r/tax

i received the ACA refund "gift" check from the IRS, however it is in the amount of $1000, not $500. i am only one person in my household, should i cash the check and expect that the IRS will realize their overpayment and come looking, or should i proactively contact the irs*?

having dealt with the irs before, it seems easiest to cash the check and then pay the overage back when they realize the error. trying to jump through hoops to send the $1K check back to them and request another $500 check seems crazy-making.

* edited: correction, the check return address is "U.S. Dept of Treasury, Bureau of the Fiscal Service". thank you to @Otto_AutoPilot for catching my mis-statement. much obliged. contacting the IRS would not have any bearing as these are two seperate departments of the Treasury.

So basically I'm trying to navigate doing taxes for when tax time comes up because I'm 18 and have never done them before but the thing is I do digital art commissions, rn I live in Washington and the thing is I have wrote down all of the commissions I have received (the date and payment amount/type and what app I was payed on) and I also work a part time job making 17.13 an hr, so I'm just wondering how I even go about taxes and how much I might owe in art taxes?(😕I haven't been putting any money aside because I didn't think about it but the amount I've earned so far this year has been about 3,412$ from art commissions, I I recently just started my job in I think August and my monthly pay is about 800$ from that😵‍💫 can anyone help me?, I've done research and ik that I need to set aside about 25-30% of payment or whatever but I also know that the digital art counts as a retail thingy or selling a product so in hoping to owe around 450ish to 500ish during taxes time🥲 but how do I just do taxes in general and how can I make this easier?? And can anyone suggest a app that will do my taxes or help me do my taxes for cheap????😭😭😭 This is all confusing and I don't want to owe a fortune in taxes.., for my next couple paychecks I do plan to set money aside for tax time but still😭🥲🥲 please please help in simple terms anyone? Or make everything easier to understand 😭😭

Just found a new tax person that states I need to go back from the formation of my S-Corp (would need to 100% make sure it legally formed) and create a K-1 form for EACH YEAR that I did my taxes incorrectly. My business did have a separate EIN. I’m a solopraneur and have always purchased tax software that leads me through everything. I’m nervous about the fees/fines of never filing an S-Corp if that’s the route I need to go. Not as worried about the tax penalties as I’ve always paid myself from a payroll company.

Has anyone encountered this?
My highest grossing year was last year and that was $80,000 from my business. I had a lot of expenses, as I’m a business that runs a high cost to run and I’m clearly not a great business person. On average, I have made between $20-$50k gross and have caught up with personal taxes and paid whatever is leftover from P&L.

Suggestions? Do I just fix this year’s taxes and keep the past years as-is because they’ve already been approved WITH my EIN on the P&L form?

How do I find out if I actually have an S-Corp?

Thank you!

Tax CPA here,

I keep having to have this same conversation with clients about how having a billion K-1 or joint tenancies earning between $-2,000 and $2,000 is just a terrible way to invest. We charge between $300 and $500 an hour. If you are lucky and a K-1 takes just half an hour of our time, you may lose ~15% of that income in tax prep. Get into multi state, tons of sep stated items, or if we have to evaluate if you have a filing requirement from these cumulative amounts and suddenly you are paying half of the amount earned in tax prep. That 8% return your advisor promised is now 4%. On top of them charging you %AUM and a fee for orchestrating the partnership investment opportunities.

Sometimes simpler is better. A K-1 with $1,000 in income is the same prep time as $100,000 fairly often. Diversification is important, but it shouldn't come at the cost of eating up your return on investment.

My husband and I filed MFJ. We both have W-2 jobs and also do occasional independent-contractor side work reported on Schedule C. My husband also has a separate small photography business.

Our federal refund has been held for months while the IRS verifies income/withholding and some Schedule C expenses. We are now working through the Taxpayer Advocate Service via our congressional representative, and they asked us to provide support for vehicle expenses, utilities, and dues/subscriptions.

Most of the numbers on the return make sense and we can document them. The problem is one line on my husband’s non-photography Schedule C: $1,800 listed as “Dues & Subscriptions.”

We did not give our preparer a list totaling $1,800 in dues/subscriptions, and we do not recognize that number from our records. It felt like maybe he inflated the number to get us a better refund. When we asked him what made up the $1,800, he did not give us an itemized worksheet showing how he originally calculated it. Instead, he told us that it included streaming services and continuing-education/apps and instructed us to submit receipts for our household subscriptions to the Taxpayer Advocate/congressional rep.

When I add up the household subscriptions we have, they come close to the $1,800. That makes me concerned that the preparer may have entered a broad or estimated number on the return and is now trying to substantiate it after the fact using subscriptions we actually paid for.

Some of these subscriptions have business use, such as cloud storage, device protection, educational apps, etc. Others are ordinary household streaming services that were used primarily for personal purposes and, at most, were only minimally used for the side business. So even if a business-use portion were arguably deductible, I would expect it to be a relatively small percentage rather than 100%.

We are trying to understand what was actually claimed and whether we should follow the preparer’s instruction to send all of these receipts.

We have asked him to clarify what business-use percentages he used and how he arrived at the $1,800, but so far the answer has essentially been to submit the subscription receipts.

My questions are:

1. Should we submit the actual subscription receipts as our preparer instructed, even though we’re concerned some of the expenses were claimed at too high of a business-use percentage?

2. If we submit them and the IRS decides some subscriptions are personal or only partially deductible, what is the likely outcome? Do they usually just disallow that portion, recalculate the Schedule C income, and reduce the refund?

3. Would submitting the receipts create a bigger problem because they may show that some of the expenses were primarily personal or mixed-use?

4. Can we simply amend the return now to correct the Schedule C deduction if we no longer feel comfortable with how the $1,800 was claimed?

5. Would amending now make the situation worse or complicate the existing review, especially since the return is already being handled through the Taxpayer Advocate Service and our congressional representative?

6. How does an amended return work when TAS is already involved? Would we need to coordinate the amendment through the advocate/congressional office, or can we amend normally while the case is open?

7. If the preparer cannot show us how he originally calculated the $1,800, would you amend proactively or wait for the IRS/TAS to review the receipts first?

We have receipts/statements for the other Schedule C items, including phone/internet, and we have a mileage log for the vehicle deduction. My husband’s separate photography Schedule C also has its own expense spreadsheet and supporting records that match what was reported there.

The expected federal refund is around $4,100. My concern is specifically that this $1,800 figure may not have been based on an actual itemized expense list when the return was filed.

And just to be clear, the tax professional worked at a legitimate accounting firm and we’ve already asked a tax professional for assistance, that’s how we got there.

TIA for any assistance.

In an accountant, I’m experienced with Prosystem CCH tax and document software through my work in public accounting. I’m trying to find the best software to prepare my family’s returns as well as my own. Just 1040s. But I don’t want to pay $3000+ for a software license. In prior years I used TurboTax but it takes so much longer to click through the menus and questions when I know exactly what I need to enter. Does anyone have any software suggestions?

I'm currently finalizing 2025 taxes and running into some confusing numbers, wanted to see if this makes sense or if I am doing something wrong.

My wife and I are both high income earners. I have some K-1s that often take until mid-late summer to return, so I file an extension on my tax return. For the sake of claiming some refund due and for getting my wife's student loan IDR plan recertified, we typically file her taxes on time as married filing separately. Then when I get my K-1s, we amend her return to married filing jointly with my income and K-1s. This year we did the same, and she got a federal and state (OR) refund. I paid almost the perfect amount of tax so I didn't owe anything when I filed my extension.

As I am running through the process of amending our returns this year in FreeTaxUSA, the calculations aren't making sense to me. When I compare the federal tax burden for married filing jointly, it is actually higher than the combined tax burden of married filing separately. This seems to come from the deductions. We itemize because we have a high mortgage interest, so we are always above the standard deduction. On the joint return, schedule A line 5e is $10,000, much lower than the amount in line 5a, presumably because our combined income is too high to get a full SALT deduction. On my wife's separate return, line 5e is $20,000, presumably because her individual income is below the ~$250,000 threshold. So basically what happens is her individual itemized deduction is about the same as the joint itemized deduction, slightly above the standard deduction. The combination of our filing separate itemized deductions is therefore larger than our filing jointly deduction, and the refund increases.

Does this make sense, or am I missing something/making a mistake in the data I entered?

Hi all-
Hope you are doing well. I have not been able to get a straight answer to this so far but hopefully you may be able to provide me with one. My wife and I have been filing our federal income taxes as married jointly throughout the years. However, last year she started supporting her sister’s household for the entire year. She has been paying for all living expenses etc. our tax person said she could file herself as the head of household (sister’s household) and I could file as married separately. We were told she could itemize her spending dor the sister’s household and get lower tax liability. However my tax research says that we can’t file it as such. Any thoughts? Thanks in advance..

Hi, would love some advice. Have done a lot of reading and gotten very confused.

I'm just starting work as a physician (base salary 400k + extras for call/signing bonus) and my husband has a slightly lower salary (~350k). I also have almost 500k in student loans while he has none (lucky). Since we're in the same tax bracket, but I have a disgusting amount of loans, it makes the most sense for us to file separately since I'm on an IDR repayment plan, yes?

Thanks for any advice!

Looking for some tax advice regarding my ex-wife and her 2025 taxes.
We were married during 2025 but separated for approximately the last five months of the year. Our divorce was finalized in July 2026. I filed my 2025 return as Married Filing Separately and received my refund.
My ex-wife has not filed her 2025 federal tax return and has indicated that she does not intend to file because she believes she didn’t make enough money.
From what I understand, the 2025 IRS filing threshold for someone filing Married Filing Separately is only $5 of gross income. She also had approximately $10,000 of 1099/self-employment income, with possibly around $1,000 in business expenses. Based on that, it appears she would have a filing requirement regardless, including because of the self-employment income.
Our divorce decree also contains language requiring tax refunds to be split between us. I have already complied with the decree regarding the refund I received.
My question is whether there would be any benefit or reason for me to submit IRS Form 3949-A reporting her failure to file if she continues to refuse to file.
I’m not looking to retaliate against her or cause unnecessary problems. I’m trying to understand whether filing Form 3949-A would be an appropriate way to document/report the situation, particularly since her failure to file could potentially affect obligations under our divorce decree.
Would you submit a 3949-A in this situation, or would you simply document everything and let the IRS eventually address the unfiled return based on the 1099 information they already receive?
Interested especially in opinions from CPAs, EAs, tax preparers, or anyone who has dealt with a similar situation.

I have a small business where I make around 20k a year, I'm also a full time student.

I file with Schedule C, my university I attend is online and is low in cost, so I see a 1098-T but it says it was for informational purposes only (about 3900 of tuition) and I spent about 400 extra on books for the classes.

(It's undergraduate studies accredited). Wondering if I can claim the AOTC still even though my university said its for informational purposes only? I'd rather not prefer an audit, but if I quality still even though it is for informational purposes only is it still valid? #Confused thanks!

I’ve been gambling on Stake throughout the year and ended up around $50k ahead overall, but it wasn’t from one huge win. It was a lot of wins and losses across sportsbook bets and casino games over a bunch of different sessions.

I deposited crypto at different points, played with it, withdrew some when I was up, then eventually sold the withdrawn crypto through an exchange and moved the cash to my bank.

What I’m struggling with is how detailed the reporting is supposed to get.

My exchange can obviously see the crypto coming back from Stake and being sold, but it has no context for all the gambling activity that happened before that. On the Stake side, there are hundreds of individual bets, so I’m not sure whether I’m expected to account for every wager separately or if there’s a reasonable way to summarize wins and losses by session.

I’m also confused about what happens when the crypto leaves Stake. If I withdraw $10k worth of crypto after a winning stretch and sell it shortly after, am I treating the value at withdrawal as the new basis and only reporting the price movement after that as a crypto gain or loss?

For anyone who has dealt with this before, what records did you actually keep?

Did you export the full betting history, just deposits and withdrawals, or create your own summary of sessions and net results?

Also wondering whether this is something a regular CPA can usually handle or if it’s worth finding someone who specifically deals with both gambling and crypto.

I’m trying to report everything properly, I just don’t want to accidentally treat all the exchange proceeds as crypto gains when a lot of it came from gambling winnings.

Hi tax pros— I hope you will forgive this question, but I’m trying to advise a friend, and I’m very much at the limit of my extremely beginner level tax knowledge.

My friend runs an industry newsletter in Florida with a group of other folks. None of them make any money off of it, and have never seen a reason to start a nonprofit or LLC or anything. Now, another larger organization is interested in providing a grant in the low five figures to help offset costs and cover the time that these folks put into this project. Great— except the org wants to write one check to one entity, and it’s unclear who it should go to.

My friend is worried that if one person takes payment of the full grant as an individual, then distributes portions of the money to the others, they would be stuck with a lot of paperwork and potentially more taxes to pay. They wonder if they should start an LLC to try to avoid that. I have an inkling that an LLC is probably more of a headache than not— and that the most correct thing would be to either start a nonprofit to take receipt of the money, or find an existing nonprofit to serve as a pass through. But, maybe I’m wrong!

If anybody has any experience with these sort of questions, I’d love to know if there is any advice to be had on deciding whether to start an LLC or not in situations along these lines…

Hi. I've been wanting to make some trades and I know if I trade from my personal account the taxes will be much higher, at least I think so, but im not sure. If I made money would I be paying capital gains on an s- corp but not from my personal? I heard you can't have both on Kalshi.

I don't understand a lot about taxes and what makes sense. Does anyone know something and can help me understand. Also with S-Corp I have to pay myself a salary right? But can I spend money from the account for expenses or if I do and decide to close the s-corp can I put the investments from the s-corp in my name? Any help would be immensely useful

We signed a form 2848 for an accountant to file taxes while I was conservator for my sister who had not filed for 10 years. They have not heard back from the IRS. My sister passed about 3 weeks after the accountant sent the form in. Now I am to be the executor and it is moving fast, will I need to refile form 2848 showing me as executor and giving the accountant POA. How long does it take to hear back from the IRS in these circumstances? TIA!

I have been writing to the IRS for nine months now and never have received a response yet on the above question. So I can apply for a foreign tax credit on my HMRC self assessment form I need to know a breakdown of the taxes owed to the IRS by type of income. ie. Interest. Dividends. Capital Gains all separately (which then of course equal Line 16 in total after adding them together). I know the following, but whenever I try to calculate myself it adds to more than Line 16. So no good.

It is clear in 2024 that interest, dividends and short term capital gains are taxed 10% to $ 11,600, 12% to $ 47,150 and 22% to $ 100,525.  Also qualified dividends and long term capital gains are taxed 0% to $ 47,025 and 15% to $ 518,900.  

It is also clear in 2025 that interest, dividends and short term capital gains are taxed 10% to $ 11,925, 12% to $ 48,475 and 22%  to $ 103,350.  Also qualified dividends and long term capital gains are taxed 0% to $ 48,350 and 15% to $ 533,400. 

Whatever that actually means in practice after you claim the standard deduction and fill out the various worksheets. It is the way the IRS came up with the amount on Line 16 to begin with so you must be able to reverse the process and say what was put into the formula to achieve the amount on Line 16.

Does anyone know anyone who knows how to calculate this breakdown properly?

My husband has a large IRA. His annual RMD is over 200K. He has a Roth he created while still working/pre-RMDs when he converted a 401k from a former employer. We wanted to do a Roth conversion in 2026. Our FA said ok. They knew my husband had no taken his RMD for 2026. The FA just transferred certain number of individual shares in several companies to a new Roth account. It has been profitable this year. They did not withhold any estimated tax due based on full RMD amount plus the Roth conversion amount.

Now I read it is "illegal" to create a Roth before you have taken that year's RMD. We contacted our FA. They talked to their firm's legal--these FA are w/Merrill Lynch and also a new CPA we engaged this year, a few weeks ago. Both ML advisors and the CPA say that we just need to withdraw the full RMD and pay tax since we will pay tax on the Roth + RMD+whatever else income is earned In 2026. Most of our other assets are in municipal bonds whose ROI is mainly tax free. Their opinion is that his IRA has sufficient funds to pay out the full RMD AND the Roth amount so doing one before the other is moot.

But I read that if this Roth is not returned to the IRA, and the profit is not declared as ordinary income and placed in a different account and tax paid on it--that there is a 6% recurring penalty by keeping it inside the new Roth.

I also read the deadline to correct this error/mistake/screwup is Oct 15 of this year.

So I am not so cavalier. Sorry if this is not a clear explanation. I am about ready to take a Xanax because I am so stressed. We did not intend to break any rules doing this. And our FA certainly didn't give us accurate advice either...but hindsight is always 20/20 they say.

It has been ~11 weeks I filed my tax. It says processing al the time for last 10 weeks.

Also, how to reach out? The phone call always redirect me to refund check and ask my details, and all it says is that it is processing that I already know.

Hi everybody! Just wanted to give a quick experience I had! I started my own tax firm in late July. I just filed my first tax return today and got paid for it! Up until this point I was hesitant to say that I was even doing this, but it actually feels real now! Even though it was only $300, it feels awesome to be on the board!

Hi, wanted to get thoughts on deduction opportunities for a 2025 tax return I'm working on for a family member. This is one of my first planning opportunities and I want to get a 2nd set of eyes on if there is anything else that is possible from a Fed and CA perspective.

Here's the client profile:

MFJ, California residents. Combined AGI ~$690K.
• Person 1: Physician, sole owner of a medical practice S-Corp. W-2 $192K, S-Corp net income $425K.
• Person 2: W-2 employee working from home, $180K. Family health insurance through Person 2's employer.
• Renters, no mortgage, no charitable contributions. ~$11K in capital gains.

Already Taken
• Person 1 solo 401(k): $72K pre-tax
• Person 2 401(k) + HSA: $33K pre-tax
• Backdoor Roth: both spouses
• S-Corp business expenses via accountable plan
• Standard deduction on federal
• CA standard deduction

Already Off the Table
• PTET: not elected for 2025; sadly too late
• Cash Balance Plan: client declined

Any deduction opportunities you'd consider at this income level and profile that we might be missing on either the federal or CA return?