This is exactly the kind of detailed guidance I was hoping to find! I'm new to dealing with equity compensation and had no idea about the double taxation risk. Your point about the IRS assuming zero basis is particularly scary - that could result in a huge tax bill. I'm going to check all those sources you mentioned, starting with my company's equity portal. I think I remember getting some emails when I first started receiving stock grants, but I probably deleted them thinking they weren't important. Lesson learned about keeping all tax-related documents! One quick question - if I find the exercise documentation but it's from multiple different exercise dates, how do I figure out which specific shares I sold? Do I need to use FIFO (first in, first out) or can I choose which lots to report?

Great question about lot identification! You typically have a choice between FIFO (first in, first out), LIFO (last in, first out), or specific identification if you can document which exact shares you sold. Most brokerages default to FIFO unless you specify otherwise. The key is being consistent and having documentation to support your choice. If your brokerage statement shows specific lot information (like "sold 100 shares from 03/15/2022 grant"), use that. Otherwise, FIFO is the safest approach since it's the default method. Your cost basis will be the exercise price per share (from your SSAR exercise confirmation) multiplied by the number of shares sold. Make sure to keep all your exercise confirmations - you'll need them not just for this year's taxes but potentially for future sales too. Also, check if your company's equity portal has a "tax center" or "cost basis" section. Many of the major administrators (Fidelity, E*TRADE, Morgan Stanley) now provide downloadable reports that show exactly what basis to report for each sale, which makes filing much easier.

This is incredibly helpful - thank you for breaking it down so clearly! I'm new to this community and dealing with my first year of stock compensation, so posts like this are a lifesaver. I had no idea that leaving the cost basis blank could result in the IRS assuming zero basis. That's terrifying! I'm definitely going to dig through my emails and check our company's stock portal immediately. One thing I'm curious about - you mentioned that SSARs would have appeared in a previous year's W2 when exercised. How can I tell which year that was if I can't remember when I exercised them? Should I be looking through old W2s to try to match up the amounts, or is there an easier way to figure out the timeline? Also, does anyone know if there's a statute of limitations on requesting these records from the stock plan administrator? I'm worried that if the exercise was several years ago, they might not still have the documentation.

This is such a helpful summary! I'm in a similar situation as the original poster - had to reduce my income this year due to some business changes, and I've been wondering if I could take advantage of being back under the Roth IRA threshold. One follow-up question: if I'm planning to contribute to both accounts, does the timing matter? Should I max out the Roth first since there's a deadline, or can I contribute to both throughout the year without any issues?

Great question about timing! You can contribute to both accounts throughout the year without any issues. For Roth IRAs, you have until the tax filing deadline (April 15, 2026 for 2025 contributions) to make your contribution, and SEP IRAs actually have an even more flexible deadline - you can contribute up until your tax filing deadline including extensions (so potentially as late as October 15, 2026). That said, I'd personally recommend maxing out the Roth IRA first if you have to choose, since you're only temporarily under the income threshold. Once your business recovers and your income goes back up, you might lose Roth eligibility again, but you'll always be able to contribute to your SEP IRA as long as you have self-employment income. Plus, getting that $7,000 into tax-free growth as early in the year as possible gives you more time for compounding. You can always adjust your SEP contribution later in the year once you have a better sense of your final business income numbers.

This is really helpful to hear from someone who went through the same situation! I'm curious - when you were prioritizing the Roth IRA contributions, did you find it better to make the full $7,000 contribution early in the year, or did you spread it out monthly? I'm trying to figure out the best approach since my freelance income can be pretty irregular month to month. Also, completely agree about potentially needing a new accountant. It's concerning when they're not familiar with basic self-employment retirement rules. Do you have any recommendations for finding someone who specializes in freelancer/self-employed tax situations?

I'm so glad I found this discussion as a new member! I'm literally going through the exact same thing - my status changed to "Under review" just this morning and I immediately started panicking. Reading through everyone's experiences here has been such a relief. It's really eye-opening to learn about the IRS's increased funding and system upgrades that are causing way more routine verification checks this year. I had no idea that was happening, which explains why so many of us are seeing these status changes recently. Anna's CP75 timeline is incredibly helpful - knowing it could take 10 days to get a letter and 6 weeks total for resolution makes this feel so much more manageable. And the fact that it was just charitable deduction verification rather than a full audit is really reassuring for those of us in the early stages of this process. I'm definitely going to organize my documents this weekend like everyone suggests. Better to be prepared now than scrambling later if they do request something. This community has been amazing for providing real-world experiences and practical advice during what could otherwise be a very stressful situation!

I just joined this community and I'm so grateful I found this thread! I'm dealing with the exact same "Under review" status change that happened to me just 3 days ago. As someone completely new to this situation, I was absolutely panicking until I read through everyone's experiences here. What's been most helpful is understanding that the IRS is conducting way more of these routine checks now due to their increased funding and system modernization. I had no idea this was happening on such a large scale this year - it really explains why so many of us are seeing these status changes. Anna's CP75 experience breakdown is exactly what I needed to hear as a newcomer to this process. The 10-day timeline for receiving actual correspondence and the 6-week resolution for something as simple as charitable deduction verification makes this feel so much less overwhelming than what I was imagining. I'm definitely going to organize my documents this weekend following everyone's advice. It seems like the best thing to do while waiting is to get all my W-2s, 1099s, and receipts in one place so I'm prepared if they do need anything. Thank you all for creating such a supportive space for people going through this stress. As a new community member, it's amazing to see how you all help each other navigate these IRS situations with real experiences and practical guidance!

This is such an important point that often gets overlooked until it's too late! I'm just starting out with partnership real estate and hadn't even considered the multi-state filing requirements. A few follow-up questions: 1) Is there a minimum threshold of rental income or property value that triggers state filing requirements, or does any ownership in a state potentially create obligations? 2) How do you typically find out about these state-specific rules - is this something most tax software handles automatically, or do you need to research each state individually? 3) You mentioned discovering unexpected state tax obligations - were there penalties involved, or just additional taxes owed? I want to make sure we're proactive about this from the beginning rather than dealing with compliance issues later. Thanks for bringing this up - it's exactly the kind of detail that could easily slip through the cracks!

@Logan Greenburg Great questions! Let me share what I ve'learned: 1 State) filing thresholds vary significantly. Some states like California require partnership filings if you have ANY income sourced there, regardless of amount. Others have minimum thresholds $1,000+ (in some cases .)For individual partners, you might trigger filing requirements with as little as $1 of state-sourced income. Property ownership alone can create nexus even without rental activity. 2 Most) standard tax software doesn t'handle multi-state partnership issues well - it s'designed more for simple situations. You really need either specialized partnership tax software or a CPA familiar with multi-state issues. Each state s'department of revenue website has the rules, but they re'often buried in technical publications. I ended up paying for a consultation with a multi-state tax specialist just to map out our obligations. 3 In) my case, we caught it during the preparation process so avoided penalties, but we did owe about $800 in unexpected state taxes. The bigger issue was the ongoing compliance burden - now we file in three states every year. Some states also have penalties that can be substantial $200+ (per partner in certain states even) for small amounts of income. Pro tip: If your partnership spans multiple states, budget for higher tax prep fees and consider whether the partnership structure still makes sense versus individual ownership in each state.

@Amara Oluwaseyi Thank you for the encouragement! It s'reassuring to hear from someone who s'been through this process recently. Your point about tracking everything from day one really resonates - I m'already realizing how many small decisions and time investments could potentially impact my tax situation later. I m'curious about your experience with the first year chaos you mentioned. Did you end up having to file extensions, or were you able to get everything sorted by the regular deadline? Also, when you mention working with professionals who understand the complexity, did you find it better to have the partnership use one tax preparer for the partnership return and then each partner use their own for personal returns, or is it more efficient to have everyone work with the same firm? One thing I m'still wrapping my head around is how to balance being conservative with tax planning versus potentially missing out on legitimate deductions. There seem to be so many areas where the rules have exceptions and special cases - it s'easy to see how you could either be too aggressive or too cautious and end up in the wrong place either way. Thanks for sharing your experience - it s'helpful to know others have navigated this successfully!

@Hattie Carson Great questions! For my first year, we definitely had to file extensions. Our partnership s'accountant needed extra time to properly allocate depreciation and handle some mid-year property improvements that complicated the calculations. I d'say plan for an extension - it s'really common with rental partnerships. Regarding tax preparers, we initially tried having the partnership use one firm and partners use their own, but it created coordination problems. The partnership s'CPA would make assumptions about allocations that didn t'align with what our individual preparers expected. We switched to having everyone use the same firm for year two, and it s'been much smoother. They understand how all the pieces fit together and can optimize across both the partnership and individual returns. On the conservative vs. aggressive question - I ve'found it s'better to err on the side of being well-documented rather than conservative. For example, if you qualify for active participation, claim it, but make sure you have detailed records of your involvement. The tax code actually provides significant benefits for rental real estate when you meet the requirements - you just need to be able to prove you meet them. A good tax professional will help you identify what you re'entitled to while keeping you within safe bounds. The key is building systems now for tracking your involvement and expenses, so when opportunities arise, you have the documentation to support them.

This is such great practical advice! I'm dealing with a similar situation for my son who's starting at a community college next fall. They don't have any dorms either, and I've been worried about how to handle the Coverdell ESA withdrawals properly. Your tip about saving the Cost of Attendance document with the date is brilliant - I never would have thought about schools potentially updating those figures mid-year. That could definitely cause problems if you're audited later and the numbers don't match what you originally used. Did the financial aid office give you any guidance on how to handle expenses that might vary month to month, like utilities? I'm wondering if I should budget conservatively or if there's some flexibility as long as the annual total stays within their guidelines.

This spreadsheet tracking idea is really smart! I'm just getting started with my son's Coverdell ESA and feeling overwhelmed by all the documentation requirements. Would you mind sharing what columns you include in your tracking spreadsheet? I want to make sure I'm capturing everything I might need for tax purposes or potential audits. Also, when you say "withdraw based on actual expenses as they occur" - are you making monthly withdrawals from the Coverdell ESA, or do you pay out of pocket first and then reimburse yourself periodically? I'm trying to figure out the most efficient way to handle the timing of withdrawals versus when expenses are actually due.