Wait, really? I didn't know CPAs could be forced to testify. Does that mean anything I tell my CPA could be used against me if I accidentally did something wrong on my taxes?

It's a bit more nuanced than that. CPAs do have a limited privilege in certain non-criminal tax matters, but it's not as broad as attorney-client privilege. Generally, if criminal tax issues are involved, a CPA can be compelled to testify. This doesn't mean you should be worried about normal tax planning discussions with your CPA. For typical tax preparation and planning, this distinction rarely matters. It only becomes important if there's potential criminal tax evasion or fraud involved. For most people with legitimate tax questions or mistakes, this isn't something to worry about.

This matches my experience too. My CPA charges $200/hr for business consulting but my tax attorney was $450/hr when I needed help with an IRS dispute. The attorney was worth it though because they got the penalties reduced significantly.

Does ProSeries handle the Canadian portion as well? I have K1 income from Canada and I'm completely lost on how to report it properly. My limited partner status includes operations in British Columbia and Ontario.

ProSeries does handle foreign income reporting including Canadian-source income. It will create the necessary Form 1116 (Foreign Tax Credit) based on your K1 information. For the Canadian portion specifically, it asks for the province where the income was earned and automatically applies the correct tax treaty provisions. There is a slight learning curve with how to enter the information, but they have decent support that can walk you through it. I've found their knowledge base particularly helpful for foreign income situations. One thing to note is that you'll need to convert any Canadian dollar amounts to USD using the yearly average exchange rate published by the IRS.

Can you explain the basis tracking a bit more? I became a partner in 2023 and received my first K1, but I don't understand how to track my basis. The partnership gave me a capital account on the K1, but is that the same as my basis?

Thanks so much for this detailed info! So to clarify - for my regular daily routes where I'm not staying overnight, those meal expenses aren't deductible at all, right? It's only when I'm on those multi-day out-of-state trips where I have to stay in hotels?

That's correct. The deduction only applies when you're away from your "tax home" (your regular work location) overnight or long enough that you need sleep or rest to properly perform your duties. Your daily local routes with just lunch expenses wouldn't qualify, even if you're on the road all day. Only the meals during those out-of-state trips where you stay in hotels would potentially qualify for the deduction. And remember, you can only deduct 50% of the allowable meal expenses.

I use Stride. It's free and lets you track mileage and expenses. You can categorize each expense and add photos of receipts. It also shows you the per diem rates for different locations. I've been using it for 2 years now and it makes tax time way easier.

There are some exceptions to this though! Even if you take the standard deduction, you can still deduct things like student loan interest, IRA contributions, self-employment taxes, and health insurance premiums if you're self-employed. These are called "above-the-line" deductions and they work differently.

Absolutely right! Those "above-the-line" deductions reduce your Adjusted Gross Income (AGI) directly and you can claim them regardless of whether you take the Standard Deduction or itemize. This is why tax terminology is so confusing for beginners - there are "deductions" that aren't affected by the Standard Deduction vs. itemizing choice. Thanks for pointing that out!

Yeah but tax software can mess this up sometimes. I had a friend who had major medical expenses that would have pushed him over the threshold to itemize, but his software didn't properly explain this to him. Always worth double-checking if you have unusual expenses.

Both are definitely mortgages - we used them simultaneously to purchase the home (one conventional loan and one through the employer's first-time homebuyer assistance program). The employer loan doesn't show up anywhere on the W-2, it's a completely separate arrangement with its own 1098. I'm wondering if it's because the employer loan has a much lower interest rate (2.5% compared to 3.25% on the main mortgage), and that's somehow affecting the overall calculation? Could a lower rate on the second mortgage somehow reduce the total benefit?

That's interesting. Even with the lower rate, more interest should still be more deduction. The fact that it's an employer loan makes me think there might be some fringe benefit taxation going on behind the scenes. Check if the interest rate on the employer loan is below market rate. If it is (which 2.5% would likely qualify as), the IRS can consider the difference between your rate and the market rate as taxable income - essentially treating the below-market rate as a benefit from your employer. This "imputed income" might be what's reducing your refund when you add the second 1098.

This is a really good point. AMT can definitely cause this kind of counterintuitive result. The software should tell you if AMT is being applied though - there's usually an AMT worksheet or form that appears.