qualified for the American Opportunity Credit which gave me $2,500 back. You get this credit based on paying qualified education expenses, and if your scholarships covered tuition but not books/supplies, those expenses can qualify. Also, if you earned any income from a job during the year, make sure that withholding is properly accounted for on your tax return - that might offset some of what you owe from the scholarship.
This is really helpful, thank you. Do you know if there's a limit on the amount of books/supplies that can count toward the American Opportunity Credit? I spent about $1,800 on books and another $1,200 on my laptop.
The American Opportunity Credit is calculated as 100% of the first $2,000 in qualified expenses, then 25% of the next $2,000 - for a maximum credit of $2,500. Your $3,000 in expenses would qualify for the full first $2,000 plus 25% of the remaining $1,000, so $2,250 total credit. Remember that the expenses must be required for enrollment in your courses, which books typically are. For the laptop, you'll need to determine if it was required for your specific program of study or just convenient. If your courses required specific software or computing capabilities, you've got a stronger case for including it.
Have you talked to your university's financial aid office about this? My school has emergency grants specifically for situations like this. When I got hit with an unexpected tax bill from my scholarship, they provided a one-time grant to help cover it. Also worth checking if your school has a VITA (Volunteer Income Tax Assistance) program. They provide free tax help for students and might find deductions or credits you're missing.
This is great advice. My university's VITA program actually helped me file for hardship consideration with the IRS too. They had specific experience with scholarship tax issues since they see it every year with students.
What type of lawyer helps you appeal an IRS decision? Need advice fast
So I just got this letter from the IRS saying they're disallowing some of my deductions from last year and now I owe them an extra $6,800. I think they're completely wrong and I want to fight this, but I have no idea where to start. My wife and I run a small business from home and we've always been really careful about keeping good records for our expenses. We claimed a home office deduction and some travel expenses that were 100% legitimate for our business, but the IRS is saying they're "personal expenses" which is total BS. I know I need a lawyer to help me appeal this, but what kind exactly? Are there attorneys who specialize in fighting the IRS? Tax attorneys? Business lawyers? Something else? The letter says I only have 30 days to respond and I'm freaking out a bit. We definitely can't afford to just pay this amount, especially if we're actually in the right. Any advice on finding the right type of lawyer would be super appreciated!
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Tax attorney here (though obviously not YOUR attorney). A few things to consider when finding representation: 1. Look for an attorney who specializes in "tax controversy" - that's the specific term for dealing with disputes with the IRS 2. Ask about their experience with your specific issue (home office and business travel deductions in your case) 3. Consider the size of your case ($6,800) when choosing representation - don't spend $10,000 fighting a $6,800 assessment 4. Ask if they have experience with the Appeals Office in your specific IRS district Many cases get resolved at the appeals level without going to Tax Court, so having someone familiar with your local Appeals Officers can be helpful.
This is super helpful, thank you! Is it worth trying to handle the initial appeal myself to save on costs, or is that risky? I'm worried about saying something that might hurt my case later.
It depends on your comfort level with tax matters and how complex your situation is. For simple factual disputes where you have clear documentation, you might be able to handle the initial response yourself. However, if there are complex legal interpretations at play or if your business structure has nuances, professional help is advised. The biggest risk of handling it yourself is inadvertently making statements that limit your options later or missing technical arguments that could help your case. If you do go it alone for the initial response, be very careful to stick to provable facts and avoid making legal conclusions or interpretations of tax law.
Does anyone know how much tax attorneys typically charge for IRS appeals? Are we talking thousands or tens of thousands? I'm in a similar situation and trying to figure out if I can even afford to fight this.
I paid $3,500 for my tax attorney last year for an appeal similar to what OP is describing. It was a flat fee that covered everything unless it went to Tax Court (which it didn't). Some attorneys charge hourly ($350-500/hr where I live) which can add up fast. Ask for a flat fee if possible!
Where to get W2's for 2025 tax filing if employer hasn't sent them?
Hey everyone, I'm getting pretty anxious about filing my taxes this year. It's already February 12th and I still haven't received my W2 from my previous employer. I worked at this restaurant until October last year and they always seemed disorganized with paperwork. I've tried calling them twice but keep getting put on hold forever. My current job already sent their W2 but I need both to file correctly. Does anyone know where else I can get a copy of my W2 or what I should do if my old employer never sends it? I'm worried about missing the filing deadline since I usually get a decent refund and could really use the money soon for some car repairs. Thanks for any help!
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Another option nobody mentioned is checking if your W2 is available online. A lot of employers use payroll services like ADP, Paychex, or Gusto that let you access your tax documents online even after you leave the company. Try logging into the payroll portal you used when you worked there, or ask a current employee which service they use. Also, if you filed with them last year, sometimes tax preparation services like H&R Block or TurboTax will have your previous W2 information saved in your account that might help with the estimates.
This is solid advice! My employer uses UltiPro and I was able to log in and download my W2 even though I left the company in November. Totally forgot I had that access.
That's great to hear it worked for you! Many people don't realize these payroll portals often maintain your access for a period of time after employment ends, specifically for tax document purposes. If anyone else is trying this method, also check your email for any invitations to these portals when you were hired. Sometimes the login credentials or reset instructions are still valid. Even if your account appears inactive, customer service for these payroll providers can sometimes help former employees access just their tax documents.
Just a heads up that if it gets too close to the filing deadline and you still don't have your W2, you can always file for an extension using Form 4868. This gives you until October to file your actual return, though you still need to pay any estimated taxes you might owe by the regular deadline. The extension doesn't solve the missing W2 problem, but it gives you more time to get it sorted out without penalty. I had to do this two years ago and eventually got my W2 in June when my old boss finally got around to sending them.
Won't an extension delay my refund though? I'm counting on that money for some bills coming up in March.
Anastasia Popov
This is definitely more complex than your usual tax situation. Form 8594 is for allocating purchase price in business asset sales, so I don't think that applies to your home sale. Given all the complexities you're dealing with (partial home ownership, sale after a death, plus multiple retirement transactions), this is probably the year to get professional help. A good CPA will likely save you more than they cost by making sure everything is reported correctly, especially with all those retirement account transactions.
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Isabella Ferreira
AuthorIf I do go to a CPA, what documents should I bring with me? I want to be prepared so I don't have to keep going back with more paperwork.
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Anastasia Popov
Bring the deed showing when you were added to the title, the closing documents from the sale, any documentation showing improvements made to the home that might affect basis, and anything showing the original purchase price when your father bought it. For the retirement accounts, bring all 1099-R forms, statements showing the withdrawals and deposits, and documentation from both the old and new retirement plan administrators. Also bring your last year's tax return and any correspondence you've had with the IRS. If you have documentation of any hardship that led to the withdrawals, that could be helpful too as it might qualify you for penalty exceptions.
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Sean Murphy
I had a similar situation last year and thought I needed form 8594 too! My tax person actually laughed (nicely) and explained that's for business assets. For a home that you owned with your father and then sold, you'll need Schedule D and Form 8949 to report the capital gain. Since you were already on the title before your father passed, your basis is going to be complicated. Part of it will be your father's original basis (for his portion) and part might be the fair market value at the time of death (for the inherited portion if you inherited any additional share).
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Zara Khan
Do they also need to worry about the Section 121 exclusion for primary residence? If they lived in the house for 2 of the last 5 years, couldn't they exclude some of the gain?
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