This is exactly the kind of partnership tax issue that trips up so many people! The W-2 wages on Statement A are there for the QBI deduction limitation calculation, but only if your taxable income exceeds certain thresholds. Here's the simple breakdown: If your 2024 taxable income is under $191,050 (single) or $382,900 (married filing jointly), you can completely ignore those W-2 wages. They won't affect your QBI deduction at all. You'll just take 20% of your qualified business income as your deduction, subject to your overall taxable income limitation. The W-2 wages only come into play as a potential limitation on your QBI deduction if you're above those income thresholds. Since most taxpayers fall below these levels, the partnership is essentially required to report information that the majority of partners won't even use. It sounds like you're probably in the clear to ignore the W-2 wage information entirely and just focus on calculating your 20% QBI deduction. The partnership has to include this data "just in case" any partner needs it, but it doesn't mean every partner has to use it in their calculations.

I went through this exact same confusion when I first encountered QBI reporting on my K-1! The W-2 wages section really threw me off because I kept thinking I needed to subtract them from something or use them in some calculation that wasn't making sense. What finally clicked for me was understanding that this is really about two completely separate concepts that happen to be reported together. Your qualified business income (the amount you'll base your 20% QBI deduction on) is one thing. The W-2 wages are there for a totally different purpose - they're like a backup calculation method that only kicks in if you're a high earner. Think of it like having both regular driving directions and alternative routes for construction - you only need the alternative route if you hit that specific situation. For most of us, we can just follow the main path (20% of QBI) and ignore the alternative calculation entirely. The partnership reports both pieces of information because they have to cover all their bases, but that doesn't mean every partner needs to use every piece of data. It sounds like you're probably in the same boat as most of us - you can just focus on that QBI amount and take your 20% deduction without getting bogged down in the W-2 wage limitation rules.

Don't forget that for gambling, you have to itemize deductions on Schedule A to claim losses. This means giving up the standard deduction which is $14,600 for single filers in 2025. If your total itemized deductions (including gambling losses, mortgage interest, charitable contributions, etc.) don't exceed your standard deduction, it might not make sense to deduct gambling losses at all.

For your 2024 situation where you didn't report small winnings under $600, you're probably fine since the amounts were minimal and you didn't receive any tax forms. The IRS typically focuses on larger unreported income. For this year with the $20,000 PayPal 1099-K, that's reporting gross payment volume, not taxable income. You'll need to separate your actual gambling winnings from deposits/withdrawals. Since you're only up $135 on FanDuel and didn't get a 1099 from Prizepicks, your actual taxable gambling income is likely very small. The key is keeping good records going forward. Download transaction histories from both platforms showing all bets placed and winnings received. Your tax professional should be able to help you properly report the actual winnings as income while ensuring you don't overpay based on the inflated 1099-K amount. Most importantly, don't panic - this is a common situation with payment processors issuing 1099-Ks for gross transactions rather than net gambling profits.

I'm in almost the exact same situation as you - dual Swiss-American citizen, lived in Switzerland my whole life, and just learned about US tax filing requirements. The anxiety about airport issues was consuming me until I read through this thread. What's been most helpful for me is understanding that this is purely an administrative tax issue, not a criminal matter. The CBP agents at airports are completely separate from IRS operations and don't have access to tax records. I've traveled to the US twice in the past year while researching my compliance options and had zero issues at customs. The key insight I've gained is that the US tax system for expats is designed around the assumption that most Americans abroad will owe little to no actual tax due to foreign tax credits and exclusions. With Switzerland's higher tax rates, you're likely already paying more in Swiss taxes than you would owe the US anyway. I'm planning to use the Streamlined Foreign Offshore Procedures mentioned throughout this thread. From my research, it seems like the most straightforward path for people in our situation who genuinely didn't know about the filing requirements. The 3-year filing requirement (versus catching up on everything) makes it much more manageable. Your mother's situation is actually quite common among older dual citizens. Many choose to get compliant simply for peace of mind, even when the actual tax impact is minimal. Swiss retirement income generally receives favorable treatment under the tax treaty.

As someone who works in international tax compliance, I want to emphasize that your concerns about airport arrests are completely unfounded. US Customs and Border Protection operates independently from the IRS, and they have no access to tax filing information during entry processing. Their focus is on customs declarations, not tax compliance status. Your situation is incredibly common - we call it the "accidental American" problem. The US citizenship-based taxation system catches many dual citizens off guard, especially those who've lived their entire lives abroad. You're definitely not alone in this. With your income level of 5,200 CHF monthly, you'll likely benefit significantly from both the Foreign Earned Income Exclusion (up to $126,500 for 2024) and the Foreign Tax Credit. Since Switzerland has higher tax rates than the US, you may end up owing little to nothing in actual US taxes. The filing requirement exists regardless, but the financial impact should be minimal. For both you and your mother, I'd strongly recommend the Streamlined Foreign Offshore Procedures. This program is specifically designed for non-willful cases like yours and only requires filing 3 years of back returns plus 6 years of FBAR forms. It's much more manageable than trying to catch up on everything. Don't let tax anxiety prevent you from visiting family or renewing your passport. Focus on getting compliant at your own pace, but know that your immediate travel plans are not at risk.

This is exactly the kind of situation where having good documentation practices pays off! Since you caught this mistake relatively early, you're in a much better position than if you had discovered it years later. One additional tip - when you file your 2024 tax return next year, make sure to keep a copy of your amended 2023 return and any correspondence from the IRS in the same folder. If there's ever any confusion down the line about this income being reported twice, you'll have the paper trail showing you corrected the error properly. Also, don't beat yourself up over this mistake! Rental property income timing can be tricky, especially when you're dealing with payments that come in right around year-end/New Year. I've seen seasoned real estate investors make similar errors. The important thing is that you caught it and are taking the right steps to fix it.

I went through almost this exact same situation two years ago with rental income that came in on December 30th but I didn't receive it until January 2nd due to bank processing delays. The confusion about which tax year it belonged to had me second-guessing everything! What really helped me was keeping a simple spreadsheet tracking when rent payments were actually received vs. when they were due. This has prevented similar mix-ups since then. For rental properties, I now make it a habit to double-check any December/January payments to make sure they're being reported in the correct tax year. The 1040-X process that others mentioned is definitely the right approach. One thing I'd add is to file your amendment as soon as you can rather than waiting. I procrastinated on mine and it just made me more anxious about the whole thing. Once I finally submitted it, the relief was immediate even though I had to wait months for the actual refund. You're being really responsible by catching and correcting this early. Many people don't realize their mistake until much later, which makes it more complicated to fix.

I went through something similar with a large annuity withdrawal for home improvements. One thing that really helped was getting a complete history of all my contributions from the annuity provider - not just the recent statements, but going back to when I first opened it. The tax calculation gets complex because it's based on the ratio of your total contributions versus the account's current value. If you've been contributing for 12 years like you mentioned, a significant portion might indeed be return of principal that shouldn't be taxable. Also worth noting - if you're being pushed into a much higher tax bracket this year, consider if there are any ways to defer some other income to next year, or accelerate deductions into this tax year. Things like maximizing your 401k contributions, HSA contributions if eligible, or even charitable donations can help offset some of that income spike. The 20% withholding they took might actually work in your favor come tax time if it turns out you don't owe as much as initially calculated.

I had a similar situation last year with an annuity withdrawal for my home purchase. One thing that really saved me was requesting what's called a "basis statement" from my annuity provider - this document shows your exact cost basis (total contributions) versus the account's current value. For non-qualified annuities, the IRS uses something called the "exclusion ratio" to determine what portion of each withdrawal is taxable. If you've been contributing for 12 years, there's a good chance a significant portion represents return of your original after-tax contributions, which shouldn't be taxed again. The key is making sure your 1099-R reflects the correct taxable amount. Many providers default to reporting the entire withdrawal as taxable, but that's often incorrect for long-term annuities. I had to work with my provider to get a corrected 1099-R that properly separated the taxable earnings from the non-taxable principal. Also, don't forget about the first-time homebuyer credit and all the deductions you can claim for closing costs, points, and mortgage interest to help offset some of that income spike this year.