Where in FreeTaxUSA can I find that calculation? I refinanced and borrowed $800K total between both loans (original was $600K, new is $800K with some cash out). Will the software handle the partial deduction or do I need to do math before entering?

FreeTaxUSA doesn't automatically calculate the partial deduction if you're over the limit. You'll need to do this calculation yourself before entering the information. The basic formula is to take your deductible loan amount ($750K) divided by your total mortgage amount ($800K in your case) which gives you the percentage of interest that's deductible (93.75% for you). Then multiply each interest amount by that percentage before entering it. In the text box or notes section, you should explain this calculation in case of an audit. It's a bit of a hassle, but necessary to avoid claiming more deduction than you're entitled to.

Double check that you didn't accidentally enter one of the 1098s in the wrong section. One common mistake is entering the second mortgage interest statement in the "Points" section or vice versa. Also verify that you entered the full year's worth of property taxes from both lenders if that was also included on your 1098s.

That's really helpful to know! Do you happen to remember what that special rule for the Earned Income Credit was called? I'd like to look it up so I can mention it specifically when I talk to another tax preparer.

The special rule relates to disability benefits that are taxable in the year you reach minimum retirement age. If you receive disability benefits from an employer plan and report them as wages, those can count as earned income for the EITC until you reach minimum retirement age. It's in IRS Publication 596 under "Disability Benefits and the EIC." The exact wording gets technical, but basically, if you're getting taxable disability benefits and haven't reached retirement age, you might qualify. It made a huge difference for my sister's refund.

I used FreeTaxUSA last year with SSDI and a dependent. It worked well and asked all the right questions about my disability income and how it was reported. They had specific sections for disability benefits and walked through all the potential credits. Don't use the totally free version though - spend the extra $7 or whatever for the deluxe version which gives you better support for credits and deductions. Saved me way more than that $7 in the end.

Thanks for the recommendation! I'll check out FreeTaxUSA. The $7 upgrade sounds worth it if it helps find all the credits. Did they handle state taxes well too or just federal?

Did you find the new accountant through a referral or did you just search online? I'm thinking I might need to do the same thing but I'm not sure how to find someone reliable.

I got a referral from a coworker who also does freelance work on the side. Personal referrals are definitely the way to go if possible since online reviews for tax professionals can be hard to trust. If you don't have any personal referrals, I'd recommend looking for an Enrolled Agent (EA) rather than just any tax preparer. They're specifically licensed by the IRS and tend to be more knowledgeable about tax code than the seasonal preparers at big chain tax services. Local small business associations sometimes have lists of reputable tax pros who work with self-employed individuals.

QBI is so confusing! My accountant says I don't qualify because my business is a "specified service business" (I'm a consultant) and my income is too high. Is there a simple way to know if I should be getting this?

Thanks for this advice! How far back should we go with documentation? We have most bank records for the past 7 years, but the earlier years might be harder to track down. Also, does having our names on utility bills help establish our "beneficial ownership" claim?

Try to gather documentation going back as far as possible, but the past 7 years should be sufficient for most IRS purposes since they typically don't look back further than that for audits. If you can show a consistent pattern of payment responsibility, that strengthens your case. Utility bills in your names are excellent supporting evidence! They help establish that you were truly treating the property as your primary residence. Also gather any documentation showing you were responsible for property taxes, insurance, maintenance and repairs. The more comprehensive your paper trail showing you were acting as the true owners, the stronger your position.

That's technically correct but comes with significant risks in this situation. The OP mentioned trust issues with the father-in-law, so leaving the property in his name creates vulnerability. Also, they need the proceeds now for their new home purchase, so waiting isn't practical.

That's an interesting approach I hadn't thought of. Wouldn't setting up a payment plan be seen as accepting that I owe the amount though? I'm concerned it might complicate things if we're simultaneously arguing that we don't actually owe this money.

Setting up the installment agreement doesn't mean you're agreeing the amount is correct. The IRS allows you to dispute the underlying tax while still having a payment arrangement in place. You can specifically request that your agreement be processed with "pending audit reconsideration" or "disputed liability" noted on your account. When the dispute is resolved, if it turns out you owe less or nothing, the IRS will refund any excess payments automatically. I made about four $25 payments before my situation was resolved, and I received those payments back with my refund. The peace of mind was worth the temporary $100 out of pocket.

This is correct. Having worked at the IRS for 12 years, I can tell you there's a specific sequence of notices, and CP504 is not the final step. You'll get at least one more notice with appeal rights before any levy action.