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Another thing to consider is that the exchange might have sent the 1099 to the IRS already. If you don't file and report those transactions, you might get a letter from the IRS later asking why the info they have doesn't match what you reported. It's much better to file correctly now than deal with notices later!

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Does anyone know which type of 1099 form exchanges typically send? Is it 1099-K, 1099-MISC, or the newer 1099-B? I got something from Coinbase but I'm not sure which one it is and if it matters.

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Most cryptocurrency exchanges issue either a 1099-B or 1099-K. The 1099-B is more common now and includes details about your specific transactions. The 1099-K is generally issued if you had a large volume of transactions or if you conducted certain types of crypto activities. You can tell which form you received by looking at the top right corner of the document. The form type should be clearly marked. And yes, it does matter which form you received because they report different types of information and may need to be handled differently on your tax return.

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Does anyone know if free tax filing services like FreeTaxUSA can handle crypto transactions? Or do I need to pay for the premium versions of TurboTax or H&R Block? I'm trying not to spend a ton of money filing taxes for a small loss.

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FreeTaxUSA can handle crypto! I used it last year for my bitcoin and ethereum trades. You just manually enter your transactions on the capital gains section. It's not as automated as the paid services but it works fine if you don't have tons of transactions.

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Mei Zhang

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One thing nobody's mentioned yet - if you're on a work visa, pay close attention to any tax treaties between the US and your home country! This could significantly affect your tax situation. Many countries have agreements that prevent double taxation or provide special deductions. Also, depending on your visa type and how long you've been in the US, you might be considered a "nonresident alien" or "resident alien" for tax purposes, which have different filing requirements. The "substantial presence test" determines this status.

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How do you figure out if there's a tax treaty benefit for your country? Is this something standard tax software will catch or do you need a specialist?

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Mei Zhang

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Standard tax software like TurboTax and H&R Block will ask questions about your citizenship and residency status, then apply any relevant tax treaty benefits automatically. The software will prompt you to identify your country of citizenship, and it has the treaty information built in. However, if you want to check yourself before filing, you can look up tax treaties on the IRS website - Publication 901 "U.S. Tax Treaties" lists all current treaties and explains the specific benefits. Common benefits include reduced taxation on certain types of income or special rules for students, teachers, and researchers. The treaty articles can be a bit technical to read, but the overview tables in Publication 901 make it fairly straightforward to see if any benefits might apply to your situation.

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Made a huge mistake last year trying to file myself. I missed claiming my kid with an ITIN properly and it cost us $2,000 in child tax credits! Definitely recommend using dedicated tax software rather than trying to do it completely on your own with paper forms.

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Which software did you end up using that worked well with the ITIN situation? I'm trying to decide between a few options.

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Nia Williams

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Here's a breakdown of the most common paycheck deduction acronyms I learned when I started payroll at my company: FIT - Federal Income Tax SIT - State Income Tax FICA - Social Security & Medicare combined SS - Social Security portion only (6.2%) MEDI - Medicare portion only (1.45%) SDI - State Disability Insurance SUI - State Unemployment Insurance 401K - Retirement contribution FSA/HSA - Flexible/Health Spending Account GTLI - Group Term Life Insurance If your deduction increased by a lot suddenly, check if you hit a threshold for something. Some deductions have caps and reset annually.

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Luca Ricci

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I have something called "OASDI" on mine. Is that the same as SS?

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Nia Williams

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Yes, OASDI stands for "Old Age, Survivors, and Disability Insurance" which is the official name for Social Security. It's exactly the same as the SS deduction, just a different abbreviation some payroll systems use.

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I've noticed that sometimes the deductions go up when I work overtime - is that normal? Does overtime get taxed at a higher rate? I worked 12 extra hours last pay period and my deductions were almost double!

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Overtime itself isn't taxed higher, but payroll systems often calculate withholding as if your higher paycheck is your new normal salary. So if you made $1000 extra from overtime, the system thinks "oh this person now makes $X more annually" and withholds at the higher rate that would apply. You'll get the excess back when you file taxes, but it definitely feels like overtime gets taxed more in the moment!

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Gavin King

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I work in the financial aid office at a university, and I see this confusion all the time. Just to clarify something important: the reason you still had to pay $1,300 out of pocket despite the scholarship exceeding tuition is likely because some of that scholarship money was applied to room and board, meal plans, or other non-qualified expenses. Many large scholarships/grants cover more than just tuition - they often include housing, meals, etc. For tax purposes, only the portion covering qualified education expenses is tax-free.

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Nathan Kim

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Thanks for this insight! Quick question - do student loans factor into this calculation at all? My daughter has both scholarships and loans.

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Gavin King

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Student loans don't impact the taxability of scholarships. Loans are simply money you have to pay back, so they're not considered income. The calculation only looks at: 1) How much in qualified education expenses did you have? and 2) How much in scholarships/grants (money you don't have to repay) did you receive? If #2 is larger than #1, the difference is taxable income. Loans are completely separate from this calculation. However, you may be eligible for the student loan interest deduction for interest paid on those loans, which is a different tax benefit entirely.

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Intentionally leaving off forms the IRS already has copies of is literally the definition of tax fraud. As someone who got audited over education credits, let me tell you - it's NOT worth it. I "forgot" to include a 1098-T from a community college class (was only $600) and ended up paying the back taxes PLUS a 20% accuracy penalty PLUS interest. And that was considered an "honest mistake" - if they determine it was intentional, the penalties are way worse.

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Lucas Turner

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How did they even catch such a small amount? Was it just random bad luck that you got audited or do they actually check everyone's forms that carefully?

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I gave up on TurboTax for RSUs and switched to H&R Block's software last year. Their interface for stock compensation is MUCH clearer. They specifically ask if the RSU income was already included on your W-2 (which it almost always is) and then only have you report the sales transaction with the correct cost basis. TurboTax kept double-counting my RSU income for three years before I realized what was happening. Literally paid thousands in extra taxes before figuring it out and filing amendments. Such a nightmare.

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Does H&R Block handle the capital gains calculation correctly? My situation is complicated because some of my RSUs vested early in the year and then I sold them months later when the price had changed quite a bit. I need to make sure I'm reporting both the initial income and the capital gains/losses correctly.

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Yes, H&R Block handles the capital gains calculation correctly. It separates the initial income recognition (which appears on your W-2) from any subsequent capital gains or losses that occur between vesting and selling. When you enter your stock sales, you'll provide both the sale price and the cost basis (which is the fair market value on the vesting date). The software then correctly calculates only the difference as capital gains/losses. It's much more straightforward than TurboTax, especially for situations where there's a significant time gap between vesting and selling with price changes.

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Important tip: make sure you have your Form 3922 from your employer handy when dealing with RSUs in any tax software. This form should clearly show the FMV of your shares on vesting date, which is your cost basis. Sometimes TurboTax gets confused if you manually enter numbers that don't precisely match what's on your W-2 and other forms.

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Joy Olmedo

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Form 3922 is for ESPP (Employee Stock Purchase Plans), not RSUs. For RSUs, employers typically provide a summary statement but not a specific IRS form. Most just include it on your W-2 and provide supplemental information.

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