I'm so sorry you're going through this - it's a horrible feeling when you realize someone you trusted has potentially committed fraud using your name. I went through something similar a few years ago and want to share what I learned. First, definitely file that Form 14157 complaint against the preparer as others mentioned. But also consider contacting your state's Board of Accountancy or licensing board if your preparer is licensed - they take these complaints seriously and can revoke licenses. When you file your amended returns, include a detailed letter explaining the situation. I wrote something like "I recently discovered that my tax preparer included fictitious business information on my returns without my knowledge or consent. I am voluntarily amending to correct these errors and have filed a complaint with the IRS regarding this preparer's conduct." The IRS was actually pretty understanding in my case once I showed I was proactively fixing the problem. I had to pay back the excess refund plus interest, but they waived most penalties because I demonstrated good faith by coming forward voluntarily. Document everything - keep copies of all communications, your original returns, and evidence that you don't actually have the business claimed on your return. This will be crucial if the IRS has questions later. You're doing the right thing by addressing this now rather than hoping it goes unnoticed. The IRS has gotten much better at catching these patterns, so it's better to be proactive.

This is absolutely a serious situation that needs immediate attention. As someone who works in tax compliance, I can tell you that what you're describing - creating fictitious Schedule C business losses - is one of the most common forms of tax preparer fraud. The good news is that you discovered this relatively quickly and can take corrective action. Here's my recommended action plan: 1. **Immediately stop using this preparer** - Don't let them file anything else for you 2. **Gather all documentation** - Keep copies of both returns, any communications with the preparer, and proof that you don't operate any business 3. **File Form 14157** to report the preparer to the IRS - This creates an official record 4. **File amended returns (Form 1040-X)** for both years - Include a detailed explanation letter 5. **Consider contacting the IRS Taxpayer Advocate Service** if you run into issues Regarding your concern about the preparer being notified of amendments - they typically aren't directly notified when you file 1040-X forms, but they may find out through other means if the IRS investigates them. You're wise to address this proactively. The IRS has sophisticated systems that flag these patterns, and voluntary disclosure generally results in much better treatment than being caught in an audit. While you'll likely need to pay back the excess refunds plus interest, acting in good faith by coming forward can help you avoid fraud penalties. Don't panic - you're taking the right steps to protect yourself.

One thing I haven't seen mentioned yet is the importance of timing when it comes to investment interest deductions. If you don't have enough net investment income this year to fully deduct your HELOC interest, you can carry the excess forward indefinitely to future tax years. For example, if your HELOC interest is $3,000 but you only have $1,500 in qualifying investment income this year, you can deduct $1,500 now and carry forward the remaining $1,500 to use against future investment income. This is particularly helpful for buy-and-hold investors who might not generate much taxable income from their investments in the early years. Keep good records of any carryforward amounts - you'll need to track them on Form 4952 each year until they're fully used up. Also worth noting: if you're near the standard deduction threshold, run the numbers both ways. Sometimes it makes sense to realize some gains or take dividends in cash rather than reinvesting to boost your investment income and maximize the interest deduction.

Great question! As others have mentioned, you can absolutely deduct HELOC interest as investment interest expense, but I want to add a few practical tips from my experience: **Documentation is everything**: Open a separate checking account just for your HELOC draws if possible. Transfer HELOC funds there first, then to your brokerage. This creates a crystal-clear paper trail that the IRS loves to see. **Consider the AMT implications**: If you're subject to Alternative Minimum Tax, investment interest deductions work differently. The AMT allows the deduction but calculates it using AMT investment income, which can be lower than regular tax investment income. **Don't forget state taxes**: Some states don't allow investment interest deductions even if the federal government does. Check your state's rules - you might be able to deduct federally but not at the state level. **Quarterly estimated payments**: If you're expecting a large investment interest deduction, remember it only helps if you're itemizing and it might affect your quarterly estimated tax payments. Don't get caught with an underpayment penalty. Keep excellent records from day one - it's much harder to reconstruct the paper trail later if you get audited. The IRS specifically looks for "tracing" of borrowed funds to investment use.

I've dealt with this exact situation multiple times! The "cost basis not reported to the IRS" checkbox is actually pretty common, especially for stocks purchased before 2011 when brokers weren't required to track cost basis for all securities. Here's what you should do: Use your own records to determine the cost basis and report it accurately on your tax return. When you enter these transactions in TurboTax, look for the option that says something like "Cost basis not reported to IRS" or similar - they have specific fields for this scenario. A few important points: - This won't trigger an audit just because the basis wasn't reported to the IRS - Make sure your sale proceeds match exactly what's on the 1099-B - Keep any documentation you have of your original purchase prices - If you're missing some records, try logging into your Fidelity account to see if you can access older statements or trade confirmations The key is to make a good faith effort to report the correct cost basis. Don't stress too much about this - it's a very routine situation that the IRS deals with constantly. Just be honest and thorough with your record-keeping.

This is such a common situation - you're definitely not alone in dealing with this! I went through the exact same thing with my Vanguard account last year and was equally stressed about it. The good news is that TurboTax handles this scenario really well. When you get to the investment section, there's a specific workflow for entering 1099-B transactions where the cost basis wasn't reported. You'll see checkboxes or dropdown options that let you indicate this situation, and then you can enter your own cost basis data. A couple of practical tips that helped me: - Double-check that your sale proceeds match the 1099-B exactly (that's the number the IRS definitely has) - If you use Fidelity's website, try looking under "Accounts & Trade" > "Account Features" > "History" - they often have trade confirmations going back several years - For any missing records, I created a simple spreadsheet showing how I estimated each cost basis with notes like "researched historical price on MarketWatch for approximate purchase date" The "cost basis not reported" checkbox is actually the IRS telling you they expect YOU to provide this information, not a warning that something's wrong. You're doing exactly what you're supposed to do by using your own records. Just make sure to keep documentation of how you determined your numbers, and you'll be fine!

One thing no one has mentioned - make sure you file in the right order! Start with the oldest year first and work forward. This is important because some tax attributes carry forward from year to year. If you have any business losses, capital losses, or credits that might carry forward, filing out of sequence can really mess things up.

Really glad to hear you're getting your life back on track! Six years of unfiled returns might seem overwhelming, but it's absolutely manageable and you're taking the right step by addressing it now. A few key points to keep in mind: Since you mentioned having steady W-2 income with proper withholding, there's a good chance you may have been owed refunds for some of those years (though you can only claim refunds for the last 3 years). The penalty situation might not be as bad as you think if you don't actually owe much. Before jumping into anything, I'd suggest requesting wage and income transcripts from the IRS for each of those years - you can do this online at IRS.gov. This will show you exactly what income the IRS has on file for you and help you gather any missing documents. It's free and can really help you understand your situation before you start filing. Given your income level and the fact that you had withholding, you might be able to handle some of the simpler years yourself using tax software for prior years, but definitely consider getting professional help for at least the first year to make sure you're doing everything correctly. The peace of mind is worth it, and they can often spot opportunities for penalty abatements or other relief you might not know about. You've got this! Taking action now is the hardest part, and it sounds like you're in a much better place to handle it than you were before.

One thing that hasn't been mentioned yet is the importance of understanding how partnership distributions affect your basis calculation. I learned this the hard way when I received a large distribution from one of my real estate partnerships last year. When you receive distributions from the partnership, they reduce your tax basis but don't necessarily change your capital account. If your distributions exceed your basis, you could have immediate taxable gain even if the partnership itself is profitable and your capital account is positive. This is another reason why tracking your actual basis (not just relying on the capital account) is so important. I almost missed a taxable distribution because I was only looking at my capital account balance on the K-1, which showed I still had plenty of "equity" in the partnership. Your partnership agreement should specify how distributions are allocated and whether they're considered returns of capital or something else. Make sure you understand this before you receive any large distributions, especially if you're planning to take money out for other investments.

Great question about tracking basis during the year for distribution planning! I've found a few approaches that work well: 1. **Quarterly basis estimates**: I created a simple spreadsheet that tracks my beginning basis, then adds/subtracts items as they occur during the year. I add my estimated share of partnership income (based on monthly/quarterly reports from the partnership) and subtract any distributions I receive. 2. **Partnership reporting**: Better-managed partnerships will often provide quarterly or semi-annual statements that include estimated basis calculations for each partner. If your partnership doesn't do this, it might be worth asking them to start - especially for partnerships with active distribution policies. 3. **Conservative cushion approach**: Since distributions that exceed basis create immediate taxable gain, I always assume my basis is lower than my rough calculations suggest. I try to keep a cushion of at least 20-30% of any planned distributions in my estimated basis before taking money out. The key is getting regular financial reports from your partnership so you can estimate current year income/losses. Most real estate partnerships should be providing at least quarterly updates on property performance, which you can use to estimate your share of partnership income for basis calculations. It's definitely not perfect, but it beats the surprise of finding out in March that your December distribution created taxable income!