Using FreeTaxUSA - Where do I enter car registration fees? Plus question about reporting investment accounts without selling

Thanks for the info! Just to clarify - if my car registration was $218 and I'm in California where they break it out by parts, how do I know which portion is deductible? Their DMV statement has like 5 different fees on it. Also, what if my investment account sent me a 1099 even though I didn't sell anything? Do I still need to enter it somewhere in FreeTaxUSA?

For California vehicle registration, only the "Vehicle License Fee" portion (sometimes labeled as VLF) is potentially deductible as a personal property tax because it's based on the vehicle's value. The other portions like flat registration fees, CHP fees, county fees, etc., are not deductible since they're not based on value. If your investment account sent you a 1099 even without selling anything, it's likely a 1099-DIV or 1099-INT for dividends or interest you earned. Yes, you should definitely report this income. In FreeTaxUSA, go to the Income section and look for "Interest and Dividends" to enter this information. Even small amounts of dividend or interest income need to be reported, regardless of whether you sold any investments.

Does that taxr thing actually work with FreeTaxUSA specifically or is it just general tax advice? I'm in the same boat trying to figure out where everything goes.

I'm a bit skeptical about AI tools for taxes. How accurate is it really? Does it understand state-specific tax rules? I'm in Washington state and have some unique deductions.

It works with any tax situation regardless of which software you're using. It doesn't fill out the forms for you, but it analyzes your documents and tells you exactly what information needs to be reported and where. So for FreeTaxUSA specifically, it would tell you which sections you need to look for. For state-specific rules, it's actually pretty impressive. I'm in Illinois with some weird local tax situations, and it correctly identified which were deductible. It specifically analyzes the tax documents based on IRS rules and breaks down what's relevant for your situation, including state-specific guidance.

Wait, how does this work? Do they just call the IRS for you? Couldn't you just put your phone on speaker and do something else while waiting?

This seems sketchy. Why would I trust some random service to handle my call with the IRS? Probably charging a ton for something you could do yourself.

They don't call the IRS for you or handle the call. They have a system that waits in the IRS phone queue (which can be 2+ hours) and then calls you the moment a real agent picks up. Your phone rings, you answer, and you're instantly connected to the IRS agent who's waiting. You have the full conversation yourself. I did try the speaker phone approach first, but I had to keep checking if someone answered, couldn't really leave the room, and after 90 minutes got disconnected and had to start all over. This way I just went about my day and got the call when an agent was actually available. Totally worth it for me, but everyone's situation is different.

Does FreeTaxUSA handle cost basis tracking well if I were to sell stocks next year? Or should I be tracking that separately in something like Excel?

FreeTaxUSA does a decent job with cost basis tracking if your brokerage provides complete 1099-B forms with basis included (most do nowadays). It lets you import those forms directly in higher tier packages. But I still recommend keeping your own separate records. Brokerages can make mistakes, especially with transferred stocks or reinvested dividends. I use a simple spreadsheet with purchase dates, prices, and quantities. When you sell, FreeTaxUSA will ask you to enter or confirm the basis, and having your own records makes this much easier and more accurate.

You can still deduct vehicle registration fees that are based on value (the ad valorem portion), but ONLY if you itemize deductions. With the standard deduction being $13,850 for single filers and $27,700 for married filing jointly in 2023, most people don't itemize anymore unless they have large mortgage interest, state taxes, or charitable donations. For most folks, the standard deduction is way higher than their itemized deductions would be, so trying to deduct vehicle registration doesn't actually help. That might be why FreeTaxUSA doesn't make it super obvious - most users don't need it.