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Something nobody's mentioned - make sure you don't file an AMENDED return (Form 1065X) just to add the missing Schedule B-2! That's overkill and could create confusion. Just send the missing schedule with a cover letter as the first commenter suggested. I made the mistake of filing an amended return for a similar situation last year and it created a huge headache.
Has anyone tried using one of the partnership tax support lines? I called the Business & Specialty Tax Line (800-829-4933) for a similar issue and they were actually pretty helpful, though I had to wait on hold for about an hour. They told me exactly where to mail my missing schedule and what to write on it.
One thing to consider - if you just have W2 and 1099 income without complicated investments or business structures, software like FreeTaxUSA can handle past years for a fraction of what you were quoted. They charge around $15-20 per federal return for prior years. For 1099 income, you'll need to fill out Schedule C, but most tax software walks you through this with simple questions. Just make sure you have good records of your expenses to offset that 1099 income - things like home office, supplies, mileage, etc. Don't let a CPA scare you into thinking your situation is more complex than it is. The $8800 quote is appropriate for someone with seriously complicated tax issues, not basic W2 and 1099 filing.
You'll need to mail in prior year returns - the IRS doesn't allow e-filing for tax years more than 2 years past. Print everything out, sign the forms, and send them via certified mail so you have proof of filing. For state returns, it varies by state. Some states do allow e-filing for prior years, but many follow the same rule as the IRS. Most tax software can still prepare state returns for prior years for around $15-20 per state. Just make sure you're using the software version for the correct tax year - 2021 taxes need to be prepared using 2021 tax software, etc.
Has anyone here actually gotten a penalty abatement for filing late? I'm in a similar boat (3 years unfiled) and I'm worried about how much the penalties are going to be on top of what I owe.
The "exempt" checkbox on W-4 forms is seriously misunderstood. I work in payroll and see people make this mistake all the time. Here's the deal: You can only claim exempt if you meet BOTH criteria: 1. You had ZERO federal income tax liability last year (not just got a refund) 2. You expect ZERO tax liability this year At $43k, you definitely had tax liability even if you got a refund. The refund just means you overpaid throughout the year. If you check exempt incorrectly, you'll get a bigger paycheck now but potentially face a huge bill plus underpayment penalties next April.
What's the difference between "no tax liability" and getting a refund though? If the government gave me money back, doesn't that mean I didn't owe anything?
Great question. Tax liability means the total amount of tax you owe based on your income before any withholding is considered. Getting a refund just means you had more withheld throughout the year than your final tax liability. For example, if your total tax liability was $3,000, but your employer withheld $4,200 throughout the year, you'd get a $1,200 refund. But you still had a $3,000 tax liability. To qualify for exempt status, your tax liability would need to be $0 before considering any withholding.
Has anyone used the IRS Tax Withholding Estimator? It's supposed to be more accurate than the old W-4 calculator but I can't figure out how to use it with my situation.
My wife and I switched from paper filing to TurboTax a few years ago, and I'll admit it's been worth it for us. Our main reason was because we started a small side business selling handmade items online, and the business expense categories were confusing us. The interview-style questions in TurboTax definitely made it easier to understand what we could legitimately deduct. It also automatically imports our W-2s and 1099s which saves time on data entry. That said, if you actually ENJOY doing taxes by hand and understand all the forms well, there's nothing wrong with continuing that way. You're not necessarily missing out on deductions if you're thorough and stay up to date with tax law changes.
How much do you typically pay for TurboTax? Their pricing is so confusing with all the different versions and upsells.
We pay about $150 for the Self-Employed version plus state filing. You're right that their pricing is confusing - they start you on a cheaper version then tell you halfway through that you need to upgrade to handle certain forms. The most annoying part is that they increase the price every year while adding very few new features. We've looked at cheaper alternatives like FreeTaxUSA but haven't made the switch yet because we're already familiar with TurboTax's interface.
Has anyone used a CPA vs tax software and can compare the costs/benefits? I've always used software but wondering if a professional would find more deductions.
I switched from TurboTax to a CPA three years ago and it's been worth every penny. Cost is $350 but she found nearly $2,000 in deductions I was missing related to my consulting work. Plus she provides advice throughout the year, not just at tax time. The biggest difference is that software can only work with the information you provide and the questions it's programmed to ask. A good CPA asks probing questions based on your specific situation and knows the more obscure parts of tax code that might apply to you.
Ellie Perry
One thing nobody has mentioned yet - don't forget about potential state tax implications if your rental property is in a different state than your residence. I made this mistake last year. Some states may consider your rental activity as doing business in that state, which could potentially trigger filing requirements. This is especially important if you're physically present in that state doing work on the property.
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Danielle Campbell
ā¢That's a really good point I hadn't considered. The rental property is actually in a different state than where I live. So you're saying I might need to file a non-resident state tax return for the state where the rental is located? Were there any resources you found helpful for figuring out the state-specific requirements?
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Ellie Perry
ā¢Yes, you may need to file a non-resident state return. It depends on the specific state's rules where your rental is located. Some states have minimum income thresholds before filing is required, while others want you to file regardless of the amount. I found the state's department of revenue website to be the most helpful resource. Most have specific sections for non-resident property owners. Also, software like TurboTax or H&R Block will usually prompt you about this situation if you indicate you have rental property in another state. In my case, I had to file in Arizona even though I live in California because my rental income exceeded their minimum threshold.
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Landon Morgan
Has anyone considered the vehicle aspect of this? You might be able to deduct some of the truck purchase if you can legitimately allocate a portion to business use during that period. Keep track of total miles driven for rental work vs. personal during your ownership.
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Teresa Boyd
ā¢That wouldn't work because OP already said they don't plan to use the truck for business after driving it home. You can't just allocate part of a vehicle purchase to business use for a one-time thing and then convert it to 100% personal use. The IRS would see right through that.
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