This is really helpful advice. Do you know if TurboTax can help me calculate how much I should be paying quarterly? Or should I just put aside 30% of everything I make to be safe?

TurboTax can give you estimated quarterly payment vouchers based on your previous year's income, but since your situation has changed, it might not be accurate. For simplicity, I'd recommend setting aside 30% of every payment you receive in a separate savings account dedicated to taxes. Then each quarter, calculate your actual tax obligation more precisely (or use a tax calculator online) and make your payment. Whatever is left in the account after your quarterlies can go toward retirement savings or other goals. This approach gives you a buffer and prevents nasty surprises.

This! I'm in California and they're even stricter about estimated payments than the feds. And their penalties are no joke either.

This is super helpful! I hadn't even thought ahead to resolution options yet. Any tips on documentation needed for the Offer in Compromise? I suspect my client will have significant tax debt once we figure out all the unfiled years.

For the OIC, you'll need comprehensive financial documentation - recent bank statements (3 months), pay stubs, vehicle registrations, property records, investment accounts, retirement accounts, credit card statements, loan statements, and monthly expense documentation. The IRS Form 433-A (individual) or 433-B (business) will be required. The key is accurately documenting your client's collection potential. This includes liquid assets, equity in property, and future income potential minus allowable expenses. If your client has few assets and limited income, that strengthens the OIC position. Make sure to fully document any hardship conditions or special circumstances that would justify accepting less than the full amount owed.

Streamlined procedures only apply to international situations with unreported foreign assets/income. If this is purely domestic, it wouldn't qualify. Regular voluntary disclosure through filing the required back returns is the way to go.

I hadn't considered wash sales affecting the holding period classification! I'll definitely look back through my history to see if I had previous transactions in this stock. That actually makes a lot of sense because I was actively trading this particular ticker throughout the year, so there's a good chance I triggered some wash sales along the way. Would that really change the Form 8949 category though? I thought wash sales just affected the basis calculation, not the short-term/long-term classification.

Wash sales primarily affect your cost basis by disallowing the loss, but they can also affect holding periods in certain circumstances. If you repurchase shares within 30 days of selling at a loss, the holding period of the original shares can sometimes be added to the new shares. This is a complex area of tax law and brokers often handle it differently. Some brokers calculate everything properly, while others (especially the free trading apps) often make errors in reporting. Your situation sounds like a reporting error rather than a legitimate holding period adjustment, but it's always good to check your complete trading history to be sure.

This is the correct answer! Broker lot relief methods are often the source of these discrepancies. I work in accounting and see this constantly with clients who trade actively.

I didn't know about the qualifying widow(er) status! That's really helpful information. In this case though, they didn't have dependent children living with them. It sounds like for the 2020 return, they should file jointly without the deceased designation, then for 2021 file jointly with deceased designation, and then for 2022 she would have to file as single. Is that right?

Yes, you've got it exactly right! For 2020, file jointly with no deceased designation since he was alive all year. For 2021, file jointly with deceased designation since that's the year he passed away. Then for 2022 forward, she'll file as single (or head of household if she has qualifying dependents, but it sounds like she doesn't). One thing to note - when filing that 2021 return with deceased status, make sure to write "DECEASED" and the date of death across the top of the return to ensure proper processing. Some tax software handles this automatically, but it's good to double-check.

Is there a calculator or something that shows the break-even point between traditional vs Roth? I always hear conflicting advice and don't know how to figure out which is actually better for my situation.

There's no perfect calculator because it depends on assumptions about future tax rates that nobody can predict with certainty. However, a good rule of thumb is that if you expect your tax rate in retirement to be higher than it is now, go with Roth. If you expect it to be lower, go traditional. For young people early in their careers with relatively low incomes, Roth often makes more sense because they're likely in a lower tax bracket now than they will be in retirement. But everyone's situation is different - factors like pension income, Social Security, and other retirement income sources can affect your future tax situation.

This is exactly what I do too! It's called "tax diversification" and it means you'll have both tax-free and taxable income sources in retirement, which gives you flexibility for tax planning. Smart strategy.