Can you still file an extension through tax software if you're not actually planning to use that software to file your final return? My accountant prepares my actual S-corp return but I handle the extension myself.

Yes, you can absolutely use tax software just for the extension even if your accountant prepares the final return. You just need to enter your company info and select Form 7004 for your S corporation. The software will submit the extension electronically and provide confirmation. I do this every year because my accountant charges extra to file the extension, but it only takes me about 10 minutes to do it myself through tax software. Just make sure you have your EIN and basic business information handy when you do it.

This is super important advice! Each state has different rules too. Some automatically grant an extension if you have a federal one, others require their own form, and some have different deadlines altogether. Always check each state where you have nexus.

Thanks for confirming! It was such a headache dealing with that penalty. I ended up having to call each state tax department directly to figure out their specific requirements. New York and California were the most complicated for me, while some other states were pretty straightforward about accepting the federal extension.

Thank you so much for this detailed explanation! Quick question - when I refile the rejected return, should I attach any kind of explanation letter about why I'm filing so late? And does using tax software still work for submitting prior year returns or do I need special forms?

You don't need to attach an explanation letter when you refile, but it's not a bad idea to include a brief statement explaining you weren't aware the original filing was rejected. This won't prevent penalties automatically but could help if you request penalty abatement later. Most tax software can handle prior year returns, but you may need to purchase the specific tax year you need as they don't always keep all years available in the current software. Some companies offer prior year versions on their websites. If your situation is fairly straightforward, you can also download the forms directly from IRS.gov for the specific tax year and file by mail. Just be absolutely certain you're using the forms for the correct tax year - they change slightly each year.

I used a tax attorney last year for a similar situation with rejected returns AND self-employment complications. It cost about $1200 but was 100% worth it for the peace of mind. They handled everything, negotiated with the IRS on penalties, and even found deductions I'd missed that nearly covered their fee. Just make sure you find one who specializes in tax resolution, not just general tax preparation.

That's really helpful to know! The $1200 seems steep but honestly if they can find deductions I missed and handle the IRS negotiations, that sounds worth it. Did you find them locally or use some online service?

Do any of these exceptions apply to purchasing rental property specifically? I thought these were mostly for primary residences, not investment properties.

Unfortunately, the first-time homebuyer exception only applies to a primary residence, not rental properties. None of the exceptions specifically cover investment property purchases. However, if you used the SEPP (Substantially Equal Periodic Payments) method to access your retirement funds, that could potentially avoid the 10% penalty regardless of how you used the money. But that's a very specific method that must be set up properly in advance and continued for at least 5 years or until age 59½, whichever is longer.

I switched from TurboTax to H&R Block Premium for my rental properties. It asks more detailed questions about property management, depreciation, and has better guidance for rental-specific deductions. Not perfect but definitely better for real estate.

I went through one last year. They wanted to see my mileage log with dates, starting/ending odometer readings, business purpose for each trip, and total miles. They also asked for proof of my personal vehicle (registration and insurance documents) to verify I had another car for personal use. They checked my gas receipts against my reported mileage to make sure it made sense. Be SUPER detailed in your records.

Thanks for pointing this out! I hadn't considered the depreciation recapture when I eventually sell the vehicle. Is there a specific way to calculate how much depreciation I've already "taken" through the standard mileage rate for the past two years?

Yes, there's a specific calculation for this. The IRS considers a portion of the standard mileage rate to be depreciation. For 2022, it was 26 cents per mile and for 2023, it's 27 cents per mile. You'd take the total business miles you drove in each year and multiply by the depreciation portion for that year. For example, if you drove 30,000 business miles in 2022, that's 30,000 × $0.26 = $7,800 in depreciation already "taken" through the standard mileage rate. When you switch to actual expenses, you'd use this figure to reduce your depreciable basis in the vehicle. This prevents you from double-dipping on depreciation that was effectively included in your standard mileage deductions from previous years.

Did you claim any tax credits like earned income or child tax credit? Those automatically delay processing until at least mid-February because of the PATH Act.

No tax credits like that. Just a standard return with a W-2 and mortgage interest deduction. Nothing complicated! That's why it's so annoying - my husband's return is actually more complex than mine with business income and he gets his refund in like a week. Meanwhile I'm over here waiting 6+ weeks every year for my simple return. Makes zero sense.

I filed Jan 29 and still waiting lol. So much for the "file early" strategy working for everyone 😂