That makes sense, thank you. If I file an amendment, will I likely get my refund delayed? I haven't received it yet and I'm a bit worried that filing an amendment might further complicate things.

Filing an amendment shouldn't affect your original refund - those are processed separately. Your original return will continue processing as normal, and you'll receive that refund based on the original timeline. The amendment is processed separately and typically takes longer (up to 16 weeks currently). Since your amendment won't change the total tax due (assuming the only change is moving the same amount from royalties to other income), you won't have any additional payment to make or receive. The amendment is just to correct the reporting location of the income.

If you use tax software, it's way easier. Just go back into whatever program you used, tell it you need to amend, and it will create all the right forms for you. TurboTax, H&R Block, and most others handle amendments pretty well.

Thanks for this advice! I do have all my trading records going back several years, but they're not organized very well. Do you have any tips on the best way to document the carryover trail? Should I be saving specific forms from each year?

You definitely want to save your full tax return from each year, especially Schedule D and Form 8949. These show your capital gains/losses calculations and carryover amounts. Just as important, keep a separate spreadsheet or document that tracks: 1) Your starting carryover amount each year, 2) How much was used to offset gains that year, 3) How much was used against ordinary income (max $3,000), and 4) The remaining carryover amount that moves to the next year. I also recommend keeping all your original trade confirmations and year-end statements from brokerages. In my audit, the IRS actually wanted to see the original transactions that created the losses in the first place, not just the tax forms showing the carryovers.

That's not accurate. The $3,000 limit ($1,500 if married filing separately) applies to the tax return, not per person. A married couple filing jointly still has the same $3,000 limit as a single filer. The $1,500 limit for married filing separately is because they're essentially splitting the $3,000 limit.

I've considered leasing, but I typically keep vehicles 5-6 years and put on high mileage (30K+ per year) managing rental properties across a wide area. Doesn't leasing usually end up more expensive with mileage penalties for heavy use like mine? I'm curious how you handle that with your rental business. Does the tax simplification outweigh the potential higher costs?

You're right that high mileage can make leasing less attractive. I typically negotiate high-mileage leases (25K miles/year) upfront, which increases the monthly payment but eliminates surprise penalties later. For my situation with 3 rental properties all within 50 miles, it works out financially. With your usage pattern and keeping vehicles 5-6 years, purchasing probably makes more financial sense despite the tax complications. The tax simplification doesn't outweigh the cost difference in your high-mileage scenario. If you're putting 30K+ miles annually while managing properties "across a wide area," the mileage penalties would likely erase any tax-related benefits from leasing.

I use Everlance and it's been awesome. Automatically tracks my trips to rental properties vs personal driving. At tax time, I just export a report showing my business percentage for the year. My accountant said this kind of documentation is exactly what you need if you ever get audited about vehicle expenses with varying business use.

Thanks for the recommendation! Does Everlance let you categorize trips to different properties separately? I need to track which trips go to which rental for our internal accounting, not just the overall business percentage. My current app only tracks business vs personal but doesn't let me sub-categorize the business trips.

Is there something similar to 1031 exchanges but for stocks? Like if I wanted to sell my Amazon shares and buy Google instead, is there any way to defer the capital gains?

Unfortunately, there isn't a direct equivalent to 1031 exchanges for stocks. Those tax-deferred exchanges are specifically for real estate and certain types of personal property, but not securities like stocks or bonds. When you sell stocks, even if you immediately reinvest the money in different stocks, you'll generally have to pay capital gains tax on any profit. The closest option for stocks would be to do your investing within tax-advantaged accounts like IRAs or 401(k)s where you can buy and sell without triggering immediate tax consequences, but that doesn't help for investments you already hold in taxable accounts.

I've been doing this for my clients for years. The key is tracking specific tax lots meticulously and choosing which ones to sell based on your current year tax situation. Some brokerages make this easy with their cost basis settings (specific identification method instead of FIFO). Just make sure you're consistent with your approach.

Do you need to include closets and bathrooms in the total square footage calculation? My apartment is about 800 sq ft total, but my office is 100 sq ft. But there's also 80 sq ft of closet space and a 70 sq ft bathroom. Not sure if those count toward the total or not.

You should include the entire square footage of your apartment when calculating the percentage. This includes closets, bathrooms, hallways - everything. So in your case, you would use the full 800 sq ft as your denominator in the calculation. So if your office is 100 sq ft of an 800 sq ft apartment, your business use percentage would be 12.5% (100 ÷ 800), not the higher percentage you'd get if you excluded some areas. The IRS wants you to use the total square footage of your home, not just the "livable" areas. Make sure you document your measurements carefully!

happened to me too! claimed about 25% of my townhouse for my consulting business and got a letter from the irs 8 months later. such a headache even tho everything was legit. they wanted bank statements, photos, client invoices from my home address, everything!!! took like 3 months to resolve.