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Does anyone know if the Wage and Income Transcript shows state tax info too? Or is it just federal? I created my account and can see all my federal stuff but nothing for state taxes.
Adding to what the other person said - some states automatically get the federal info and will flag discrepancies if your state return doesn't match what the IRS has. That's how I got caught missing a small 1099 last year. The feds didn't catch it but my state did!
Just a heads up to everyone - make sure you're actually on the real IRS website when setting up ID.me. My brother thought he was creating an account but it was some phishing site. Go directly to IRS.gov and navigate from there rather than clicking links in emails or search results.
This happened to my mom too! She got an email claiming to be from "IRS online services" with a link to "set up your account" and it was totally fake. Always go directly to irs.gov!
Exactly! The official way is to go to IRS.gov and look for "Sign into your Online Account" - anything else might be sketchy. My brother was lucky his credit card company flagged the charges that showed up after he entered his info on the fake site.
Something nobody's mentioned yet - make sure you're tracking the dates of improvements vs when you started renting rooms. If you made improvements before renting, the tax treatment can be different than if you make them after already establishing rental activity. Also, check with your insurance company! When I started renting rooms, I had to update my homeowner's policy to a landlord policy which was slightly more expensive but covered a lot more.
That's a great point about the timing. I hadn't considered that. Most of the improvements I'm planning would be happening now, about a year after I started renting the rooms. Does that change anything about how I should handle the deductions?
Since you're making the improvements after already establishing rental activity, you're in a good position. The IRS will view these improvements as clearly connected to your existing rental business. This makes it more straightforward to apply your rental percentage to the improvement costs for depreciation purposes. If you had made the improvements before renting, there's sometimes a question about whether the costs were truly for the rental business or just personal home improvements that you later happened to use for rental purposes. The timing works in your favor from a tax perspective.
Has anyone used TurboTax for reporting room rentals in their primary residence? I'm in a similar situation and wondering if I need to pay for their more expensive version or if the basic one will handle this correctly.
I tried using TurboTax Deluxe last year for my room rentals and it was a nightmare. You definitely need TurboTax Premier at minimum to handle rental properties properly. Even then, I found it confusing for my situation where I was renting out rooms in my main home rather than a separate property. Switched to FreeTaxUSA this year and it was way better for handling partial home rentals.
I went through something similar in 2023. My advice: get a tax professional. I tried doing it myself and made things worse. Found a CPA who specializes in unfiled returns and IRS problems, and it was worth every penny. For the garnishment specifically, once you file those missing returns, you might qualify for a hardship reduction or removal. If you're actually owed refunds as you suspect, that will help your case tremendously. The CPA can file Form 911 (Taxpayer Advocate Service) to help expedite the garnishment release if you're experiencing financial hardship because of it. Don't beat yourself up about the delay - the pandemic was rough on everyone's mental health. Just focus on fixing it now.
How much did the CPA charge you for handling multiple years of unfiled returns? I'm in a similar situation but worried about the cost.
For three years of unfiled returns plus dealing with a lien (similar to garnishment), I paid about $1800. But honestly, it varies widely depending on your location and complexity. My situation included self-employment income and the tax pro had to reconstruct some missing records. The initial consultation was free, which helped me understand what I was getting into before committing. Many tax pros will work out payment plans too, especially if you're already in financial distress. Don't let potential costs stop you from at least talking to someone - most will give you a price estimate during the first conversation.
Don't panic! The good news is that if you've been overpaying and are due refunds, once you file those returns, you might actually come out ahead. But you need to act quickly because there's a 3-year limit on claiming refunds. For the house sale, make sure you have documentation for any improvements you made to the property while you owned it. These increase your basis and can reduce any capital gains. If it was your primary residence and you lived there at least 2 of 5 years before selling, you probably qualify for the capital gains exclusion ($250k for single, $500k for married filing jointly). I've used TurboTax to file back taxes before and it was pretty straightforward. They keep previous years' versions available. If your situation is complicated though, hiring a pro might save you money in the long run.
TurboTax is great but wouldn't a professional be better for dealing with the garnishment? That seems like the urgent problem here.
Another option nobody's mentioned is to contact your HR department directly and request a duplicate W-2. They're legally required to provide it. My company actually has a self-service portal where I can download my W-2 anytime. Might be worth checking if yours has something similar?
I tried reaching out to HR but they're taking forever to respond. I used to work for a small company and their HR department is just one person who's always swamped. Do you know if there's a legal timeframe they have to provide it within? I'm worried about missing the filing deadline.
There's no specific legal timeframe for providing a replacement W-2, unfortunately. Employers are only legally required to provide the original W-2 by January 31st. For replacements, they should provide it in a "timely manner," but that's pretty vague. If you're concerned about the filing deadline, you might want to consider filing Form 4868 for an automatic six-month extension. Just remember that this only extends the time to file, not the time to pay any taxes owed. You'd still need to estimate and pay any taxes due by the original deadline to avoid penalties and interest.
Has anyone tried using the last paystub method? My accountant told me I could use my last paystub of the year as a substitute for a W-2 in a pinch, but I'm not sure how to report it properly on the tax forms.
I did this a couple years ago when my W-2 got lost in the mail. You have to fill out Form 4852 (Substitute for W-2) along with your tax return. Just be careful because the paystub might not include taxable benefits or year-end adjustments that would show up on the actual W-2.
Thanks for the info on Form 4852! I found it on the IRS website and it looks straightforward enough. Did the IRS give you any trouble when you submitted this form instead of having the actual W-2?
Kiara Greene
The $2 difference is definitely from rounding. I've used both TurboTax and FreeTaxUSA for years just to double-check myself. FreeTaxUSA always forces whole dollar amounts, while TurboTax gives you the option to use cents. I actually called the IRS about this exact issue three years ago (before I discovered you could just use both and compare). The agent told me either method is fine as long as you're consistent within the same return.
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Evelyn Kelly
ā¢So which one do you end up filing with? Do you just pick whichever gives you the better refund? lol
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Kiara Greene
ā¢I actually file with FreeTaxUSA every year now because it's so much cheaper for my situation (I have investments and a small business). The small difference in calculation has never been enough to justify paying hundreds more for TurboTax. I still run the numbers through both just as a sanity check, but as long as they're within a few dollars of each other, I know I've entered everything correctly.
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Paloma Clark
Don't forget some tax software includes fees in their refund calculation while others don't! My "refund" looked $39 different between two programs last year until I realized one was showing my refund AFTER their fee was taken out. Make sure you're comparing the actual tax calculation, not the final deposit amount.
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Heather Tyson
ā¢This!! I had a $75 "difference" that freaked me out until I realized H&R Block was showing me my refund amount after their preparation fees and TurboTax was showing the full amount before fees. Such a sneaky practice!
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