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Can I completely write off stock losses from a failed bank? Tax loss limits question
I owned shares in Valley National Bank (VLYB) which collapsed earlier last year and was seized by the FDIC (later JP Morgan ended up purchasing most of its assets). For those not following the banking drama, the stock basically crashed to nothing and technically became a penny stock (ticker changed from VLYB to VLYBB). I sold my remaining shares for literally pennies each in December just to close out the position completely. I'm trying to figure out how to handle this on my taxes this year. Can I deduct the entire loss from these worthless bank shares? I vaguely remember reading something about a $3,000 maximum loss deduction limit per year, but I'm not clear if that applies in cases where a company completely fails. Does anyone know the rules around writing off stock losses in this situation? Any advice would be really appreciated!
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Can the IRS still collect on my 2010 tax bill after bankruptcy, or has the statute of limitations expired?
So I found this old IRS tax bill from 2010 while cleaning out my filing cabinet. I definitely remember filing for bankruptcy in 2012, and I know that stops the clock on collections temporarily. The bankruptcy was discharged completely, but I'm not sure if this particular tax debt was included properly or if it survived. It's been about 13 years since all that happened, and I haven't heard anything from the IRS about this specific bill in years. I'm worried about whether I still legally owe this money or if the statute of limitations has run out by now. The original amount was around $7,800 but with any potential penalties and interest over the years, I'm afraid to even calculate what it could be now if I still owe. I haven't received any notices about it in forever, but I also moved a couple times so who knows. Does anyone know if there's a way to check if I still owe this? Or has enough time passed that the statute of limitations means they can't collect anymore? I'm finally getting my finances straight and don't want this popping up out of nowhere.
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You should pull your tax transcripts ASAP. That will show the actual assessment date and collection statute expiration date (CSED). You can get them online at IRS.gov if you create an account, or use Form 4506-T if you can't create an online account. Look for "collection statute date" or something similar on the transcript. The transcript will also show if the debt was ever paid, discharged, or is still active. The IRS data system is pretty good about tracking these dates accurately, including adjustments for bankruptcy.
I tried logging into the IRS website but I'm locked out because I don't have the right documents they need to verify my identity. Is there any other way to get transcripts without waiting for the mail?
If you're having trouble with the online account, you can also call the IRS transcript request line at 800-908-9946 to have them mailed, which is faster than using Form 4506-T. They typically arrive within 5-10 business days. Another option is to make an appointment at your local Taxpayer Assistance Center where they can print your transcripts on the spot. You'll need to bring ID, but it's a way to get them immediately without dealing with the online verification issues.
My dad had a similar situation with a 2008 tax bill that resurfaced in 2021. What we discovered is that the IRS had made an additional assessment in 2014 (some adjustment to his return), which reset the 10-year clock! So even though the original assessment was old, this new assessment gave them more time. Check your transcripts carefully for any subsequent assessments that might have extended the timeframe.
That's a really important point! Any adjustments or additional assessments can start a new collection statute for those specific amounts. I've seen people get surprised by this too.
Yeah it was a complete shock to us! The IRS had disallowed a deduction years after the return was filed and assessed additional tax. Even though it was a small amount (like $840), it created a new 10-year collection period for that portion. And they were definitely still trying to collect it.
How to find affordable tax professionals for small business taxes?
Title: How to find affordable tax professionals for small business taxes? 1 I'm about to launch a small business venture and I'm already feeling overwhelmed by the tax situation - quarterly estimated payments, tracking business deductions, the whole nine yards. There's just SO much to figure out and I honestly don't think I can handle it myself. I've been considering hiring someone who actually knows what they're doing, but I've heard horror stories about CPAs charging like $650+ per hour for consultations. That's way outside my budget as a new business owner. I know organizations like AARP offer tax help services at reduced costs, but I'm not sure if they specialize in business taxes or if they can actually help with tax planning strategies to minimize what I owe. Are there any options for finding reasonably priced tax professionals who can handle small business taxes? Maybe some membership organization I could join? Or does the IRS offer any services that connect people with affordable tax pros? Any suggestions would be super helpful because I'm already stressed about this and I haven't even started my business yet!
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17 Have you considered using a tax preparation service like H&R Block or Jackson Hewitt? They're typically less expensive than independent CPAs and often have small business specialists. They also offer year-round support, not just during tax season. I used H&R Block's small business services when I started my etsy shop last year and paid around $350 total for the year, including quarterly estimates and my annual return. Much more affordable than the quotes I got from private CPAs.
1 I was thinking about that! Did they help with identifying deductions throughout the year or was it more just for the filing part? And did you work with the same person each time or get random preparers?
17 They absolutely helped with deductions throughout the year. I had an initial consultation where they set me up with a tracking system for business expenses and explained what to save receipts for. You can request the same preparer each time, which I definitely recommend. I worked with the same woman for all my quarterly stuff and my annual return, which was great because she remembered my business details and could spot trends in my expenses. Just make sure to ask for their small business specialist specifically - the regular preparers might not have the same level of expertise with self-employment taxes.
3 I recently found out that some professional organizations and chambers of commerce offer discounted tax services for members. I joined my local chamber for $175/year and got access to a CPA who charges members 30% less than his regular rate. Might be worth checking if your industry has a professional association with similar benefits.
13 That's actually brilliant. Do they offer other business services too? Might be worth joining for multiple benefits.
Can somebody help decipher this IRS notice I received?
I just got this weird notice from the IRS dated 5/25/2023 about my 2020 taxes and I'm completely lost. They're saying something about changes to my 1040 form that I filed years ago. The notice mentions a "carryback claim" which I have absolutely no idea what that means. Why are they suddenly bringing this up almost 3 years after I filed? The letter includes a phone number I can call if I want to dispute whatever they're saying, but honestly, I don't even know what I would be disputing since I can't understand what they're talking about. Has anyone dealt with something like this before? Should I be worried? This came out of nowhere and I'm freaking out a bit.
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Carryback claims are actually a good thing usually! The IRS is probably giving you money back from your 2020 taxes because of pandemic relief provisions. During COVID they changed a bunch of rules retroactively and they're STILL processing all those changes. The delay is totally normal - the IRS has been massively backed up since COVID. My mom just got a similar notice last month about her 2019 taxes and ended up getting an extra $1200 refund she never expected.
Thank you all for the explanations! I called the number on the notice today (took forever to get through) and you were right - it was actually GOOD news. They found I was eligible for some additional pandemic relief I didn't claim and they're sending me $790! Apparently there was some provision about carrying losses back that I qualified for but didn't know about. The agent explained that they're still processing these adjustments from the CARES Act and I just happened to be in this batch. I was so worried they were coming after me for something, but it was actually them giving me money back. What a relief!
That's great news! The IRS isn't always the bad guy (though their communication could definitely use some work). Glad it worked out in your favor!
Check if it's a legitimate notice first - lots of IRS scams going around. Real IRS notices have a notice number (usually CP followed by numbers) in the top right corner and will NEVER ask for gift cards, cryptocurrency or personal info over the phone.
Good point. My sister got a fake IRS letter that looked super official last month. Real IRS notices also usually come with detailed explanations of your appeal rights and will reference specific tax code sections.
Need help figuring out quarterly tax payments for self-employment!
Hey everyone, I'm totally new to this self-employment tax stuff and could use some guidance. I just learned about quarterly estimated taxes and I'm trying to figure out if I need to start making payments this year without paying someone to tell me. My situation: 1. Started as an independent contractor in August 2023 2. Didn't have any tax obligations for 2022 3. Already filed my 2023 taxes and ended up owing about $1,400 on roughly $12k of freelance income 4. My tax return showed $0 penalty for not making estimated payments last year 5. For 2024, I'm projecting I'll make around $40k from my contractor work Do I need to start making quarterly payments now? I've heard some people mention there's a one-year grace period for new self-employed folks, but I'm not sure if that applies to me since I already filed for one partial year. Also, if I do need to start making payments, how exactly do I figure out how much to pay? Any help would be super appreciated!
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For your situation, I'd recommend using the 100% prior year tax liability safe harbor. Since you only owed $1,400 for 2023, you could simply divide that by 4 and pay $350 per quarter for 2024. That would guarantee no penalties even if your income jumps to $40k. If you want to be more precise, estimate your 2024 tax liability (including self-employment tax which is about 15.3% of your net profit) and divide by 4. Remember that quarterly due dates are April 15, June 15, September 15, and January 15 (2025). You can pay online through the IRS Direct Pay system which is free and pretty straightforward.
Isn't the June payment actually due on June 17th this year? I thought I saw something about that online. And do I calculate the self-employment tax separately or is there a combined form or calculator?
You're right about the June deadline this year - it's June 17, 2024 (the 15th falls on a weekend). Good catch! For calculating your payments, the self-employment tax is actually part of the total tax calculation on the 1040-ES worksheet. You don't need to calculate it separately for your quarterly payments. The worksheet walks you through calculating both your income tax and self-employment tax, then combines them to determine your total estimated tax payments. This ensures you're covering both your income tax and SE tax obligations with your quarterly payments.
Quick tip that saved me a ton of stress: set up an IRS online account if you haven't already. It lets you see your payment history, make payments, and set up payment plans. Makes the whole quarterly tax thing so much easier to manage. I had the same issue last year - started contracting midyear and was confused about quarterly requirements. I just divided my expected annual tax by 4 and paid each quarter. As long as you're making a good faith effort, the IRS is fairly reasonable.
The IRS online system is great except when it's not lol. I got locked out of my account last year and they wanted me to mail in verification. Took like 8 weeks to get access back. but yeah when it works its definitely worth having.
Isabella Martin
Just a heads up for anyone with worthless stocks - make sure you report the correct dates! The IRS considers a stock to be worthless in the year it actually became worthless, not necessarily when you sell it for pennies. For the failed banks last year, the date of FDIC takeover is generally considered the worthless date. Also, keep good records about your cost basis (what you originally paid) because that determines your loss amount. If you bought shares at different times at different prices, you'll need to calculate the average cost or identify specific lots.
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Elijah Jackson
What if I already filed my taxes but didn't include these losses? Can I file an amended return to claim them or would that increase my audit risk?
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Isabella Martin
You can absolutely file an amended return to claim losses you forgot to include. Use Form 1040-X for the amendment along with a corrected Schedule D showing the capital losses. The general time limit for filing amendments to claim a refund is within 3 years from the date you filed your original return or within 2 years from when you paid the tax, whichever is later. As for audit risk, claiming legitimate losses you're entitled to shouldn't significantly increase your risk if you have the documentation to support them. Just make sure you keep records showing your basis in the shares and evidence of when they became worthless.
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Sophia Miller
Anyone using TurboTax to report these bank stock losses? I'm trying to figure out where exactly to enter this and if it'll automatically handle the carryforward amounts.
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Mason Davis
In TurboTax, you need to go to the Investments & Rental Properties section, then select Stocks, Mutual Funds, Bonds, Other. It will ask for the sale information and your cost basis. Make sure to enter your actual sales (even if pennies) rather than just marking it as worthless. It does track carryforward losses automatically for future years.
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