That's really helpful advice - thank you! What kind of documentation would you recommend I keep? Right now I'm just planning to save the wire transfer receipts, but should I be doing something more formal like writing up agreements with my grandfather?

Definitely save all wire transfer receipts, but that's just the beginning. You should create a simple investment agreement document (doesn't need to be fancy) that clearly states your initial investment amount and the terms for repayment. For each payment received, have your grandfather specify in writing (even just an email) what the payment represents - whether it's returning your initial capital, profit distribution, or a personal gift. Keep a running spreadsheet tracking the remaining balance of your initial investment so you can clearly show when you've been fully paid back and subsequent payments are profits.

I have to respectfully disagree with this approach. While filing the FBAR is absolutely necessary if you meet the $10,000 threshold, it only reports the existence of foreign accounts - it doesn't address your tax obligations on the income. The IRS treats different types of foreign income very differently. Investment returns, business profits, and gifts all have distinct reporting requirements and tax treatments. Taking a simplified approach could lead to significant underreporting penalties if audited.

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.

19 This is really good advice! I work in a college financial aid office, and we do sometimes accept last paystubs as temporary documentation especially in cases like this. We'd still need the official documents eventually, but it can buy you some time with deadlines.

11 Thanks for the additional info! I didn't even think about the paystub option. You're right that the year-to-date information would essentially show the same income information that would be on the W-2. I should have also mentioned that the employer is required by law to provide a replacement W-2, so being persistent with them is important. If they refuse, you can actually report them to the IRS using Form 4852 (substitute for W-2), which also puts some pressure on them to comply.

16 Try the IRS Taxpayer Advocate Service instead at 877-777-4778. They specifically help with issues like this, especially when you have a hardship situation like a financial aid deadline. They're usually much easier to reach than the main IRS line.

1 Would I still qualify for an Offer in Compromise if I have decent income now? I'm making good money these days, but those back taxes are from when my business failed and I had almost no income for a while.

9 Current income is definitely a factor they consider, but it's not the only one. They look at your overall financial situation including assets, expenses, future earning potential, and ability to pay. Even with good current income, if the total debt is large enough compared to your projected ability to pay over the collection period, you might still qualify. The key is having a professional properly document your financial situation and submit the offer correctly. The forms and financial statements need to be accurate but presented in a way that shows why a settlement makes sense for both you and the IRS. The official term they use is "doubt as to collectibility" - they want to collect what's reasonable rather than an amount that would cause financial hardship.

13 They do allow back tax filing, but you have to buy the software for those specific years. You can still purchase previous year versions of TurboTax, but they're not always easy to find on their website. Search specifically for "TurboTax 2021" or "TurboTax 2022" and you'll find links to buy those versions.

Did you need to include any special notes or memo with your payment? I've heard conflicting info about whether that's necessary.

I did include a note in the memo field saying "Schedule 3 Line 12e Deferred Payment" just to be extra careful, but my accountant said it wasn't strictly necessary as long as I selected the correct tax year (2020). The most important thing is selecting the right tax year since that's how the IRS computer systems match the payment to your account. The memo is more of a backup in case there's any confusion later and you need to prove your intent.

EFTPS has always been one day delayed for me too. Is there any tax software that lets you pay deferred taxes more easily? Trying to avoid using EFTPS altogether if possible.