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.

Thanks for mentioning this! Do you know if email confirmation of the download/activation would count as proof? Or do we really need actual project screenshots?

Email confirmations of download/activation are a good start, but they only prove you received the software, not that you actually put it to business use. The IRS specifically looks for evidence of the software being used in your business operations. Project screenshots with visible dates, saved project files with creation timestamps, or even emails to clients mentioning you used the new software on their project can all serve as stronger evidence. I'd recommend keeping several different types of proof just to be safe. My accountant calls it the "belt and suspenders" approach to tax documentation.

I got audited last year and software deductions were absolutely part of what they examined. It wasn't the only thing, but they specifically asked for proof that the $3200 design software I purchased was actually used in my business and when I started using it. They disallowed part of another tech purchase because I couldn't prove I was using it exclusively for business.

3 Wouldn't leasing have limitations too though? I thought there were luxury auto restrictions on lease deductions as well? Plus don't you lose the potential appreciation of the vehicle as an asset?

5 You're right that there are luxury auto limitations on lease deductions, but they work differently than purchase limitations. With leasing, you can deduct the business percentage of your payments, subject to inclusion amounts for higher-priced vehicles. It's often more straightforward than dealing with Section 179 income limitations. As for asset appreciation - vehicles almost always depreciate rather than appreciate, so that's rarely a concern. In fact, with leasing, you avoid the risk of getting stuck with a rapidly depreciating asset. The main advantage in your situation would be that you don't need immediate business income to start taking some deduction, unlike with Section 179 which requires business profit to utilize fully.

1 This is making me nervous now. Would starting with a cheaper vehicle be less likely to trigger an audit? I was also thinking about an SUV but maybe something in the $45k range instead of $95k?

Wait, so if I'm trading in my Roth IRA I don't need to worry about this at all? That's a huge relief for part of my portfolio! What about trading between a regular brokerage account and an IRA? Could that trigger wash sales?

You're completely safe trading within your Roth IRA - no wash sale concerns there! Trading between accounts is where you need to be careful. The IRS considers trades across different accounts you own when applying the wash sale rule. So if you sell something at a loss in your brokerage account and then buy it within 30 days in your IRA, you could trigger a wash sale. What makes this particularly bad is that the disallowed loss gets added to the cost basis in your IRA, where it essentially disappears forever since IRAs don't benefit from cost basis adjustments.

TurboTax Premier has been decent for me with handling wash sales, but only if your brokerage provides a correct 1099-B with wash sales already calculated. If you're using a broker that doesn't adjust for wash sales on their forms, you're basically on your own with any software. I've heard H&R Block's premium version is also good for investors, but haven't tried it myself.

This is a really good point! The post office sometimes does "address corrections" based on carrier knowledge which can mask the real problem. Would talking to the postmaster help or is there a specific form for this too?

Talking to your regular mail carrier first is usually helpful, but if that doesn't work, yes - speaking with the postmaster at your local post office is the next step. There's actually a form called PS Form 3575Z "Employee-Generated Change of Address" that they can use to stop automatic "corrections" to specific addresses. The key is making sure they understand that redirecting the mail is masking a problem rather than solving it. Once my postal carrier understood the situation, they started marking the mail as "addressee unknown" and returning it, which eventually forced the IRS to fix their records.

I do this all the time and it works! Just make sure the message is super clear and covers any barcodes on the envelope. I've heard that sometimes the automated sorting machines just read the barcodes and ignore what's written on the envelope.