Do you have any issues with more complex returns in TaxAct Pro? I've got mostly simple returns but a couple clients with rental properties and small businesses. Can it handle K-1 forms?

I haven't run into any significant limitations with more complex returns. It handles Schedule E for rental properties very well, and I have several clients with small businesses filing Schedule C without issues. For K-1 forms, it processes them fine - I have a few clients with partnership and S-corp income. The only area where I've found it slightly less robust is with very complex investment situations or extremely complicated business returns with lots of unusual deductions. But for the typical small business owner, rental property investor, or individual with some investment income, it works perfectly well. The value for the price is excellent for a small practice.

FreeTaxUSA doesn't have a professional version that allows you to prepare multiple client returns under a practitioner account. It's really designed for individuals doing their own taxes, not professionals preparing returns for clients. You'd need software specifically designed for tax professionals that includes features like client management, e-filing capabilities under your EFIN, and professional liability protections.

Thanks for clearing that up! I was hoping there might be a free option, but I understand professional software would need those additional features. Guess I'll need to budget for one of the lower-cost options mentioned here.

The married filing separately thing is interesting! I've rarely seen cases where it's beneficial. But what about separated couples who aren't legally divorced yet? Would you have some exception for them?

Good point about separated couples! I'd create a simple "legally separated" status that would essentially treat them as single filers. The current system with MFS is just too punitive with all its limitations and phase-outs. The problem is that MFS was designed to prevent gaming the system, but it's become so restrictive that it actually creates unfair outcomes for people in difficult situations, like those separating or dealing with a spouse who won't cooperate on taxes. A better-designed single status for separated individuals would be much more straightforward.

Average cost basis would be amazing! Also why are crypto transactions so complicated tax-wise? I bought and sold some Bitcoin last year and the tax calculations were insane. Each transaction created a taxable event and I had hundreds.

I tried setting up an IRS online account but got stuck at the ID verification part. It kept rejecting my driver's license photo. Any tips on getting past that?

I had the same issue with the ID verification initially. Make sure you're taking the photo in good lighting with no glare on your ID. Also, they're really strict about the photo quality - I had to use a different device with a better camera. If that still doesn't work, they offer an alternative verification process through ID.me that some people find easier. You can also request a mail verification code if the digital methods aren't working. It takes longer but it's more reliable if you're having technical issues with the photo verification.

This is a really important point. How do you know if you need to make estimated payments for next year? Is there some threshold?

Thank you for mentioning this! With the baby coming next month, I completely forgot to factor in how that would affect our taxes next year. Would you recommend we split the $2,000 child tax credit between both our W-4 forms or put the full amount on just one of our forms? Also, do you know if we qualify for the child care tax credit as well as the dependent care FSA? Or can we only use one of those options?

You can put the full $2,000 on just one W-4 form, or split it between both - the end result will be the same. Just make sure you don't claim it on both forms (which would incorrectly double-count the credit). Regarding the child care tax credit vs. dependent care FSA: You can potentially use both, but there's an important limitation. The expenses you pay through the FSA cannot also be used for the child care credit - no "double dipping." Usually, with your income level, the FSA is more beneficial because it reduces your taxable income directly. The child care credit percentage is reduced at higher income levels, making the FSA more valuable for most dual-income professional couples.

This is spot on. My wife and I have almost identical incomes to the OP, and increasing our 401k contributions made a huge difference. We each increased from 10% to 15% contributions and it dropped our tax bill by almost $3,000. Plus that money is growing tax-deferred instead of going to the IRS. Also worth noting that at their income level, they might be close to the phase-out range for some tax benefits once the baby arrives, so tax planning becomes even more important.

Wait, does claiming the kid automatically make you Head of Household? I thought you had to have the child living with you for more than half the year for that? How does that work with 50/50 custody?

You're absolutely right to question that - I oversimplified. For Head of Household status, you need to have the child in your home for more than half the year AND provide more than half of the household's financial support. In true 50/50 situations, only one parent will qualify, and it's not automatically tied to who claims the Child Tax Credit. This is actually why it's so important to understand all the different tax benefits - they don't all follow the same rules. For example, the parent who has the child more nights during the year (even by just one night) might qualify for Head of Household, while the other parent might still be able to claim the Child Tax Credit with a signed Form 8332.

My ex and I do exactly this with our kids. You can actually fill out Form 8332 to cover multiple future years. We did one form for a 10-year period specifying which years each of us would claim the kids. Just be super clear about which tax years you're releasing the claims for. Also make a copy for yourself - my ex lost his copy one year and it was a whole thing.