Do you document this separately for each tax year, or do you just keep a running log of all furniture items? I'm trying to set up a system that won't be a complete mess 5 years from now.

I keep a running spreadsheet with all furniture items, their purchase dates, costs, and depreciation schedule. Then I have a separate tab for disposed items where I record the disposal date, method (trashed, donated, sold), and any documentation I have. For tax filing purposes, I extract just that year's disposals. This system makes it easy to keep track over many years without creating a new document each tax season. I also back everything up with photos in a cloud folder organized by year of disposal. Might seem like overkill, but it saved me during that audit!

I wouldn't recommend TurboTax for this. I tried last year for my UK rental and it was a nightmare. It doesn't handle the separate tracking of multiple furniture items well at all. I ended up switching to a tax pro who specializes in expat taxes.

Yup, I had the same exact experience with TurboTax. Got all the way to the end of my return and then hit a wall when I needed to use specific codes on Form 8949. Had to pay $89 to upgrade to their "premier" version. They know exactly what they're doing with these limitations.

The whole tax prep industry is built on this kind of bait and switch. They advertise "free filing" knowing most people will hit some limitation that forces an upgrade. This 1099-K situation is just making it worse since more casual sellers are getting caught in the tax reporting net. I'm definitely trying FreeTaxUSA this year based on the recommendations here. Done with the big names and their upgrade games.

Yes, the Free File Fillable Forms will absolutely work for this. It's basically just the electronic version of paper forms. The downside is you get zero guidance - you have to know exactly what you're doing and calculate everything yourself. But if you're comfortable with tax forms and just need access to the code L option, it'll work fine.

Do you know if either CPAs or tax attorneys offer any kind of guarantee that they'll resolve the issue? I'm worried about paying someone a ton of money and still ending up with problems.

Neither CPAs nor attorneys can typically guarantee specific outcomes with the IRS - anyone who promises this should be viewed with suspicion. What they can guarantee is proper representation and application of their professional expertise. Most reputable tax professionals will clearly explain what they believe they can accomplish based on your specific situation and their experience with similar cases. They should be upfront about potential outcomes, both favorable and unfavorable. This transparency is actually a good sign of professionalism rather than a limitation of their services.

So does that mean the home office, travel and equipment deductions the OP mentioned are likely to be rejected? I claim similar things for my business and now I'm worried.

Thanks for pointing that out - I should have mentioned it. From what I understand from the audit letter, she failed the support test. The IRS determined she didn't provide more than 50% of their support over the year. In reality, I was the one paying most of the housing costs and expenses, but we filed separately and she claimed them.

That's exactly what I was getting at! If the support test was the issue, and YOU were actually the one providing most of the support, then you have a legitimate case for amending and claiming them. Make sure you gather documentation showing YOUR financial support: rent/mortgage payments, utility bills, grocery receipts, clothing purchases, medical expenses, school supplies, etc. Calculate the total cost of support for each dependent and show that your contribution exceeded 50% of that total. Bank statements and canceled checks can help establish the timeline and amounts. When you file the 1040X, include a clear statement explaining that you were the actual support provider, not your wife, and that's why her claim was rightfully rejected while yours should be accepted. The more organized and detailed your documentation, the better your chances of avoiding another audit or having your amendment approved if you are audited.

I did this last year. Don't use the normal amend process in TurboTax. Start a brand new return for that tax year, enter everything correctly including the dependents, then select the option that this is an amended return. It'll generate a 1040X showing the differences automatically.

TaxAct didn't work well for me for back taxes. The navigation was confusing and it kept deleting info between sessions. Which version did you use?