This is exactly the kind of detailed discussion I needed to see! I'm a newcomer to dealing with gambling taxes and had no idea about some of these complications. @Omar Zaki - your situation is very similar to mine. I had about $22K in slot winnings but probably $24K in total wagers throughout the year. Based on what everyone's saying here, I need to report the full $22K as income and then itemize the $22K in losses (not the full $24K since I can only deduct up to my winnings). The part about AGI impact is really eye-opening though. I'm on an income-driven student loan repayment plan, so even though my gambling was essentially break-even after losses, that $22K in winnings is going to bump up my monthly payments significantly. This is something I wish I had known before I started gambling regularly. Does anyone know if there's a way to minimize this AGI impact, or is it just an unavoidable consequence of gambling? It seems like the tax system penalizes gamblers even when they don't actually profit from their activities. Also, for record-keeping - I mostly used my player's card at two different casinos. Would getting annual statements from both casinos showing my total play and win/loss records be sufficient documentation for the IRS?

As someone who's been through multiple years of gambling tax reporting, I want to emphasize how important it is to start keeping detailed records RIGHT NOW if you haven't already. I learned this lesson the hard way after getting audited in 2022. The IRS Publication 529 specifically states that you need to maintain a gambling diary with: date and type of gambling activity, name and location of the gambling establishment, names of other people present, and amounts won or lost. This diary becomes crucial evidence if you're ever questioned. One thing I don't see mentioned much is the "professional gambler" designation. If you're gambling frequently enough and treating it like a business (which it sounds like some of you might be), you could potentially qualify to report gambling income and losses on Schedule C instead of as itemized deductions. This would avoid the AGI inflation issue everyone's talking about, but the IRS has very strict criteria for this classification. The professional gambler route requires proving that gambling is your primary source of income, you do it regularly and continuously, and you approach it in a businesslike manner with records and systems. It's a high bar to meet, but for serious players dealing with large volumes, it might be worth consulting a tax professional about. For most recreational gamblers though, the standard approach of reporting winnings as income and itemizing losses on Schedule A is the way to go - just be prepared for those AGI consequences!

Based on all the great advice here, I think the smartest approach for your situation is to take a very conservative stance for the next 5 years until you hit 62. Here's what I'd recommend: 1. Have your wife be the sole LLC owner with 100% profit allocation 2. Keep your involvement to absolute minimum - maybe occasional informal advice only 3. Document everything meticulously from day one, including any financial contributions you make (structure them as loans or gifts with proper paperwork) 4. Be extremely careful about social media - don't post anything showing you working on the business 5. Consider starting very small scale to test the market without significant risk The real-world example about the landscaping business review is eye-opening. OPM clearly looks beyond just the paperwork structure to see if you're actually performing work that constitutes gainful employment. Even answering phones regularly could trigger their "restored earning capacity" determination. Since you're only 5 years away from the age 62 conversion when all earning restrictions disappear, it might be worth being extra cautious now to protect your current benefits. You could use this time to plan and prepare the business foundation, then ramp up your involvement significantly once you hit 62 and have complete earning freedom. The peace of mind of knowing your FERS disability benefits are secure is probably worth more than any short-term business income you might miss out on by taking a hands-off approach initially.

This has been such a helpful discussion! As someone who's been wrestling with similar questions about my FERS disability and potential business involvement, I really appreciate everyone sharing their experiences and insights. The point about OPM looking at "substance over form" rather than just the legal structure really resonates with me. I've been considering helping my partner with their existing consulting business, but after reading about the landscaping case and how thoroughly OPM can investigate, I'm realizing I need to be much more careful about any involvement. One question I still have - for those who've successfully navigated this while staying under the income limits, do you regularly report your earnings to OPM proactively, or do you just include it in your annual tax filing and wait to see if they ask questions? I want to make sure I'm being compliant but also don't want to unnecessarily draw attention to my situation if I'm staying well within the limits. The age 62 conversion timeline is definitely something I hadn't fully appreciated before. It's good to know there's a light at the end of the tunnel where these restrictions lift completely. Thanks again to everyone for sharing their knowledge and experiences!

anyone know if turbo tax automatically calculates the business percentage of mortgage interest once you enter your home office percentage? or do i need to do that math separately and enter it manually?

Great question! I ran into this exact same issue last year. The "excess mortgage interest" term in TurboTax is really misleading - it mainly applies to mortgages over $750,000, so you shouldn't have to worry about it with your $385,000 mortgage. What you DO want to make sure you're capturing is the business portion of your mortgage interest for the home office deduction. This is completely separate from your decision to take the standard deduction. You can take the standard deduction for your personal taxes AND still deduct the business portion of mortgage interest on Schedule C. So if your home office is, say, 15% of your home's square footage, then 15% of that $18,000 annual mortgage interest ($2,700) would be deductible as a business expense for your husband's photography business. Just make sure the office space is used exclusively for business - that's the key requirement the IRS looks for. The beauty is this reduces your business income dollar-for-dollar, which can save you more in taxes than if it were just part of itemized deductions. Don't leave money on the table!

I'm a tax professional and I want to clarify something important here - there seems to be some confusion in the comments about CP2000 notices vs Form 2848 requests. These are completely different issues. If you received a CP2000 notice (as mentioned in one of the comment threads), that's about income discrepancies, not power of attorney. But your original post describes getting a letter specifically asking for Form 2848, which would be very unusual for married filing jointly. Can you double-check what type of notice you actually received? Look for the notice number in the upper right corner - it should be something like CP###, LTR###, or Notice ###. This will help us give you much more accurate advice. Also, regardless of the notice type, I'd recommend calling the IRS directly at 1-800-829-1040 rather than using third-party services. Have your Social Security numbers, the notice, and your 2023 tax return ready when you call. The IRS can usually clear up these automated system errors pretty quickly once they review your actual filing status.

I'm new to this community but wanted to chime in as someone who recently went through a similar confusing situation with the IRS. Like others have mentioned, getting that exact notice number is going to be key to figuring out what's really going on here. From what I've learned lurking in tax forums, the IRS computer systems sometimes flag accounts for weird reasons that don't always make sense on the surface. If you're married filing jointly and both signed the return, you definitely shouldn't need to give each other power of attorney - that's not how joint filing works at all. One thing I noticed in this thread is that there might be some confusion about what type of notice you actually received. The CP2000 that was mentioned by someone else is completely different from a Form 2848 request. Before trying any of the services people have recommended (which might be helpful, but seem like overkill if this is just a system glitch), I'd definitely start with calling the IRS directly with that notice number in hand. Hope you get it sorted out quickly - these kinds of notices are so stressful even when they turn out to be nothing!

Everyone here is giving good info, but remember that if you got subsidies (premium tax credits) through the marketplace plan, make sure your income reported on the tax return matches what you estimated when you applied for coverage. If your income ended up higher than expected, you might have to pay back some of the subsidy. This is separate from the 1095-C issue but related to your overall health insurance situation.

Just want to echo what others have said - you're totally fine! The 1095-C is basically just a paper trail showing your employer offered you coverage, but since you declined it and went with a marketplace plan, you don't need to do anything with it. I had the exact same panic last year when my employer gave me my 1095-C after I'd already filed. Spent hours researching and even called a tax preparer who confirmed that as long as I used my 1095-A correctly (which it sounds like you did), the 1095-C is just for record keeping. The key thing is that you qualified for marketplace subsidies because your employer's plan was unaffordable - that $380/month sounds absolutely ridiculous! Keep the 1095-C in your files but don't stress about amending your return.