Thanks for pointing that out. I held most of these coins for over a year, but some of the DeFi stuff was shorter term. Do I need to separate those out specifically on different forms, or just calculate different rates?

You'll report them separately on your Schedule D and Form 8949. You'll use different sections of Form 8949 - Part I for short-term transactions and Part II for long-term. Each transaction gets reported individually with its purchase date, sale date, proceeds, and cost basis. This is where good record keeping becomes really important, as you need to know the specific purchase and sale dates for each position. If you're using tax software, it will guide you through this process and calculate the appropriate tax for each category.

Using $0 cost basis is the nuclear option though - definitely a last resort! I'd exhaust every possible method to reconstruct your basis before going that route. Bank statements, credit card statements, emails from exchanges confirming purchases - anything can help establish at least some basis.

So does this mean your student's income DID count toward PTC household income once you filed their return? Or were they still exempt from household income because they were below the filing requirement threshold, even though you voluntarily filed? This distinction seems really important.

Their income remained exempt from the household income calculation for Premium Tax Credit purposes. The key is that they were below the filing requirement thresholds ($12,950 for earned income and $1,250 for unearned income), so even though we voluntarily filed a return, their income didn't have to be included in the PTC household calculation. The IRS looks at whether they were required to file, not whether they actually filed. This is an important distinction that many tax software programs don't explain well. So we got the benefit of claiming the American Opportunity Credit without any negative impact on our Premium Tax Credit.

Good question! For Additional Child Tax Credit purposes, earned income refers to wages, salaries, tips, self-employment income, and certain disability benefits. Work-study income does count as earned income because it's reported on a W-2 as wages. However, the confusion might be because you're thinking of the Earned Income Tax Credit (EITC), which has its own specific definition of earned income. For the Additional Child Tax Credit, what matters is having at least $2,500 of earned income to begin qualifying, but the credit amount is based on your overall tax situation, not just earned income.

Thanks for clearing that up! I was totally mixing up ACTC requirements with EITC. That makes much more sense now. So if I understand right, the parent needs earned income to qualify for ACTC, but the scholarship question is more about how it affects household income for Premium Tax Credit, not whether it counts for the ACTC calculation itself?

Thanks for this insight! Do you think it's reasonable to negotiate a rate increase after I've completed a certain number of returns or after a specific time period?

Absolutely! That's a very common arrangement. You could propose starting at a lower rate while training (maybe $30-35/hour), then bump up to $40-45 after you've successfully completed 10-15 S Corp returns or after the first month, whichever comes first. Just make sure to get this agreement in writing before you start. Many CPAs will happily agree to this structure since they expect you'll become more valuable as you gain experience with their specific clients and processes. It also gives you a built-in opportunity to revisit compensation without having to initiate an awkward conversation later.

Good point. When I subcontracted, the CPA provided access to their Drake software through a remote login, but I had to use my own computer and internet. Some may expect you to have your own ProSeries or UltraTax license which would be crazy expensive for a subcontractor.

Thanks for that tip! Do you know if using the FTA for an estimated tax penalty would prevent me from using it for other types of penalties in the future? Like if I somehow ended up with a late filing penalty next year?

Good question. The FTA policy is actually applied separately to different types of penalties. So using your FTA for an estimated tax penalty wouldn't prevent you from qualifying for an FTA on a late filing or late payment penalty in the future. The IRS treats each penalty type as its own category for FTA purposes. But you should still aim to avoid penalties altogether since FTAs aren't guaranteed and depend on your compliance history.

Isn't the Practitioner Priority Line only for tax professionals with CAF numbers? I don't think regular taxpayers can use that line - we're stuck with the normal IRS customer service line.

That's interesting - I've heard about opportunity zones but don't really understand how they work. Would this only help if he's selling property with capital gains, or can it help with his regular business income too? And are there any risks involved?

Opportunity zones primarily help with capital gains, not ordinary business income. If your brother-in-law sells property, equipment, or even business interests at a profit, he could defer those capital gains taxes by reinvesting in a qualified opportunity zone fund within 180 days of the sale. The main risks include market risks (as with any investment), liquidity constraints (funds typically have 10-year holding periods for maximum benefits), and potential regulatory changes since this is a relatively new program. There's also geographic limitation since investments must be in designated opportunity zones. I'd definitely suggest talking with both a financial advisor and tax professional before pursuing this strategy.

This is especially useful if your brother-in-law owns the buildings where his business operates. My construction company did a cost seg study on our headquarters building and main warehouse. We were able to reclassify about 35% of the assets from 39-year property to 5 or 7-year property. Massive tax deferral benefit.