Thanks for sharing that! That's exactly what I was worried about. Did your brother have to file an amended return or did the IRS just send him a bill?

The IRS sent him a CP2000 notice showing the discrepancy and their calculation of what he owed. He had the option to dispute it or agree and pay. Since it was legitimate income he hadn't reported, he just paid the amount. It wasn't catastrophic, but definitely more expensive and stressful than if he'd just reported it correctly the first time. The peace of mind from doing it right is worth the extra effort now.

This is great advice. I had a similar issue and found out the payroll records were being maintained by a third-party processor even though the business was gone. Might be worth checking if you know what payroll service they used.

14 Did you have any issues with credit card statements showing purchases in both states during the "transition period"? I traveled back to my old state several times after moving for work and I'm worried that might cause problems.

22 Traveling back to your old state after moving shouldn't cause problems as long as you have clear documentation of your permanent residence change. In my case, I continued to make purchases in my old state for about 2 months after officially moving because I was finishing up a project there. The auditor was primarily concerned with establishing when my legal residence changed. The lease documents and utility connections were the most important evidence. Just make sure you can show a clear timeline of when your permanent residence shifted from one state to another, and temporary visits back to your old state won't matter for tax purposes.

17 Remote work makes it complicated! Generally, you pay taxes based on where you physically perform the work, not where your employer is located. So if you moved to State B but were working remotely for an employer in State A, you typically owe taxes to State B once you're living there.

Thanks for sharing your experience! Did that delay your refund initially or just cause problems later on?

My refund actually processed normally at first, which made me think I was in the clear. The problems came later when their automated matching system flagged the discrepancy between what Robinhood reported and what I put on my return. The amended return was a hassle to file, and I ended up owing additional tax plus interest on the amount I underpaid. The whole process took about 4 months to resolve completely. Definitely not worth the couple weeks I "saved" by filing early without the proper forms!

This is a great point. Wash sales can be super confusing. For anyone who doesn't know, if you sell a stock at a loss and buy the same or "substantially identical" security within 30 days before or after the sale, you can't claim that loss immediately. The disallowed loss gets added to the cost basis of the replacement shares.

Thanks for mentioning state requirements! I completely forgot about that. Which tax software did you find worked better for household employees? I've used TurboTax in the past but never for nanny taxes.

I found H&R Block Premium worked better for my situation with household employees. Their interface for entering household employee information was more straightforward, and they had better guidance specifically for nanny taxes. They also made it clearer how to handle late filings and amendments. TurboTax can certainly handle it too, but I felt like their household employment section was buried deeper in the software and not as intuitive. The main advantage with either software is that they'll actually prepare all the required forms (W-2, W-3, Schedule H) with the correct calculations, which helps avoid errors that might lead to more notices or penalties.

This is super helpful! Does this work even if you missed the January deadline? I'm in the same boat as the original poster and worried that all the electronic filing options might be closed to me now.

Yikes, that's terrifying! Does the IRS ever waive these penalties if it was an honest mistake or first-time filing error? I'm even more nervous now.

Yes, the IRS can waive penalties if you have "reasonable cause" for filing late or incorrectly. This usually means showing you made a good faith effort to comply and weren't willfully ignoring the requirements. First-time filers sometimes get more leniency, especially if you voluntarily file before the IRS contacts you. If you realize you've made a mistake, file correctly as soon as possible with a detailed explanation of why it was late or incorrect. Document everything about your efforts to comply with the law - research you did, professionals you consulted, etc.

Definitely true. Countries with banking secrecy laws or that are on FATF's "grey list" trigger additional scrutiny. Also matters HOW the money was transferred. If it came through normal banking channels with proper documentation, much less likely to raise flags than if it came through unusual methods.