Just wanted to share my experience since I went through something very similar last year. I had a property that was my primary residence for 2 years, then rental for 3 years before selling. The biggest mistake I made initially was trying to handle everything on Form 8949 when, as Miranda mentioned, the depreciation recapture actually belongs on Form 4797. Once I separated these two components, everything fell into place: **Form 4797:** $18,500 depreciation recapture (taxed as ordinary income up to 25%) **Form 8949:** Capital gain calculation using the depreciation-adjusted basis **Form 1040:** Applied partial Section 121 exclusion to reduce the capital gain portion The key insight for me was understanding that the IRS views these as fundamentally different types of income. Depreciation recapture is treated as ordinary income because you previously deducted it, while the remaining gain is capital gain eligible for preferential rates and potentially the Section 121 exclusion. Also, make sure you have documentation for any major improvements during your ownership period - new roof, HVAC system, etc. These increase your basis and reduce your overall taxable gain. I was able to add about $15,000 in improvements that I had forgotten about initially. The whole process becomes much clearer once you realize it's really two separate tax calculations happening simultaneously.

I went through this exact same issue last year and can confirm what others have said about separating the depreciation recapture from the capital gain calculation. The confusion often comes from thinking everything goes on Form 8949, when actually you need multiple forms. Here's what worked for me with similar numbers: **Step 1: Calculate depreciation recapture for Form 4797** - You claimed $22,000 in depreciation → this goes on Form 4797 as ordinary income **Step 2: Calculate capital gain for Form 8949** - Proceeds: $528,000 (column d) - Adjusted basis: $378,000 ($400,000 - $22,000 depreciation) (column e) - Column g: $0 (no adjustment needed here) - Capital gain: $150,000 **Step 3: Apply Section 121 exclusion** - Since you lived there 3 years as primary residence, you likely qualify for partial exclusion - This can significantly reduce or eliminate the capital gain portion (but not the depreciation recapture) The reason TurboTax keeps flagging your entries is probably because it expects the depreciation component to be handled on Form 4797, not mixed into your Form 8949 calculation. Once you separate these two components, the software should accept your entries. Also double-check that you've included all qualifying improvements in your original $400,000 basis - things like major renovations, new systems, etc. can add to basis and reduce your overall gain.

One thing nobody's mentioned yet - you should really clarify if you're truly an independent contractor (1099 worker) or if you should be classified as an employee (W-2). Based on what you described, it sounds like you're working regular hours for one company. The IRS has specific criteria for who can be classified as a 1099 worker vs. an employee. Many employers incorrectly classify workers as contractors to avoid paying employment taxes. If you're misclassified, you're paying extra taxes that your employer should be covering. You might want to look at the IRS guidelines on worker classification and see if your situation fits.

Hey Caleb! You're absolutely right to be concerned about this. I went through something similar when I was freelancing and getting paid through various apps. First thing - definitely keep ALL those Zelle screenshots and bank records. Print them out and keep digital copies too. When your 1099 arrives in January, compare it line by line with your own records immediately. One tip that saved me: create a simple spreadsheet now with the date, amount, and Zelle transaction ID for every payment you've received. This makes it super easy to spot discrepancies when the 1099 comes. If there is a mistake on the 1099, don't panic! Your employer can issue a corrected form (1099-C) to fix it. Most small business owners will work with you on this - they don't want IRS problems either. And honestly, the fact that you're only 22 and already thinking about this stuff puts you way ahead of most people your age. You've got good instincts here. Just stay organized with your records and you'll be fine even if there are bumps along the way. The payment method (Zelle vs direct deposit) doesn't really matter for tax purposes - what matters is accurate reporting of the amounts. You're doing the right thing by keeping track of everything!

I've been in a similar situation and ended up using a combination of approaches. First, I calculated my safe harbor amounts using last year's tax return - if you paid 100% of last year's tax liability (or 110% if your AGI was over $150k), you're generally safe from penalties regardless of what happens with your current year income. But here's what I learned the hard way: don't just assume you're covered based on rough estimates. I thought I was fine until I actually sat down with all my 1099s and realized I had miscalculated my withholdings from my day job. My suggestion would be to do a mid-year tax projection using actual numbers through now, then extrapolate for the rest of the year with conservative estimates. Include ALL income sources - W-2 withholding, estimated payments made so far, dividends, interest, any side income, etc. If that shows you're clearly above the safe harbor thresholds, then you can confidently skip or reduce remaining payments. The peace of mind of knowing for sure is worth the hour it takes to run the numbers properly. Plus, if you do end up with extra withholding, you'll get it back as a refund anyway.

One thing to consider is that the IRS calculates underpayment penalties quarterly, not annually. So even if you end up overpaying for the year overall, you could still get hit with penalties for specific quarters where you underpaid. That said, if you've already made two quarterly payments based on high projections and your actual income is coming in lower, you're probably in good shape. The key is making sure those first two payments, combined with any withholding from other sources, meet the safe harbor requirements Ian mentioned. I'd recommend doing a quick calculation: take your total tax liability from last year, multiply by 100% (or 110% if your AGI was over $150k), and see if what you've already paid this year covers that amount. If yes, you should be fine to skip the remaining payments. If you're close but not quite there, maybe make a smaller payment just to be safe. Also keep in mind that if you do end up with a big refund, you're basically giving the IRS an interest-free loan, so there's definitely value in not overpaying too much.

I've been dealing with IRS phone issues for years and here's what I've learned: the audio problems are usually on their end, not yours. Their phone system is ancient and overloaded. Try calling the Taxpayer Advocate Service line instead - it's a separate number (1-877-777-4778) and I've had much better luck with clear connections there. They can often help with the same issues as the main IRS line but with way less hassle. Also, if you do get through to someone who can't hear you, ask them to note in your file that there were technical difficulties - this way if you have to call back, the next agent will see you already tried. Don't let them just hang up on you without documenting the attempt!

I've had this exact same problem! The IRS phone system is notorious for audio issues. Here are a few things that have worked for me: First, try calling from a landline if possible - cell phone connections can be spotty with their old system. Second, make sure you're in a quiet room and speak directly into the microphone (not on speaker). If they still can't hear you, don't waste time trying to make it work - immediately ask to be transferred to a different agent or line. I've also had success calling the early taxpayer assistance line at 1-800-829-1040 and pressing 2 for personal income tax questions - sometimes that routing has better audio quality. The key is being proactive about the audio check right when they pick up instead of trying to struggle through a bad connection. Good luck!

I dealt with a very similar situation last year when I made large anonymous donations through a local food bank. After consulting with a tax attorney, here's what I learned: The key distinction is whether you made gifts to specific individuals or charitable contributions to an organization. If the charity distributed your money to specific families (even anonymously), those are technically gifts to individuals and require Form 709 if over the exclusion amount. For Schedule A, I recommend: 1. List the charity's name and address in the "Donee's name and address" section 2. In the description field, write something like "Anonymous gifts to individuals facilitated by [Charity Name] - recipient identities unknown" 3. Include the total amount and date of transfer 4. Attach a statement explaining the circumstances and your good faith efforts to obtain recipient information The IRS Publication 559 actually addresses situations where complete information isn't available. As long as you document what you know and explain why certain information is missing, you should be compliant. The important thing is showing transparency and good faith effort to follow the reporting requirements. Don't leave fields completely blank - always provide what information you have and explain the limitations.

I'm dealing with a very similar situation right now! Made some large anonymous donations through a community fundraiser last year and just realized I crossed the gift tax threshold. Reading through all these responses has been incredibly helpful. One thing I want to add based on my research - make sure you're clear on the timing requirements. Form 709 is due by April 15th (or October 15th with extension) of the year AFTER you made the gifts, not the year you made them. So gifts made in 2024 require filing Form 709 by April 15, 2025. Also, even if you can't identify the specific recipients, you still need to report the total value of gifts that exceeded the annual exclusion. The annual exclusion for 2024 was $18,000 per recipient, and it's $19,000 for 2025. If you made multiple anonymous gifts through the same organization, each unknown recipient still gets their own $18,000/$19,000 exclusion. I'm planning to follow the advice here about including the facilitating organization's information and attaching an explanation statement. It's reassuring to hear from others who've successfully navigated this exact situation without issues from the IRS.