Does anyone know if capital loss carryovers from previous years are also split between short-term and long-term for tax calculation purposes? I've got about $12k in carryover losses from last year's crypto crash.

The confusion about where the different tax rates get applied is totally understandable! I went through the same thing when I first started dealing with capital gains. What really helped me was understanding that Form 1040 is essentially just the "summary" document - it shows your total income from all sources, including the combined capital gains from Schedule D. But the actual tax calculation happens in the background using those worksheets that others mentioned. Think of it this way: Schedule D does all the heavy lifting of separating your short-term vs long-term gains and calculating the net amounts. Then, when it comes time to actually compute your tax liability, the IRS tax calculation process (whether done by software or manually using the worksheets) knows to apply ordinary income rates to any short-term gains and the preferential rates (0%, 15%, or 20% depending on your income level) to long-term gains. If you're doing your taxes manually, you'd use the "Qualified Dividends and Capital Gain Tax Worksheet" in the Form 1040 instructions if you have net long-term capital gains. But if you're using tax software, it handles all of this automatically behind the scenes - you just need to make sure you're entering your transactions with the correct dates so it can properly classify them as short-term or long-term.

This is really eye-opening information from everyone who's actually been through audits. I'm a freelance graphic designer and I've been pretty sloppy with my Zelle records - mixing business payments with personal stuff all in one account. Based on what I'm reading here, it sounds like the IRS definitely has the ability to scrutinize these transactions if they want to, but the key is having good documentation to back up what each payment was for. I'm definitely going to start keeping better records and probably open a separate business account like others suggested. One question though - for those who've been audited, how far back did they actually look at your payment app transactions? Was it just the tax year in question or did they go back further to establish patterns?

As someone who's been through multiple IRS audits over the years (unfortunately), I can confirm that they absolutely do examine payment app transactions like Zelle. The key thing to understand is that they're not specifically targeting these apps - they're looking at ALL your deposit sources to find unreported income. During my most recent audit in 2024, the examiner pulled my complete bank statements and highlighted every deposit over $500, including Zelle transfers. I had to provide explanations for each one. The ones that were clearly personal (like my sister sending rent money) were easy to dismiss, but any that looked like they could be business income required detailed documentation. What saved me was having kept a simple spreadsheet throughout the year tracking all my payments - source, amount, date, and purpose. Even though I mixed business and personal on the same account (not recommended!), I could quickly show which transactions were taxable income versus personal transfers. The IRS examiner told me they see a lot of people trying to hide income through payment apps, thinking these transactions are somehow invisible. They're not - if the money hits your bank account, it's visible during an audit. The good news is that if you can document what each payment was for, you'll be fine.

Quick question for anyone who knows - I'm in a similar situation but with a much smaller inherited IRA (about $43k). Is there a minimum amount where the IRS doesn't care about missed RMDs? Like if the penalty would be really small, do they sometimes just ignore it? Just wondering if there's a threshold where it's not worth their time to pursue.

I went through this exact situation with my father's inherited IRA back in 2021. Missed three years of RMDs and was absolutely terrified about the penalties. Here's what worked for me: First, don't panic - the IRS really is reasonable about penalty waivers when you're proactively fixing the mistake. I calculated all my missed RMDs using the Single Life Expectancy Table (you can find it in IRS Publication 590-B), took all the distributions immediately, then filed separate Form 5329s for each missed year. The key is the reasonable cause letter. I explained that I wasn't aware of the RMD requirement due to inexperience with inherited accounts, that I discovered the error through my own research, and that I had now taken all required distributions and would comply going forward. I attached documentation showing I had taken the catch-up distributions. The IRS waived all penalties - saved me about $4,200. The whole process took about 6 months from filing to receiving the waiver approval. The hardest part was actually getting all the year-end account statements I needed for the calculations, so make sure you contact your IRA custodian for those historical balances. One tip: when you take the catch-up distributions, ask your custodian to code them properly for each tax year they relate to, not just dump them all as 2025 income. This can help with the tax impact.

This thread has been incredibly helpful - I'm dealing with almost the exact same situation! My employer excludes my $800/month housing stipend from 401k calculations but taxes it as regular income. After reading through everyone's experiences, I think my next step is to request a copy of our Summary Plan Description to see exactly what our plan document says about eligible compensation. If it's vague or inconsistent with how they're actually handling it, I might have grounds to negotiate. The long-term impact calculations really opened my eyes too. Missing out on employer matching for that portion of my compensation could cost me tens of thousands in retirement savings over my career. Even if I can't get them to change the plan retroactively, it's definitely worth discussing during my next performance review to see if we can restructure my compensation package. Has anyone had success getting their employer to amend their plan document to include housing allowances? Or is it usually easier to just negotiate for higher base salary instead?

I'm in a very similar boat with my company! They're treating my relocation allowance the same way - taxing it but excluding it from 401k calculations. What's been most frustrating is that HR keeps giving me different explanations every time I ask about it. First they said it was "temporary income" that didn't qualify for retirement benefits, then they said it was a "reimbursement" (even though it's a flat monthly amount), and most recently they claimed it was "outside the scope of our plan design." Reading through this thread, I'm realizing I need to stop accepting vague explanations and actually request the specific plan documentation. The fact that some of you found actual errors in how your companies were interpreting their own rules gives me hope that there might be a solution here. I'm also curious - for those who successfully negotiated changes, did you approach HR directly or go through your manager first? I'm trying to figure out the best way to bring this up without seeming confrontational, especially since I've already asked about it multiple times.

Don't forget about the Real Estate Professional status if you spend significant time managing your properties! If you qualify (750+ hours annually in real estate activities and more than half your working time), your real estate losses are no longer subject to the passive loss limitations. This means you could potentially deduct ALL of your losses against other income with no $25k limit or phase-out based on income. This has been a game-changer for my tax situation with my real estate LLC. Just make sure you keep EXTREMELY detailed time logs if you claim this status - the IRS scrutinizes these claims heavily.

Great question! I went through something very similar last year with my rental property LLC. One important thing to add to the excellent advice already given - make sure you're categorizing your $27,500 in repairs correctly between repairs vs. improvements. Regular repairs (like fixing plumbing issues) are fully deductible in the year incurred, but major improvements (like a new roof or HVAC system) typically need to be depreciated over time. The new roof and HVAC might be considered improvements that get depreciated over 27.5 years for residential rental property. However, there are some exceptions - if these were necessary to bring the property up to rentable condition when you first acquired it, they might be treated differently. Also, look into the "safe harbor" rules for small taxpayers - if your average annual gross receipts are $27 million or less (which applies to most individual investors), you might be able to deduct up to $10,000 per building in improvements. Since you're planning to use TurboTax, it should help guide you through these distinctions, but it's worth understanding the difference before you start. Consider keeping detailed records of what exactly was done and why - this documentation could be crucial if you're ever audited.