Do you think the CPA could get in trouble if OP reports him to the state board? My tax guy messed up some stuff too and I'm wondering if I should report him.

Yes, CPAs are licensed professionals who can face disciplinary action from their state boards for substandard work. The severity depends on whether this was a simple mistake or represents a pattern of incompetence. Before formal reporting, I'd recommend clearly documenting the errors in writing and giving the CPA an opportunity to correct the issues or adjust their fee. Most licensing boards want to see that you attempted to resolve the issue directly first. If they're dismissive or refuse to acknowledge clear errors (like taxing unrealized gains), then reporting becomes more appropriate. Make sure you keep copies of all communications and the incorrect tax documents to support your complaint.

I tried a couple different options but ended up using Koinly for tracking all the transactions and calculating the gains/losses. It was pretty intuitive for importing from different exchanges. Then I just took those totals and put them into FreeTaxUSA for the actual filing. The whole process was definitely time-consuming upfront but now that I understand it, next year should be much easier. I also created a detailed spreadsheet where I documented everything so I have backup records. The most annoying part was figuring out the staking rewards since they count as income at the fair market value when received. The tax software I used makes it pretty clear where to report everything.

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.

Thanks for this advice! I pulled my credit reports right after reading this and thankfully don't see any suspicious accounts or inquiries. I've already frozen my credit at all three bureaus and filed the FTC complaint. Would you still recommend filing a police report even though there don't seem to be any other signs of identity theft beyond the fake W-2s?

Absolutely still file a police report. Even if there aren't currently other signs of identity theft, having an official police report will be extremely helpful if anything else pops up later. It creates a timeline and official documentation of when you first discovered the identity theft. Some identity thieves are specifically targeting tax fraud without touching credit because it can fly under the radar longer. The fact that they've filed W-2s using your SSN at multiple law firms suggests this is a sophisticated operation, not just a random scammer. These operations often sell stolen identities on the dark web, so other issues could surface later. Having that police report now establishes you as a victim from the start.

I had something similar happen but with medical offices. Turned out the person who stole my identity worked in medical billing. The IRS agent told me scammers often pick industries they're familiar with because they know how to manipulate those specific payroll systems or have inside access.

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.

Does the accountable plan approach require any special documentation? I've heard mixed things about how formal it needs to be.

An accountable plan does require proper documentation, but it's not overly complicated. You need to have a written policy that requires business connection for expenses, timely submission of expenses (generally within 60 days), and returning excess reimbursements within a reasonable timeframe (usually 120 days). You'll need to keep receipts and document the business purpose of each expense. The plan itself can be as simple as a one-page document outlining these requirements that's approved by the partnership. The key is consistent enforcement - you can't just reimburse expenses without following the documentation requirements you establish.

You need to measure the actual square footage of your dedicated office space and divide by the total square footage of your home. So if your office is 150 sq ft and your home is 2000 sq ft, you'd use 7.5%. Using "number of rooms" isn't accurate and could get flagged.