Thanks for this suggestion. I double-checked and I'm pretty sure I entered everything identically, but I might have missed something. Is there a specific expense category that tends to cause this kind of calculation difference? I'm going to go through line by line again to make sure.

The most common categories that can cause differences are home office deductions and vehicle expenses. Some programs calculate these differently based on how you enter the information. Also check if you're using actual expenses versus standard mileage rate for vehicle costs in both programs the same way. Another thing to look at is retirement plan contributions. If you have a SEP IRA or Solo 401(k), the way these are entered can affect your SE tax calculations differently across programs.

Is there actually an official IRS position on which order to do these calculations? I always thought the tax code was super specific about calculation order.

Thank you for mentioning this! I wasn't aware that the collection statute gets suspended during OIC consideration. Do you know if the CNC status means they can still put liens on her property? She doesn't own a house, but does have a car that's paid off. And approximately how long does the OIC process usually take from start to finish?

Yes, the IRS can (and often does) file tax liens even when you're in CNC status. The lien protects their interest in your assets even though they're not actively collecting. For a car, they typically won't seize it if it's of modest value and needed for work/medical appointments, but the lien would come into play if she tried to sell it. The OIC process typically takes 6-9 months from submission to decision, sometimes longer if there are complications or if the IRS requests additional information. During this entire time, the collection statute is paused. If the offer is rejected and you appeal, that extends the timeline and suspension even further. This is why it's important to weigh whether an OIC makes sense versus waiting out the collection statute in CNC status, especially if your sister-in-law has limited income or assets that would make collection unlikely anyway.

Did you do the OIC yourself or hire someone? And did you end up having to give up the Netflix? I'm just curious how detailed they get...seems super invasive. Good to know about the payment thing tho.

I do occasional work from home (maybe 1-2 days a month when projects need extra attention). Would that be enough to qualify my home as a "principal place of business"? And if it did qualify, would the deduction be worth the risk of triggering an audit?

Working from home only 1-2 days a month likely wouldn't be enough to qualify your home as a "principal place of business." For this approach to work, your home office would need to be: 1) Used exclusively and regularly for business (a dedicated space), and 2) The primary place where you conduct your business activities, or where you conduct administrative/management activities if you have no other fixed location for those tasks. Regarding audit risk, it's not worth claiming something questionable. The IRS has been increasing scrutiny on home office and travel deductions, especially when the amounts are substantial. Instead, focus on maximizing other legitimate deductions like retirement contributions, health savings accounts, or educational expenses if applicable to your situation.

This is the actual answer. Tax deductions for commuting rarely work out, but employer programs can save you thousands. My company gives us pre-tax transit cards that save me about 30% on subway costs. Ask your HR department!

So true! My 1099-K was about $4,200 higher than my actual product sales because it included both sales tax AND shipping charges. I almost missed this until my tax preparer caught it.

Does anyone know if fees the platform charges get included in the 1099-K? Like if Etsy charges me a 5% transaction fee, is that getting subtracted before the 1099-K amount or do I need to deduct those fees separately too?

No, that's not a good idea. The IRS computers automatically track your 8606 history, and discrepancies can trigger notices or audits. A friend of mine tried to "start fresh" instead of carrying forward their basis and got a CP2000 notice. Had to file an amended return and pay interest. The IRS is surprisingly efficient at tracking these specific forms.

I appreciate the heads up about this! I hadn't realized the IRS specifically tracks the 8606 history so closely. I guess I've just been lucky so far not to get flagged. Sounds like I should probably go back and amend my returns to properly carry forward that basis. Better to fix it myself than wait for them to find it and potentially pay penalties and interest.

That's actually incorrect. The Form 8606 instructions specifically address this situation. When you convert less than your basis (whether due to investment losses or partial conversion), the difference remains as basis to be tracked on future Form 8606s. Line 14 is literally defined as "your basis in traditional IRAs" - not just for accounts with money still in them. The basis exists separate from the account balance. This is why Form 8606 needs to be filed even in years you don't make new contributions but still have basis. Your accountant may have made an error in your situation. I'd recommend checking your prior returns.