That's interesting. I didn't have any extreme circumstances like that though. Just poor planning and procrastination on my part unfortunately. Do you know if the IRS ever just "forgives" these situations if I explain it was an honest mistake?

The IRS generally doesn't "forgive" missed deadlines just because it was an honest mistake. They hear that all the time. If it was truly just procrastination, you'll need to follow the pay-first-then-claim-refund route the others mentioned. However, there was actually a recent Supreme Court case (Boechler v. Commissioner) that established equitable tolling could apply for certain tax deadlines, though that was for Collection Due Process cases, not deficiency notices. Still, tax law continues to evolve on these issues.

In my experience, amended returns are taking FOREVER right now - like 6+ months. I filed one in April and it's still "processing" according to Where's My Amended Return tool. But that's separate from the Tax Court deadline issue. The amended return won't stop the deficiency assessment if you missed the petition deadline.

Is there an easy way to separate these out? My property tax bill has the base amount plus like 4 different "special assessments" for things like schools and flood control. Are those considered part of the deductible property tax?

Generally, special assessments for schools, flood control, and similar public improvements are deductible as property taxes as long as they're based on the assessed value of your property and apply to all properties in the jurisdiction. However, special assessments for local benefits that increase the value of your property (like sidewalks, streets, or water/sewer lines specifically for your neighborhood) are not deductible as taxes. The easiest way to separate these is to look at your property tax statement - it should itemize the different charges. If you're using tax software, it will usually ask you to enter only the deductible portions. Or if you work with a tax professional, they'll know how to properly categorize each item.

It really depends on your total itemized deductions. Remember that itemizing includes property taxes, state/local income taxes (capped together at $10k), mortgage interest, charitable contributions, and some medical expenses. If all those combined exceed your standard deduction, then itemizing is worth it. But you're right that the higher standard deduction has made itemizing less beneficial for many homeowners.

Thanks for bringing up the look-back rule - I hadn't considered that! I do have a small 1231 loss from a property I sold in 2023. So if I understand correctly, a portion of my current gain would be considered ordinary income rather than capital gain? Would that portion not be eligible for OZ investment?

Yes, exactly. If you had a 1231 loss in 2023, a portion of your current 1231 gain would be recaptured as ordinary income to the extent of that previous loss. That recaptured portion would not be eligible for OZ investment, since OZ investments can only be made with capital gains. For example, if you had a $10,000 1231 loss in 2023 and now have a $50,000 1231 gain, $10,000 of your current gain would be treated as ordinary income and only the remaining $40,000 would be treated as capital gain eligible for OZ investment.

I invested in an OZ fund after selling a small apartment building in 2022. The fees are definitely higher than typical investment funds, but remember you're getting tax benefits that can offset those costs. I went with a fund focused on multifamily development in emerging markets which aligned with my investment goals. Make sure you do due diligence on the fund manager's track record and understand the timeline - you need to hold for 10+ years to get the full tax benefits on appreciation. And be prepared for the tax bill in 2026 on your initial deferred gain.

That's interesting - I hadn't considered the adoption angle. We've actually talked about it before for family reasons, but I didn't realize it would also have this tax benefit. Do you happen to know how complicated the adoption process is for a stepchild? I'm guessing it's simpler than other adoptions.

Stepchild adoption is generally much simpler than adopting a non-related child. The biggest hurdle is usually getting consent from the other biological parent, if they're still in the picture and have parental rights. In my case, the biological father had been out of the picture for years, so it was fairly straightforward. The process typically involves a home study, filing adoption papers with the court, and a hearing. Costs vary by state but are often lower for stepparent adoptions - ours was about $1,500 total including attorney fees.

That's actually not a great solution for this specific issue. Even with an S-Corp structure, payments to shareholders that are related to services performed are still considered wages subject to employment taxes. The IRS is pretty strict about ensuring reasonable compensation is paid for work performed. Additionally, there are restrictions on how S-Corp stock can be issued, especially to minors, and the administrative burden of maintaining an S-Corp is significant. For most small businesses, the cost and complexity of setting up and maintaining an S-Corp just to try to work around this rule would far outweigh any potential tax benefits.

Thanks for the reminder about the Section 199A deduction! Is that handled automatically through Form 8995A or do I need to do something else to claim it? For the HSA, I'm contributing the maximum for individual coverage. One question though - if I switch to family coverage mid-year, can I contribute the full family amount or is it prorated?

Form 8995A is specifically for calculating your Section 199A (Qualified Business Income) deduction, so no need to do anything additional. It flows automatically to your 1040. For HSA contributions after switching to family coverage mid-year, it gets a bit complicated. You can actually contribute the full family maximum ($8,300 for 2024) if you're still covered by a family HDHP on December 1st and remain covered for the full calendar year of 2025 (called the "last-month rule"). If you don't maintain coverage through December 2025, you'd need to prorate your contribution based on how many months you had each type of coverage.

Just a quick correction - the SE tax is actually 15.3% (12.4% Social Security + 2.9% Medicare) on that 92.35% of net earnings, up to the Social Security wage base limit ($168,600 for 2024). Then 2.9% Medicare tax continues beyond that with no limit, plus an additional 0.9% for high earners. But your point about deducting half on Schedule 1 is super important - loads of people miss that and it's a significant deduction!