How detailed do these records need to be? Like do I need to track each expense category separately for the carryover or just the total loss amount each year? I've been just writing the total on a notepad file on my computer...

You should definitely track more than just the total. At minimum, track each property separately if you have multiple rentals, the total loss for each property each year, how much was allowed to be deducted (if any), and the running balance of disallowed losses. I also recommend keeping a copy of the complete Schedule E and Form 8582 for each year, not just the totals. During my audit, the IRS wanted to see the connection between what was reported on Schedule E and what flowed to Form 8582, including all allocation calculations. I had some losses that were partially allowed due to passive income from other sources, and they scrutinized how I calculated those allocations.

Short-term rentals can actually be treated differently in some cases! If your average rental period is 7 days or less, the IRS may consider it a "business" rather than a rental activity. This means it might be reported on Schedule C instead and subject to different passive activity rules. The material participation standards would apply instead of the rental real estate rules.

Thanks for the insider perspective! Do you think I should be worried about retaliation if I bring this up with my employer? I like my job otherwise and don't want to create problems, but also don't want to be taken advantage of.

It's a legitimate concern. While retaliation for raising tax classification issues is technically illegal, that doesn't mean it doesn't happen in subtle ways. My advice would be to approach it as a question rather than an accusation. Try something like: "I noticed I'm classified as a statutory employee on my W-2. I've been reading about what that means, and I'm not sure I fit the criteria. Could we review this together?" This gives your employer the opportunity to either explain their reasoning or recognize a potential error without feeling attacked. Document everything, including when you have the conversation and what's said. If your employer is generally reasonable, they might appreciate you bringing a potential compliance issue to their attention before it becomes a problem with the IRS. If they dismiss your concerns or you experience negative consequences, that's when you might consider external options like the SS-8 determination others have mentioned.

Did the employees who were misclassified receive any compensation or back pay from this audit? I wonder if OP might be entitled to something if they're misclassified.

4 Does setting up a payment plan affect your credit score? I'm worried about that since I'm planning to apply for a mortgage later this year...

17 Setting up a payment plan itself doesn't directly impact your credit score - the IRS doesn't report installment agreements to credit bureaus. However, if you owe more than $10,000, the IRS may file a tax lien, which can affect your credit. The good news is that if you owe less than $50,000 and set up a direct debit installment plan, the IRS generally won't file a tax lien. So if you're applying for a mortgage later, getting on a payment plan quickly is actually better than leaving the tax debt unaddressed.

9 Which software specifically has these options? I'm using TaxSlayer and can't seem to find anything like that in their payment section.

This is really helpful info, thanks! Are there similar income limits for deductions too? I got a decent raise this year and I'm wondering if that might affect what I can claim when I file in 2025.

Yes, many deductions have income limits too! Student loan interest deduction starts phasing out at $75,000 for single filers, traditional IRA deduction has limits if you have a workplace retirement plan, and medical expense deductions only count for expenses over 7.5% of your AGI, so higher income means fewer medical expenses qualify. If you got a big raise, definitely look into maxing out your 401(k) or other retirement accounts since that lowers your AGI and might help you qualify for more deductions and credits that have income limits.

In my experience, they do ask questions to try to determine eligibility, but they're only as good as the information you provide. If you don't know to mention something or misunderstand a question, you could miss out. I accidentally skipped some education questions last year and nearly missed a $1500 credit!

But isn't it better to break it into multiple payments? What if I can't come up with the entire amount in one payment, even after 120 days?

If you can't pay the full amount within 120 days, then you definitely want to set up the installment agreement with monthly payments. That's a different option in the online payment system. The installment agreement is great if you need more time, but it does come with a setup fee and you'll have to make regular monthly payments. With the 120-day option, you're just telling the IRS you'll pay in full by a certain date, and they don't charge a setup fee for that arrangement.

This is TERRIBLE advice! Not filing is the worst thing you can do. The IRS charges a failure-to-file penalty of 5% of your unpaid taxes for each month your tax return is late, up to 25%. The failure-to-pay penalty is only 0.5% per month. Plus, there's a statute of limitations on how far back the IRS can audit you, but it doesn't start until you file. So by not filing, you're keeping yourself open to audit indefinitely. I learned this the hard way. Don't repeat my mistake.