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One thing nobody has mentioned yet about Section 83(b): if your shares are already fully vested when granted, you DON'T need to file this! I wasted so much time panicking about this before my accountant told me it only applies to shares with vesting restrictions. Also, make sure you understand the difference between restricted stock and stock options - they're treated completely differently for tax purposes. Section 83(b) elections only apply to restricted stock, not to stock options. I got confused because my company grant included both types and I almost filed unnecessarily for the options portion.
Wait, so if I have stock options (ISOs) with a 4-year vesting schedule, I don't need to file an 83(b)? My startup's CEO told everyone to file 83(b) elections but now I'm confused.
Correct - for standard ISOs (Incentive Stock Options), you don't need to file an 83(b) election. The taxation on ISOs is different - you don't pay tax when they vest, only when you exercise them (purchase the shares). Your CEO might be confusing ISOs with RSAs (Restricted Stock Awards) or they might be trying to be extra careful. Or perhaps some employees got different types of equity. If you have standard ISOs with a vesting schedule, an 83(b) election doesn't apply to your situation. To double check, look at your grant documents - they should clearly state whether you received ISOs, NSOs (Non-qualified Stock Options), or restricted stock/RSAs. If you're still unsure, definitely ask HR or a tax professional to clarify before your 30-day window expires.
Something super important that nobody mentioned: When you file Section 83(b), you need THREE copies! One for the IRS, one for your employer, and one to attach to your tax return for that year. I almost messed this up. Also, make sure you're using the right address for your IRS service center - it differs based on where you live. And don't forget you need proof of mailing (certified mail with return receipt) to prove you sent it within the 30-day window.
Something no one mentioned yet - if you qualify for Head of Household filing status, that's usually more valuable than an extra dependent deduction. Run the numbers both ways before deciding. Also, the parent who claims the child gets the Child Tax Credit which is worth up to $2,000 per kid for 2024 taxes.
One thing to consider before amending - check if your mortgage interest plus other potential itemized deductions (property taxes, state income taxes, charitable donations) actually exceed the standard deduction. Many people assume they should itemize after buying a house, but with the higher standard deduction amounts since 2018, it often doesn't make financial sense unless you have a very large mortgage or lots of other deductions. I amended unnecessarily one year and it was a hassle for what turned out to be only a $120 benefit. Sometimes it's not worth the paperwork!
That's really good advice, thanks! Our property taxes were about $3,400 and we donated maybe $1,000 to charity. Plus the $9,800 in mortgage interest... that's still not enough to exceed the married filing jointly standard deduction, right? Sounds like maybe I shouldn't bother with amending?
Based on those numbers, you're looking at approximately $14,200 in itemized deductions ($9,800 mortgage interest + $3,400 property tax + $1,000 charitable). Since the standard deduction for married filing jointly was $27,700 for 2023, you're still better off with the standard deduction by a significant margin (about $13,500 better). So in your case, I wouldn't recommend filing an amended return since you correctly benefited from taking the standard deduction. Even if you had included the mortgage interest initially, the tax software would have automatically selected the standard deduction since it's more beneficial.
Don't forget about the SALT (State And Local Tax) deduction cap of $10,000! Even if your state income tax and property tax combined are higher, you can only deduct up to $10k when itemizing. This trips up a lot of homeowners in high-tax states who assume all their property taxes will help push them over the standard deduction threshold.
This is such an important point! I live in New Jersey and our property taxes alone are $15k, but I can only claim $10k total between those and state income tax. Really changes the math on whether to itemize or not.
Have you tried completely starting over with the healthcare section in TurboTax? Sometimes their interview gets confused if you go back and change answers. When I had this problem, I cleared the entire healthcare section and started fresh, being super careful about my answers, and it worked. Also, make sure you're indicating you had "minimum essential coverage" through a government program for all 12 months of the year. That's the magic phrase that usually prevents these 1095-A related errors.
I ended up trying this approach last night after seeing your comment. You were right - I deleted all the healthcare info and started fresh, being super careful about how I answered each question. The key was making sure I selected "full year coverage" through a government program AND specifically selecting "Medicaid" from the dropdown. My return got accepted this morning! Thanks for the tip about "minimum essential coverage" - I think that was the phrase I needed to look for.
Is anyone else annoyed that TurboTax has gotten worse over the years despite charging more? Like, for a premium tax product, it should be able to handle something as common as Medicaid without throwing confusing reject codes. I'm switching to FreeTaxUSA next year.
I switched to FreeTaxUSA two years ago and never looked back. It's way more straightforward about healthcare stuff, and they don't nickel and dime you for every form. I used to get so many weird errors with TurboTax.
Norman Fraser
Check the letter for a notice number (usually in the top right corner or mentioned somewhere in the text). Even if the form fields are empty, the notice type itself can tell you what they're looking for. Also, was your original CP2501 response complete? Did you include: - A signed statement explaining why you disagree - Supporting documents for each disputed item - A copy of the original notice If you missed any of these, that might be why they're asking for more info in this weird follow-up.
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Fidel Carson
ā¢That's the weird thing - there's literally NO notice number anywhere on this letter. It has the IRS letterhead and my address, but all the actual fields where information should be are just blank. I double checked my original response and I included everything - signed statement, all supporting docs for the disputed amounts, and attached the original notice copy like they asked. That's why this is so confusing!
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Norman Fraser
ā¢In that case, it's definitely a printing error on their end. Sometimes their antiquated systems generate letters but fail to populate the fields with the actual information. Given that you properly responded to the original CP2501, I'd suggest two things: Call the IRS directly at the number on your original notice. Tell them you received a blank follow-up letter and want to confirm the status of your case. Be persistent but polite - the first-line reps sometimes need to transfer you to someone who can actually access your case details. While waiting, keep all your documentation (including this blank letter) organized. Note the date you received it and take pictures/scans of it. If you get any further notices or if they try to assess penalties based on you "not responding" to this blank letter, you'll have evidence that they sent you something impossible to respond to.
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Kendrick Webb
Has anyone noticed that these weird IRS letter issues have gotten worse in the last couple years? I've been filing taxes for 30+ years and never had problems until recently. Now I'm getting duplicate notices, letters with missing information, and contradictory statements about what I owe. Is there a specific tax software that's better at helping with IRS notice issues? I've been using TurboTax but they don't seem to have much support for dealing with these kinds of problems.
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Hattie Carson
ā¢I switched from TurboTax to FreeTaxUSA and found their audit assistance to be more helpful with notices. I think part of the problem is the IRS is still dealing with a backlog from the pandemic plus they're working with computer systems from the stone age. But yeah, these issues seem more common lately.
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