This is so true! I made the same mistake. The "tax relief experts" took my money and then just submitted an installment agreement. When I asked about the "pennies on the dollar" settlement they promised in their ads, they said I "didn't qualify" but only after they had my money. Do these companies ever actually get anyone an Offer in Compromise?

Very few of their clients actually qualify for an Offer in Compromise (the "pennies on the dollar" program). The IRS only approves those when you can prove you have no ability to pay and limited assets. Most people with steady income don't qualify. What these companies do is take advantage of people's fear of the IRS. They charge premium prices for standard services like filing back tax returns and setting up payment plans. The worst part is they often don't even look for legitimate deductions that could reduce the total amount owed. They're focused on processing as many clients as possible, not giving personalized service.

The IRS generally focuses on the last 6 years for unfiled returns, but technically there's no statute of limitations on unfiled tax returns. For practical purposes, most CPAs will recommend filing at least the last 3-6 years to get back into compliance.

23 Good point about states! Do you know if the IRS transcript thing shows state forms too or just federal? Moving between states seems like tax nightmare fuel.

3 The IRS transcript only shows federal forms, not state ones. Each state maintains their own separate tax systems, so you'd need to check with each state tax department individually. And yes, moving between states can definitely complicate your taxes! You typically need to file part-year resident returns in both states, and the rules for how income is allocated between states varies. Some states have reciprocity agreements that simplify things, while others make it more complex.

21 Do they at least email you when the 1095-A is ready? I'm on marketplace insurance for the first time this year and trying to be proactive.

I just double-checked my 1099-R and box 2a shows the entire amount as taxable! That's definitely wrong since this was a direct rollover (the money went straight from my 401k provider to the new IRA custodian without me touching it). There was no 60-day window concern since I never received the funds. And looking at box 7 again, it has code "1" which I think means early distribution. That's completely incorrect for a direct rollover. This explains why TurboTax is calculating taxes owed. I'm definitely going to have to contact the plan administrator for a corrected form.

Yep, that confirms the problem. Code "1" means early distribution (generally subject to taxes plus a 10% penalty if you're under 59.5 years old), and having the full amount in box 2a as taxable is definitely incorrect for a direct rollover. You need a corrected 1099-R with code "G" in box 7 and ideally "$0" in box 2a. When you contact the administrator, be very specific about these corrections. Sometimes the customer service reps don't understand the tax implications, so you might need to escalate to their tax department.

How long did it take to get the corrected 1099-R? I'm in the same boat but getting close to the filing deadline.

I use H&R Block and did something similar last year. The interface is different but the concept is the same. You need to create two separate K-1 forms and split the income between them. The tricky part in H&R Block is you have to manually go to the forms view and find the right schedule to enter the rental real estate portion.

Thanks for the guidance! Do I need to do anything special to make sure the basis calculations carry forward properly in H&R Block? And should I be entering any tax credits on the first or second K-1 entry?

You actually can edit the TXF file directly if you're comfortable with text editing! I tried this approach too. TXF files are basically formatted text files, and you can open them with Notepad or any text editor. Look for the sections related to your K-1, and you'll see entries for each box. You can create a duplicate of the partnership entry with a slightly different name, then remove line 2 from the original and remove everything except line 2 from the copy. It's a bit technical but doable if you're careful.

Thanks for mentioning this, but no, it was just empty desert land that nobody lived on. No structures at all. It literally sat empty for decades until someone decided it was valuable because of the highway exit nearby.

Good to confirm. One other thing to consider - check if your state has different rules for inherited property taxes. Some states have their own tax treatment that might be more favorable than federal. For example, some states might use their own version of stepped-up basis or have special provisions for long-held family property.

This wouldn't trigger gift tax because it's a sale at fair market value, not a gift. The inheritance portion already happened when OP's mother passed away, and that would fall under estate tax rules (though with only a 15% interest in land worth $800K, it would be well below the estate tax threshold). The sale itself is just converting an asset to cash at market value - no gifting involved. OP and their sister would just each report their portion of capital gains based on their stepped-up basis.