4 So how long do you have to wait before you can buy the same stock again and still claim the loss? Is it exactly 30 days?

21 Yes, it's exactly 30 days before or after the sale. So to be safe, you need to wait a full 31 days before repurchasing the same or substantially similar securities if you want to claim the capital loss. It's important to note this applies across accounts too - so selling in your regular account and buying in your IRA within that window would still trigger the wash sale rule. And it's not just identical stocks - the IRS considers "substantially identical" securities to fall under this rule as well, which can sometimes include options on the same stock or very similar ETFs.

8 You don't really have a choice. The tax code requires you to claim the $3,000 loss against your current year income, and then carry forward the remaining $9,000 to future years. You can't voluntarily "save" the entire $12,000 for future years when you might be in a higher bracket.

That's a really good point about the 1099s. He mostly worked for cash but did have some corporate clients who probably reported payments. For the QBI deduction, would that apply even though he didn't file on time? It seems like a huge benefit to miss out on.

The QBI deduction absolutely applies even for late filed returns! The deduction is tied to the tax year, not when you file. Just make sure when you prepare the 2018-2024 returns that you calculate and claim this deduction - it's basically free money that reduces self-employment tax liability by allowing you to deduct up to 20% of qualified business income. As for the 1099 situation, this is actually why I suggested filing everything at once rather than staggering. The IRS computer system will match reported 1099 income with filed returns, and if you file incomplete years while leaving gaps, it can trigger automated notices for the missing years.

Did you have to pay all the back taxes at once? That's what scares me - I'm in a similar situation and worried I'll owe tens of thousands I don't have.

Thanks, but they are definitely taking out Social Security and Medicare, plus state tax for Michigan. It's just the federal income tax that's missing. I think I must have messed up my W4 somehow. Going to talk to HR tomorrow!

That's good then! Definitely just a W4 issue. When you talk to HR, ask them to calculate how much federal tax you should have paid year-to-date so you can plan ahead for what you'll owe. Also ask about updating your W4 to include extra withholding on Line 4(c) to make up some of the difference over your remaining paychecks.

This is misleading advice. Even at lower income levels, federal tax can be significant. Standard deduction for 2025 is projected around $13,850 for single filers, but if OP is making even $35K, they'd still owe about $2,300 in federal tax. That's not a small amount to come up with all at once!

Thanks for mentioning the first-time penalty abatement option - I had no idea that existed. My tax history before this was pretty clean since I was an employee with standard W-2 income. Does the size of the penalty affect whether they'll approve the FTA? And how do I actually request it - is there a specific form or do I need to call?

The size of the penalty doesn't technically affect FTA eligibility. The IRS looks at your compliance history, not the dollar amount. You can request it by calling the IRS directly, writing a letter, or having your tax professional include it with other negotiations. There's no specific form, but you need to explicitly ask for "first-time penalty abatement" and explain that you have a clean compliance record for the three prior years. If you call, be prepared for the agent to possibly deny it initially. Many frontline agents aren't fully trained on FTA policies. You might need to escalate to a manager or submit the request in writing. Your medical circumstances actually give you two separate arguments for penalty removal - both FTA and reasonable cause, which strengthens your position considerably.

Totally agree! My cousin ignored IRS notices and they took his car and froze all his accounts. It was a nightmare trying to get basic living expenses after that. The IRS doesn't mess around once they start the levy process.

Filing your 2024 taxes shouldn't be directly affected by your unfiled 2021 return. Each tax year is technically treated separately. The IRS system won't automatically block you from e-filing your 2024 return just because 2021 is missing. However, there can be indirect effects. If you're claiming certain credits or deductions in 2024 that relate to prior year information, there could be verification issues. Additionally, if the IRS has already started sending you notices about your unfiled 2021 return, it's best to address that situation promptly rather than filing a new year while ignoring the past issue.

Yeah the IRS got a funding boost recently and they've been upgrading their systems to better track unfiled returns. They're definitely sending more notices out. But I've heard they're still prioritizing high-income non-filers over people who made under $25k. They go where the money is!