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As someone who works at a university financial aid office, definitely check if your college has a VITA (Volunteer Income Tax Assistance) program! Many schools offer free tax prep help for students, and they can often help with back taxes too. Our campus VITA program has accounting students supervised by professors who help with exactly these situations. Also, once you file your back taxes, look into an IRS payment plan. The basic installment plans let you pay as little as $25-50 per month depending on what you owe, which is WAY better than ignoring it and having them eventually garnish your wages or put liens on your property.
Thanks for mentioning VITA! I had no idea my school might offer that. Do they help with multiple years of back taxes though? And do you know if I need to make an appointment or can I just walk in during tax season?
Most VITA programs can help with back taxes, especially for relatively straightforward situations like yours. They typically handle the current tax year plus previous years. The IRS provides VITA volunteers with training for handling back tax returns. You'll definitely need to make an appointment, especially for multiple years of taxes. These services get extremely busy during tax season. I'd recommend calling your university's financial aid or student services office now to find out when their VITA program starts accepting appointments for the 2025 filing season. Some programs start booking as early as January, and slots fill up quickly!
If you do end up owing a significant amount, don't panic! The IRS has several payment options: 1) Short-term payment plan (120 days or less) with no setup fee 2) Long-term payment plan with affordable monthly payments 3) Offer in compromise if you can prove financial hardship I ended up on a payment plan paying $120/month for two years and it was totally manageable. Just make sure whatever you agree to is something you can consistently pay.
One thing to add - if the amount you owe is under $10,000 and you can pay it off within 3 years, the IRS generally automatically approves payment plans. You can set it up online without even having to talk to anyone.
Another option is to check if your brokerage offers any summary reports. Robinhood specifically has a "tax summary" section in their tax documents that gives you consolidated numbers you can use. For crypto, they should provide a summary of proceeds and cost basis for all transactions. If you're reporting everything on FreeTaxUSA, you can often just enter the summary totals rather than each individual transaction. Look for the line items on your 1099-B that show total proceeds and total cost basis for short-term and long-term transactions separately.
I found the summary page on my Robinhood statement but I'm still confused about one thing. Some of my trades are marked as "covered" and others as "uncovered" - do I need to separate these when entering them into FreeTaxUSA?
Yes, you should separate covered and uncovered transactions when entering them into FreeTaxUSA. "Covered" means your broker is reporting the cost basis to the IRS, while "uncovered" means they're not (usually for older securities or ones transferred from another broker). FreeTaxUSA will have separate entry sections for covered vs. uncovered transactions. The tax calculation is the same, but the IRS wants them reported separately because they can verify the covered transactions against what your broker reported, while uncovered transactions are based solely on your records.
If you have a lot of trades, don't try to enter them one by one! I made that mistake last year with about 40 trades and wasted hours. Three options that worked for me: 1. Use the summary totals from your 1099-B (usually on the last page) 2. Use FreeTaxUSA's bulk entry option where you can enter multiple similar transactions at once 3. If your brokerage offers a CSV or Excel download of your transactions, you might be able to use that to organize things before entering
Just a heads up that if your HELOC was used for anything other than home improvements, you might not be able to deduct the interest at all. The Tax Cuts and Jobs Act changed the rules starting in 2018. I learned this the hard way after using mine for college expenses.
Oh crap, I didn't even think about that. My HELOC was mainly used for kitchen and bathroom renovations, but I did use about $10k of it to consolidate some credit card debt. Does that mean I can only deduct part of the interest?
Yes, you would only be able to deduct the portion of interest that corresponds to the home improvement expenses. The IRS expects you to track this and allocate the interest accordingly. For example, if 80% of your HELOC was used for the renovations and 20% for credit card debt, you could only deduct 80% of the interest paid. You'll need to keep good records showing how the money was used in case of an audit.
Has anyone successfully e-filed an amended return? Last time I had to do this (back in 2020) I had to mail in a paper return and it took FOREVER to process.
Yes! I e-filed an amended return through TurboTax last year and it was processed in about 12 weeks. Way better than the 16+ months my paper amended return took during COVID. Most tax software supports e-filing 1040-X forms now.
Just to add another perspective - I'm a real estate investor with multiple properties and you should also be aware of the "passive activity loss" rules. Even though you can deduct all mortgage interest on your rental, if your rental shows a loss after all expenses (including mortgage interest), you might not be able to fully deduct that loss against your other income like your W2. There are income limits and exceptions for "active participation" and real estate professionals, but it's something to keep in mind if you're counting on using rental losses to offset your other income.
Thanks for bringing this up! My rental actually shows a small profit after expenses, so I don't think I'll run into the passive activity loss limitation. But for future reference, what are the income limits for being able to deduct rental losses against W2 income?
If your rental shows a profit after all expenses, then you're right - the passive activity loss limitations won't affect you this year. For those who do have rental losses, you can deduct up to $25,000 in losses against other income (like W2 wages) if your modified adjusted gross income (MAGI) is under $100,000 and you "actively participate" in the rental. This deduction phases out between $100,000-$150,000 MAGI, and once you're over $150,000, you generally can't use rental losses to offset non-passive income unless you qualify as a real estate professional.
Something nobody's mentioned yet - don't forget that when you eventually sell the rental property, all that mortgage interest you've been deducting on Schedule E will affect your depreciation recapture and capital gains calculations! The fact that you're deducting it as a business expense means you're reducing your basis in the property over time.
That's actually not correct. Mortgage interest deductions don't reduce your basis in the property. You're thinking of depreciation, which is a separate deduction that does reduce your basis and gets recaptured when you sell. Interest expense is just an operating expense - it has no impact on basis or future capital gains calculations.
Daniel Rogers
Something similar happened to me last year but my amended return was ACCEPTED before I realized I made a mistake. If your amended return was rejected, you're in better shape because your original return is still valid like everyone else said. But FYI for anyone reading - if your amended return is ACCEPTED and processed, you have to file ANOTHER amended return to fix any issues. You can't go back to your original return once an amendment is processed. Learned this the hard way and ended up having to pay a tax professional $250 to sort it all out.
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Aaliyah Reed
ā¢So wait, if your amended return actually gets processed and accepted, you have to keep amending going forward? You can't just call the IRS and say "nevermind, use my original"? That seems weirdly inflexible.
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Daniel Rogers
ā¢Exactly - once the IRS processes and accepts an amended return, it becomes your official return of record. Your original return is essentially overwritten in their system. The IRS doesn't have a "just kidding, go back to the original" option. They can only move forward with processing additional amendments. It's one of those bureaucratic things that makes sense from a record-keeping perspective but is super frustrating for taxpayers who realize they made a mistake on their amendment.
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Ella Russell
Has anyone here actually had experience ignoring a rejected amended return? I'm in almost the exact situation as OP (tried to claim my mom, brother already did it, amendment rejected) and just want to make sure there aren't any weird consequences down the road. My tax software keeps bugging me about the "unresolved rejected return" every time I log in and it's making me paranoid.
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Mohammed Khan
ā¢I ignored a rejected amended return in 2023 and nothing bad happened. My original return remained in effect, got my refund from that with no delays, and never heard anything from the IRS about it. Just make sure you actually got a formal rejection and not just a math error notice or something else.
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