Is Form 8948 something that can be e-filed or do you have to mail everything in? I'm in a similar situation but I really don't want to paper file if I can avoid it.

There's actually no Form 8948 specifically for reasonable cause - I apologize for the confusion! What you need to do is write a penalty abatement letter explaining your reasonable cause (your illness) and attach any supporting documentation. If you're e-filing, you'd need to mail this letter and documentation separately after filing. Reference your SSN and tax year on all documents. While you can e-file your return, the reasonable cause request typically needs to be mailed separately. Some tax software allows you to include a brief statement with your e-filed return, but a formal request with documentation will need to be sent by mail for proper consideration.

Definitely this! You can make an estimated payment online using IRS Direct Pay. It's super easy and takes like 5 minutes. Way better than owing a giant lump sum when you file.

Does this same process work for ESPP shares? I received a similar notice but for my employee stock purchase plan discounts.

For ESPP shares it's similar but with important differences. The discount you receive when purchasing ESPP shares isn't reported on your W-2 (unlike RSUs). Instead, you report the discount as ordinary income when you sell the shares. If you held the shares long enough for a qualifying disposition (generally 2 years from offering date and 1 year from purchase), you report the discount as ordinary income and any additional gain as capital gain. For disqualifying dispositions (selling earlier), you report the discount as ordinary income and the rest as capital gain. Make sure your Form 8949 correctly identifies the basis adjustment for the discount portion. Include documentation showing your purchase price, the fair market value at purchase, and your sale details.

Did you need to use a tax professional for this or were you able to handle it yourself? I just got a CP3219A for $9,200 and I'm trying to figure out if I can DIY this response or if I need to hire someone.

OMG I didn't even think about that. Yes, he definitely gets a subsidy that makes the insurance affordable. How do we avoid a big surprise bill? Did you find a way to fix this issue going forward?

To avoid the surprise bill, you need to update your Marketplace application ASAP to reflect your actual tax filing intentions. Log into healthcare.gov (or your state marketplace) and report a "life change" to update who will be claiming the kids as tax dependents. For fixing it going forward, we set a calendar reminder for every December to review our tax and insurance situation before the new year. We also printed out IRS Publication 974 which explains the Premium Tax Credit rules and read through the sections on shared policies. It's complicated but worth understanding! The good news is that if you're proactive about informing the Marketplace, you can usually avoid any negative impact on either the tax or insurance side.

Do you know if there's any way to offset or reduce state capital gains taxes? Do strategies like 401k contributions work for state taxes too?

Generally, 401k contributions will reduce your state taxable income as well as federal, so that strategy works for both. In most states, their tax system is linked to the federal system, so deductions that work federally often work at the state level too. Some states have unique quirks though. A few states offer special capital gains exclusions for in-state investments or specific industries. And nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) don't have income tax at all, so capital gains are only taxed federally if you live there.

Tax-loss harvesting can be a great strategy. Basically, you can use investment losses to offset your capital gains dollar-for-dollar. If your losses exceed your gains, you can even use up to $3,000 of those losses to offset ordinary income, with any remaining losses carrying forward to future years. Just be careful about the wash-sale rule - if you sell an investment at a loss and buy the same or a "substantially identical" investment within 30 days before or after the sale, you can't claim the loss for tax purposes.

This sounds great! Would your spreadsheet work for a restaurant business with about 45 employees? And does it account for the different ERTC rates between 2020 (50% of qualified wages) and 2021 (70% of qualified wages)?

It should definitely work for a restaurant with 45 employees. You'll just need to add more rows for the additional staff, but all the formulas will adjust automatically. And yes, it has separate sections for 2020 and 2021 with the different credit percentages (50% vs 70%) and different qualified wage caps ($10,000 per year in 2020 vs $10,000 per quarter in 2021). I actually designed it when helping a friend with his restaurant, so it already has some restaurant-specific features like allocating tipped employees appropriately. Just make sure you customize the state unemployment rate section since that impacts some calculations.

We just got our ERTC refund last month after waiting 14 months. Filed in March 2022 and check arrived April 2023. About $168k total. No explanation for the delay and no interest payment included even though they're supposed to pay interest after 45 days. Just be patient, it'll come eventually.