Thanks for mentioning this! Do you know which form specifically I need to look for? And would I need to file separate returns for each year to get the different stimulus payments?

You'll claim the Recovery Rebate Credit directly on your Form 1040 for each year. There's a specific line for it on each year's tax return. And yes, you'll need to file a separate return for each tax year to claim the stimulus payments from that year. Each stimulus payment is tied to a specific tax year. So for example, the first two payments from 2020 would be claimed on your 2020 tax return, while the third payment from 2021 would be claimed on your 2021 return. Make sure you're using the correct year's tax forms when you file!

This is actually really important advice. I had a similar issue with a family member using my info. Without a police report, it was much harder to clear things up with credit bureaus and the IRS. They often require an official report for identity theft cases.

Wait, that's super relevant to us! My husband has about $45,000 in student loans on an income-based plan. How would filing separately affect his payments? Would the tax hit be worth the loan payment savings?

The impact depends on the specific repayment plan he's enrolled in. If he's on an Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR) plan, filing separately could potentially lower his monthly payments significantly because they'll only count his income rather than your combined household income. Whether it's worth it requires calculating both the tax difference and the loan payment savings. For example, if filing separately costs you $1,000 more in taxes but saves $150 monthly on loan payments ($1,800 yearly), you'd come out $800 ahead. Many people in your situation find that the student loan savings outweigh the tax inefficiencies, especially if the income disparity between spouses is significant.

You're right about the standard deduction but wrong about married filing separately. MFS doesn't get the single filer standard deduction - both spouses have to take the same type of deduction (either both itemize or both take standard). And if one itemizes, the other MUST itemize even if they have zero deductions. This trips up a lot of people.

Can you claim reasonable cause to avoid penalties? My mom got really sick last year and I completely forgot to file my 2022 taxes until recently.

Yes, the IRS does accept reasonable cause explanations for waiving penalties in certain circumstances, and a serious illness in the family can definitely qualify. You'll need to attach a signed statement explaining the situation when you file your late return. Be specific about the timeline of your mother's illness and how it prevented you from filing on time. Make sure to gather any supporting documentation you can, like medical records or doctor's notes. The more documentation you have, the stronger your case will be. Just be aware that the IRS reviews these on a case-by-case basis, so there's no guarantee, but they do often show leniency in genuine hardship situations.

Paper filing is STILL a nightmare. Sent my 2022 return by mail in January and it took almost 4 months to process. Definitely e-file if you possibly can. The IRS backlog for paper returns is insane.

Thanks for sharing this. Did your mom have to pay the amount while disputing it? I'm tempted to just pay the $97 to make this go away, but I'm also upset about potentially taking a credit hit for something I never knew about.

Yes, she did pay it while disputing. The IRS representative told her that paying it wouldn't be seen as admitting fault, but would stop additional interest and penalties from accruing while the dispute was being processed. She still fought to have the collection mark removed from her credit report though, which was the more important part. The Taxpayer Advocate helped her file the right paperwork to show she never received proper notice. If you can prove you updated your address and the IRS still sent notices to the old one, you have a strong case to get the collection removed from your credit report even if you pay the bill.

True! My cousin ignored a small IRS debt and ended up with a tax lien that showed up when he tried to refinance his house. Cost him thousands in higher interest rates. Even small amounts matter to the IRS!

Wait can you really deduct parking and tolls separately? I thought those were included in the standard mileage rate! I've been tracking everything together in one log. Do I need separate records for those?

Yes, parking fees and tolls related to business travel are deductible separately from your standard mileage rate! The standard mileage rate only covers the basic costs of operating your vehicle (gas, maintenance, depreciation, etc.). You should keep separate records of your parking and toll expenses for business trips. Save those receipts or take photos of them, and note which business trip they were associated with. This is one of the most overlooked deductions for freelancers who drive for work.

I use MileIQ and it's pretty decent. Automatically tracks all your drives and you just swipe left for personal or right for business. Costs like $6/month but it's worth it to me.