Has anyone successfully claimed AOTC with just a student account statement showing tuition payment but no actual 1098-T? My community college didn't issue me one because my courses were covered by a scholarship, but I paid for all the books out of pocket (about $600). I have receipts for all the books.

Great question about AOTC documentation! I went through similar confusion last year and learned a lot through the process. Your email rental agreement for the digital textbooks should definitely be acceptable proof. The IRS doesn't require specific receipt formats - they just need documentation showing you paid for qualified educational expenses. Make sure to save both digital and printed copies of that email agreement. However, I'd agree with Tyler's assessment about the health and parking fees. Health services fees typically don't qualify unless they were specifically required for enrollment in your courses (not just general campus health services). Parking permits are almost never considered qualified educational expenses since they're personal convenience costs rather than direct educational requirements. One tip that helped me: create a simple spreadsheet listing each expense, the amount, date paid, and what documentation you have. This makes it much easier if you ever need to provide proof to the IRS. Also keep everything organized by tax year and semester. The good news is that your $250 in textbook rentals should qualify perfectly for the AOTC as long as those were required materials for your courses. Focus on documenting those clear educational expenses rather than trying to stretch into questionable categories.

This has been such a helpful discussion! I'm dealing with a similar situation and want to make sure I understand this correctly. So if I have passive capital losses from selling a rental property at a loss, those losses go on Schedule D and can offset ANY capital gains I have (whether from stocks, bonds, or other investments), regardless of whether those gains are passive or nonpassive? And then separately, if I have operating losses from my rental properties (like when expenses exceed rental income), those are treated as passive ordinary losses and can only offset passive ordinary income unless I qualify for an exception? I think I've been overthinking this because I kept trying to apply the passive activity rules to ALL losses from passive activities, when really the capital vs ordinary distinction is what matters first. The tax code seems to prioritize the nature of the income/loss (capital vs ordinary) over the source (passive vs nonpassive) when it comes to capital gains and losses. Thanks to everyone who shared their experiences and especially the tax preparer who clarified the K-1 line items - that's going to save me a lot of confusion when I tackle my partnership documents!

This thread has been incredibly educational! I'm a newer investor and was completely confused about this topic until reading through everyone's explanations. The key insight that finally made it click for me is that the tax code treats capital gains and losses differently from ordinary income and losses, regardless of whether they come from passive or nonpassive activities. So to summarize what I've learned here: if you have capital losses from passive activities (like selling an investment property at a loss), those losses go on Schedule D and can offset capital gains from any source - stocks, bonds, other real estate, etc. The passive/nonpassive classification doesn't matter for capital items. But if you have ordinary operating losses from passive activities (like rental property expenses exceeding income), those are subject to the passive activity loss limitations and can generally only offset passive ordinary income. This distinction explains why @Zane Gray's $11,000 in passive capital losses can offset his $15,000 in nonpassive capital gains from stock sales, while his passive ordinary income from the rental property is handled separately. Thanks to everyone who shared their knowledge and experiences - especially the tax professionals who provided the technical details and K-1 guidance. This is exactly the kind of practical tax education you can't easily find elsewhere!

I'm dealing with a very similar situation - just received a Square 1099-K for about $3,900 in manufactured spend activity and was initially panicking about the tax implications. This thread has been absolutely invaluable in understanding the proper approach! The consistent advice about using Schedule C to report the 1099-K amount as gross receipts while offsetting it with equal expenses makes perfect sense. What's particularly reassuring is seeing multiple people who've actually gone through this process successfully, including those who've been audited and came out fine with proper documentation. I'm already implementing the spreadsheet tracking system that several people mentioned - documenting each gift card purchase, the processing through Square, and the bank deposits. The transparency approach definitely seems like the safest route rather than trying to ignore or hide the 1099-K. One thing I appreciate about this discussion is how it emphasizes that manufactured spend isn't about tax evasion - it's about properly reporting transactions that don't represent actual income. The key is having thorough documentation to prove the circular nature of the money flow. For anyone else in this situation, this thread really demonstrates that with proper record-keeping and transparent reporting on Schedule C, handling a Square 1099-K from MS activity is completely manageable. Thanks to everyone who shared their real experiences and detailed strategies!

I'm new to this community but found myself in the exact same situation - just received a Square 1099-K for about $5,800 in manufactured spend activity and was completely overwhelmed until I discovered this thread. The detailed advice here has been incredibly helpful, especially the consistent recommendation to report everything transparently on Schedule C with offsetting expenses. What really gives me confidence is seeing actual examples from people like Sean O'Brien and Jayden Hill who've successfully navigated this process, including through audits. I'm already implementing the documentation strategies mentioned - creating a detailed spreadsheet tracking each gift card purchase through Square processing to bank deposits, keeping credit card statements, and preparing a clear explanation of the circular money flow. One thing that really resonates with me is how everyone emphasizes that this isn't about tax evasion, but properly reporting transactions that represent personal fund cycling rather than actual business income. The transparency approach of acknowledging the 1099-K and offsetting it with equal expenses seems much safer than trying to ignore it. For anyone else dealing with their first Square 1099-K from MS activity, this thread demonstrates that with proper documentation and Schedule C reporting showing zero net profit, this situation is completely manageable. The key is treating it like legitimate business record-keeping even though it's just personal funds moving in a circle. Thanks to this community for sharing such valuable real-world experiences - it's transformed what seemed like a tax nightmare into something I can handle confidently!

I can totally relate to your frustration with the "pending processing" status! I went through this exact same thing last year with my amended return. What I learned is that "pending processing" basically means your return passed the initial computer checks but is now waiting in a queue for a human examiner to review it. The IRS processes amended returns in the order they receive them, but they don't assign them to specific examiners until they're ready to work on them. The good news is that if the tax advocate said nothing is wrong, you're likely just waiting your turn in line. I'd suggest checking your online account transcript every few weeks - when they actually start working on it, you'll see new transaction codes appear. Hang in there, the waiting is the hardest part but it does eventually move forward!

I'm going through this exact same situation right now! Filed my amended return in late January and I've been stuck on "pending processing" for about 9 weeks. It's so frustrating because every time I call, I get a different representative who gives me slightly different information. One person told me 16 weeks, another said 20 weeks, and the tax advocate I spoke with yesterday said "up to 20 weeks but could be sooner." What's really driving me crazy is that they can see my return in their system but can't tell me anything meaningful about where it actually is in the process. I asked the advocate if there was ANY way to get more specific information about timing and she basically said no - that amended returns are just processed "in order" but they don't have visibility into queue position or expected timeframes. I'm trying to stay patient but it's hard when you're waiting on a refund and getting zero transparency about the process. At least it sounds like yours is moving in the right direction if they confirmed nothing is wrong with it!

One important detail that hasn't been fully covered is the interaction between gambling losses and the standard deduction. Since the standard deduction for 2025 is $15,000 for single filers and $30,000 for married filing jointly, many casual gamblers find themselves in a situation where they can't benefit from deducting their gambling losses. Here's why this matters: Let's say you have $3,000 in gambling winnings and $2,500 in losses during the year. You must report the full $3,000 as income, but you can only deduct the $2,500 in losses if you itemize deductions. If your total itemizable deductions (including the gambling losses, mortgage interest, state taxes, charitable donations, etc.) don't exceed the standard deduction, you're better off taking the standard deduction - but then you lose the ability to deduct those gambling losses. This is why many recreational gamblers end up paying taxes on their gross winnings rather than their net gambling income. It's worth calculating both scenarios when you file to see which approach results in lower taxes. Some taxpayers are surprised to discover that itemizing just to claim gambling losses actually costs them more in taxes than taking the standard deduction.

This is a really comprehensive discussion! As someone who's been through this exact situation, I want to emphasize one more crucial point: make sure you're keeping contemporaneous records throughout the year, not trying to recreate them at tax time. I used to think I could just rely on my bank statements and credit card records to figure out my gambling activity when tax season rolled around, but that approach is really problematic. Bank records show you withdrew $200 from an ATM at a casino, but they don't show whether you won $500 or lost the entire $200 that day. The IRS specifically wants to see a gambling log or diary that's maintained as you go. It should include the date, location, type of gambling, people you were with (if any), and amounts won or lost. I keep a simple note on my phone after each casino visit or online gambling session - it takes 30 seconds but saves hours of headaches later. Also, don't forget to save any documentation like casino player card statements, tickets, receipts, and definitely any W-2G forms. Even if your player card doesn't track every bet (like when you switch games or play without using it), having partial records is still much better than trying to estimate everything later. Start your record-keeping system now for 2025 - your future self will thank you!