Does he need to do anything special on his tax forms to show it was his primary residence even though he didn't meet the 2-year test? Is there a specific form or something?

There's no special form specifically for declaring a primary residence that doesn't meet the 2-year test. He would report the sale on Schedule D and Form 8949 like any capital gain, but the key is keeping those supporting documents we discussed in case of questions. If he qualifies for a partial exclusion due to work-related move, health reasons, or unforeseen circumstances, he would need to fill out Form 2119. But from what you've described, planned retirement and moving overseas probably wouldn't qualify as an unforeseen circumstance, so he should plan on paying the full capital gains tax.

Did they use TurboTax or some other tax software to figure all this out? I'm trying to decide if I need an accountant for my situation or if the tax software can handle these kinds of scenarios.

Thanks for pointing this out. I'm a bit worried about the basis calculations. Does TaxAct walk you through determining each partner's basis properly? We had some complicated transactions this year with one partner contributing equipment instead of cash.

TaxAct does have a basis worksheet that helps guide you through the calculations. For non-cash contributions like equipment, you'll need to enter the fair market value and adjusted basis of the property. The software should handle the Section 704(c) allocations if set up correctly. However, this is exactly the kind of situation where careful attention is required. Make sure you have proper documentation of the equipment's value and basis. The software will ask you these questions, but you need to have the right information ready. If the contribution happened this tax year, you'll also need to complete Form 8824 for the non-cash contribution. The preview method you originally suggested would likely miss these interconnected forms.

Yep, this happened to me too. Had to file amended returns for both the partnership and personal returns. Such a headache. The Section 199A stuff is super easy to miss if you're not familiar with it.

This is terrifying. So even though my spouse handled all the finances and made the decision not to pay these taxes without telling me, I could still be held personally liable? Do they ever consider these kinds of circumstances?

They do consider circumstances, but you'll need to prove you weren't a "responsible person" as defined by the IRS. The fact that you were an owner and involved in the business creates a presumption that you had authority. However, your tax attorney can help build a case based on your specific role. Key factors they look at: Who had check-signing authority? Who made financial decisions? Who had the power to determine which creditors got paid? If you can demonstrate your spouse exclusively controlled these functions and deliberately kept you in the dark, you may have a case. Document everything about your roles and responsibilities in the business.

This! I got transcripts and found out the collection agency was trying to collect on some taxes where the assessment date was 12 years ago. When I pointed this out, they immediately removed $9k from what I "owed" because it was past the statute. Collection agencies often don't check this.

1 Oh geez I hadn't even thought about state taxes! Do you know if Missouri has the same 6-year lookback period as the IRS? Or do I need to file all 10 years with the state?

22 Missouri generally follows the federal statute of limitations, so the 6-year lookback period is similar. However, there are some important differences. Missouri's Department of Revenue can be a bit more aggressive about collecting on older debts than the IRS in some cases. The good news is that Missouri offers voluntary disclosure programs that might help reduce penalties if you come forward voluntarily before they contact you. I'd recommend checking the Missouri DOR website or calling them directly after you get your federal situation straightened out. In my experience, state tax agencies are actually easier to reach by phone than the IRS.

8 Most of those "pennies on the dollar" tax relief companies are extremely misleading. What they're referring to is the IRS Offer in Compromise program, which is legitimate but has very strict qualification requirements that most people don't meet. These companies often charge thousands upfront with no guarantee of results. The reality is that if you have assets or a decent income, you likely won't qualify for significant reductions. The IRS has standard formulas they use to determine eligibility. You're better off working directly with the IRS or hiring a reputable local tax professional who charges reasonable fees. The IRS provides payment plans that most people can qualify for without needing a special "tax relief" company.

This is the right answer! The full tax return PDFs in TurboTax include all the supporting docs with the employer breakdowns. Just make sure you're looking at the COMPLETE return, not just the 1040 summary.

That sounds perfect! I'll check my TurboTax account tonight. Hopefully they still have the full returns from 5 years ago. Thanks for this tip - would be so much easier than tracking down old employers.