Thanks, that's helpful! Do you actually submit that insolvency worksheet with your tax return or just keep it for your records? And how detailed do you have to be with listing personal property? Like do I need to estimate the value of my couch and TV separately or just put "household goods: $X amount"?

You don't submit the worksheet with your return - it's just for your own records and in case of an audit. But definitely complete it thoroughly and keep it with your tax documents. For personal property, you don't have to be extremely detailed for each individual item. Grouping them makes sense - "household furnishings: $2,000" or "electronics: $1,500" is fine. Just make reasonable estimates of what you could actually sell these items for (garage sale or Craigslist values), not what you paid for them. And yes, definitely include vehicles, jewelry, tools, anything with value. For retirement accounts, only include what you could actually access (minus penalties) if you had to liquidate them at that time.

Yes, forgiven credit card debt generally counts as cancelled debt and the credit card company should have issued you a 1099-C if it was over $600. If you didn't receive one, they might not have filed it, or it could have been lost in the mail. You're technically supposed to report it as income even without the 1099-C, but you can still claim the insolvency exclusion on Form 982 if you qualify. I'd recommend checking with the debt settlement company to see if a 1099-C was issued. You can also create an account on the IRS website to view all forms that were filed under your SSN.

I tried to access my transcripts online but got locked out after failing the identity verification. I think this might be related to the name change issue mentioned above. Is there another way to get these transcripts?

You can request transcripts by mail using Form 4506-T if the online system isn't working for you. It takes about 10 business days to arrive, but it's better than nothing. Another option is to visit a local Taxpayer Assistance Center in person - just make sure to schedule an appointment first by calling their appointment line. Bring multiple forms of ID including your Social Security card and they can often help sort out identity verification issues on the spot and get you copies of your transcripts.

Definitely agree. I worked for the IRS for 7 years and the biggest problems were always from people who ignored the initial notices. The good news is they're usually pretty reasonable about removing penalties if you can show you're actively trying to resolve the issues.

Thanks for confirming that. I wish I'd known sooner! I eventually had to hire a tax professional which cost me $450 to straighten everything out, plus I paid about $300 in penalties that probably could have been avoided.

Thank you for pointing that out! I should have mentioned - he's definitely not a dependent on anyone else's return. He's 38 and has been living on savings during 2020. I was helping him with paperwork stuff and realized he never got his stimulus payments. I appreciate the advice from everyone!

Glad to hear that! It's just something that trips up a lot of people. Also, make sure your friend keeps a copy of the return and proof of mailing (like a certified mail receipt). The IRS has been really backed up with paper returns, especially for past tax years, so it might take several months for them to process it.

Some tax software does let you file prior year returns, but most only allow electronic filing for the current tax year and maybe the year before. For 2020 returns filed in 2025, you'll probably have to mail it in. I used FreeTaxUSA to prepare a prior year return but had to print and mail it.

Thanks for the advice on tracking expenses. I've actually been keeping all my gas receipts and noting my mileage in my phone. It was about 480 miles total over the two weeks just for work-related driving. I also had to buy some office supplies they claimed would be provided but weren't. Do you know if I can still claim these deductions if I file the misclassification complaint? I'm worried about doing something wrong on my taxes while this is all getting sorted out.

You can still document all these expenses while your misclassification complaint is pending. The best approach is to keep everything organized as if you will need to file Schedule C (self-employment), but hold off on actually filing until you get a determination on your status. If the IRS rules that you were misclassified as a contractor and should have been an employee, the company will be responsible for their portion of FICA taxes (the employer half of Social Security and Medicare taxes). In that case, you'd file as an employee with a W-2 that the company would be required to provide, and many of those business expenses wouldn't be deductible anymore under current tax law for W-2 employees.

Even with arbitration clauses, labor board complaints are still valid in most states! Companies can't contract around labor laws. Had this exact situation and still won my case through the state despite the arbitration clause.

You're absolutely right! I should have been clearer about that. Labor board complaints and tax filings with the IRS are still options regardless of arbitration clauses, as these are government agencies enforcing laws rather than private litigation. What I meant was that if the OP is considering a private lawsuit for things beyond just wage claims (like potential fraud or other civil claims), that's where arbitration clauses can create hurdles. But you're 100% correct that for the core issues of misclassification and wage theft, the state labor board is still a valid path forward regardless of what the contract says.

Thanks for bringing up FSA/HSA options - I do have an HSA but haven't been maxing it out. Does anyone know if wheelchair van modifications would qualify for HSA funds? And would this approach be better than trying to claim them as itemized deductions?

Yes, the van modifications would generally qualify for HSA funds since they're considered medical expenses. The advantage of using HSA funds is that you get the tax benefit regardless of whether you itemize deductions or not, and you don't have to meet that 7.5% of AGI threshold that applies to itemized medical deductions. If you have the option, using HSA funds is almost always more advantageous than claiming itemized deductions for the same expenses. The HSA gives you triple tax benefits: tax-free contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

Totally agree about detailed invoices! We did something similar for my mom, and the modification company just gave us one lump sum initially. We had to go back and ask for an itemized breakdown of every component. Made a huge difference when filing.

That's a great point! Our modification company was pretty good about providing details, but I still had to ask for clarification on a few items. The more specific the better - like having separate line items for the ramp mechanism, the door widening, the specialized restraint system, etc. Our accountant even suggested taking photos of all the modifications as additional documentation.