This might be a dumb question, but wouldn't it just be easier to call FreeTaxUSA support? I had this exact same issue last year and their customer service walked me through the exact screens where I needed to indicate I was withdrawing contributions and not earnings.

I went through this exact same situation last year with a Code J distribution from my Roth IRA. The key thing to remember is that with Roth IRAs, the IRS assumes you're withdrawing contributions first (this is called the "ordering rules"), so as long as you haven't exceeded your total contribution basis, you should be fine. When you get to the FreeTaxUSA screen for entering your 1099-R, make sure you select "Roth IRA" as the account type. Then there should be a series of questions about whether this is a qualified distribution, early distribution, etc. Look for the question that asks if you're withdrawing contributions - this is where you indicate that your $5,000 came from contributions rather than earnings. The software should automatically generate Form 8606 Part III for you once you indicate this is a contribution withdrawal. Just make sure you have documentation of your total contributions over the years to verify that $5,000 doesn't exceed what you've put in. If you're unsure about your contribution history, check with your IRA provider - they usually track this information.

Has anyone run into issues with banking or business operations by not having a Partnership Representative? We're trying to decide if we should just pay a US person to serve as our PR instead of opting out of BBA.

I've been through this exact situation with my EU-based business partner last year! The BBA opt-out was definitely the right choice for us, and it's much simpler than it initially appears. Just to add to what others have mentioned - when we opted out, we didn't face any complications with our tax treaty benefits. Our accountant confirmed that the opt-out actually made things cleaner since it eliminated the need for ongoing PR correspondence with the IRS. One thing I'd recommend is double-checking that your partnership income is properly classified. Since you mentioned having income from outside the US, make sure you understand whether any of it constitutes "effectively connected income" (ECI). If it's not ECI, you likely won't need to file individual Form 1040-NR returns, which simplifies things considerably. Also, keep good records of your opt-out election. We created a simple file with copies of Schedule B and Schedule B-2 from our 1065 filing, along with notes about why we qualified for the election. It gives us peace of mind for future years. The whole process ended up being much more straightforward than we anticipated. With your simple financial situation, you should be able to handle this without too much difficulty once you understand the opt-out mechanics.

Have you considered section 280A limitations? This limits your deductions to the gross income from the rental activity when you're renting part of your personal residence. This might affect your ability to claim a loss.

Great question about Schedule C vs Schedule E treatment! You're absolutely right that the classification matters here. Since you're running this as a short-term rental business (less than 7 days average stay), it should be reported on Schedule C as business income, not Schedule E as rental property income. This is actually good news for you because Schedule C businesses aren't subject to the Section 280A limitations that restrict home office deductions to the income generated. However, you do need to be careful about the business use vs personal use allocation. One thing to double-check: make sure you're consistently treating this as a business. Keep detailed records of your advertising efforts, guest communications, cleaning schedules, and any business improvement activities. The IRS likes to see that you're operating with a profit motive, especially in the first few years when losses are more common. Also consider whether you qualify for the Section 199A QBI deduction on any future profits from this business - it could provide additional tax benefits down the road.

I had this exact situation last April! According to the IRS website (https://www.irs.gov/individuals/understanding-your-cp05-notice), these reviews are part of their fraud prevention program. Mine was triggered because I claimed a home office deduction for the first time. The timeline on the IRS site says 60 days, but mine was resolved in 47 days with no additional information requested. The refund just showed up in my account with interest! The IRS Operational Status page (https://www.irs.gov/newsroom/irs-operations) sometimes has updates on processing times for these reviews as well.

I went through something similar when I changed my filing status to Head of Household after my divorce. The CP05 notice can definitely be stressful when you're counting on that refund! In my case, it took about 8 weeks to resolve, but the IRS was specifically verifying my eligibility for Head of Household status and making sure I met the requirements (like paying more than half the household costs and having a qualifying dependent). Since you mentioned this involves your ex-spouse and child tax credits, I'd recommend gathering all your divorce documentation that shows the custody arrangement and who's entitled to claim which children. The IRS sometimes sees duplicate claims and needs to sort out who has the legal right to claim each credit. One thing that helped me was calling the Taxpayer Advocate Service at 1-877-777-4778. They were more helpful than the general IRS line when I needed to understand what was happening with my review. They can't speed up the process, but they can sometimes provide more specific information about what the IRS is looking for. The good news is that in most cases, these reviews end favorably for the taxpayer when everything is legitimate. Hang in there!

Im confused about pretax vs posttax deductions... which ones should be taken out before taxes are calculated? my paystub has these codes: 401k, DEN, MED, VIS, FSA, HSA, STD, LTD, LIFE

Check if your company switched payroll providers or updated their system recently - that often causes sudden changes in deduction codes and amounts. I had a similar situation where a system upgrade changed how my benefits were being calculated mid-year. Also look for an "earnings statement" or "pay stub legend" section on your company's HR portal or intranet. Most employers are required to make this information accessible to employees. If you can't find it online, ask a coworker who's been there longer - they might know where to find the documentation. The $95 jump could also be due to benefit elections kicking in if you recently went through open enrollment, or if you hit a salary threshold that triggered additional deductions. Sometimes companies also add new voluntary programs (like legal insurance or identity theft protection) that you might have accidentally enrolled in during benefits signup.