Do you remember what the monthly payment amount was for your $5,800 balance? I'm trying to figure out if they let you choose how much to pay each month or if they assign an amount.

You generally can choose your monthly payment amount as long as the debt will be paid off within the required timeframe. For amounts under $10,000, that timeframe is 3 years (36 months). So in my case, the minimum payment would have been about $161 per month not including interest and penalties. I actually opted to pay $200 per month to account for the ongoing interest and penalties and to clear the debt faster. They let me choose this amount during the application process. I set up direct debit from my checking account to avoid having to remember to make the payments and to get the lowest setup fee.

Completely agree about filing on time! The failure-to-file penalty is 5% of the unpaid taxes for each month your return is late, up to 25%. The failure-to-pay penalty is much lower at 0.5% per month.

Thank you for pointing this out! He did file on time, he just couldn't pay the full amount at once. I'll definitely suggest he try the online system since that seems to be the consensus here - much easier than trying to call again.

Omg you're right! I just double-checked my transcript and it's actually a 769 code, not 849. I totally misread it. Now I'm even more confused what that means. Is that better or worse than what I thought?

A 769 code typically indicates an earned income credit (EIC) claim on your return. This is just informational and shows the IRS has processed that part of your return. It's neither better nor worse than what you thought - it's just tracking different aspects of your return processing. What you should be looking for is either a 570 code (which would indicate a temporary hold) or an 846 code (which means your refund has been approved and issued). The 769 by itself just acknowledges your EIC claim was received and being processed. If you don't see a 570, that's actually good news - it means there's no specific hold on your account.

Tax Advocate Service is only accepting cases with real hardships now - like you're about to be evicted or have utilities shut off. They won't help with just checking refund status. They're super backlogged and turned me away when I called last week about my delayed refund.

12 Thanks for the suggestion! Would I need any special documentation to prove I actually tried to collect the debt? I have the original contract, all my invoices, and email threads showing I tried to get paid multiple times.

4 Yes, documentation is critical. Keep your original contract, all invoices sent, and especially any communications showing you attempted to collect payment. Also document how you determined the company was bankrupt and the debt uncollectible - like news articles about their shutdown, bankruptcy filings, or bounced emails to company addresses. Form 8949 is typically used for capital losses, but business bad debts can sometimes be reported as short-term capital losses. However, this really depends on your specific situation and whether you're using cash or accrual accounting.

3 Good point! They definitely should have issued a 1099-NEC for payments over $600. If they didn't, you should still report the income you actually received, but that missing 1099 might be another sign the company wasn't following proper business practices.

Great point about state taxes. Do K-1 losses always work the same way for state taxes as they do for federal? I'm in Virginia and sometimes our state rules are different than federal.

State tax treatment generally follows federal rules, but there can definitely be differences. Virginia typically conforms to federal tax law for pass-through entities like partnerships, so your K-1 loss should flow through to your state return similarly. However, some states have their own limitations or adjustments for passive losses. The best approach is to check your specific state's tax department website or consult with a tax professional familiar with your state. Even with potential variations, in most cases you'll still see some benefit at the state level from reporting your K-1 loss.

How much was the penalty? I'm wondering because I might have done the same thing last year... thought my K-1 loss was so small it wouldn't matter 😬

1 That's good to know! If my cost basis is missing, can I just use the price I remember paying or do I need actual documentation?

5 You really need documentation to support your cost basis if it's missing from your 1099-B. The IRS can question unsupported numbers during an audit. If you absolutely can't find records, you should make a good faith effort to reconstruct the cost basis using historical price data from when you purchased the securities. Some brokerages have historical price lookup tools, or you can use financial websites that show historical prices. Just make sure to keep notes on how you determined each cost basis amount in case you need to explain your methodology later. Documenting your research process shows you made a reasonable effort to comply with tax requirements.

12 Really? That seems excessive. What about losses? Can those offset other income or do they only offset capital gains?