This is such an important point! I volunteer with several small nonprofits and this is the #1 mistake I see. Even if you're waiting on 501(c)(3) determination, you absolutely must file your 990. The IRS doesn't automatically connect your 1023 application with your filing requirements.

Thank you, I'll definitely check with the MA Secretary of State tomorrow. Do you have any recommendations for finding a nonprofit tax attorney who won't charge a fortune? Our budget is already stretched thin with all this paperwork.

Check with your local community foundation or nonprofit resource center - many offer free or low-cost legal referrals for new nonprofits. Also look into law schools in your area, as many have nonprofit law clinics where supervised students provide free assistance. Another option is Pro Bono Partnership or Lawyers Alliance if you're in an area they serve. They specifically match nonprofits with attorneys who volunteer their time. Just Google them plus your area to see if they operate near you.

9 months?! That's insane. Does that mean I won't get the additional refund (if there is one) for that long? Or would I likely owe more since a W2 was missing?

It really depends on what was on that missing W2. If there was a lot of withholding on it, you might be owed an additional refund. If there wasn't much withholding compared to the income, you'll probably owe more tax. And yes, unfortunately the wait times are crazy long now. If you're owed money, you'll have to wait until they process the amendment to get it. If you owe more, you should pay it when you file the amendment to minimize interest and penalties, even though they'll take forever to actually process the paperwork.

This is such important advice. My brother went through a messy divorce and tax issues made everything 10x worse. Document everything and maybe even consider getting something in writing about how additional tax bills or refunds will be handled.

Wouldn't the paper option take way longer to process though? I'm worried about making things worse by having the payment not get credited before I file my return in April. Is there a way to track when they receive and process a paper payment?

Yes, paper payments do take longer to process - typically 2-3 weeks, sometimes more during busy periods. If you're planning to file your return soon, the electronic payment through Direct Pay (using "Balance Due" option) would be much faster. For tracking a paper payment, the IRS doesn't provide direct tracking like a package. The best way to confirm they received it is by setting up an online account at IRS.gov and checking your tax account transcript, which will show when payments post to your account. You can also call the IRS, but as others have mentioned, the wait times can be very long. If you do mail a payment, I'd strongly recommend using certified mail with a return receipt so you at least have proof of when you sent it.

Does the app charge extra fees like when you pay taxes with a credit card on those third-party processors? Or is it actually free like regular Direct Pay on the website?

Thanks for mentioning that about paying before filing the amendment! That's smart - I didn't realize I could stop the interest that way. Do you happen to know roughly how much the interest would be? The capital gains will add about $1,400 to my tax bill I think.

The IRS interest rate has been around 7-8% recently, so if you're looking at a $1,400 tax bill and it's been roughly 2 years since the original due date (April 2023), you'd be looking at approximately $200-230 in interest. The sooner you pay, the better though. The interest compounds daily, so it keeps growing. One other tip - when you make the payment online, be sure to select the correct tax year (2022) and payment reason (amended return) so it's properly applied to your account.

You only need to file Form 1040-X (not a new 1040). However, you should include any schedules that are changing - in this case probably Schedule D and Form 8949 for the capital gains. Unfortunately, you can't e-file amended returns for 2022 yet. You'll need to print and mail it. Make sure to include copies of any new documents (like your 1099-B) that support the changes you're making. And as others mentioned, consider making the payment online even though you're mailing the form.

Thank you for this simple breakdown! I think I can work with this approach. Do I need to adjust for any improvements we made to the house over the years? We did a kitchen remodel about 12 years ago and added a bathroom around the same time.

Yes, major improvements should definitely be factored in. For the kitchen remodel and bathroom addition, you would take the cost of those improvements, multiply by your business use percentage, and then depreciate that amount over 27.5 years starting from the year the improvements were completed. You'll want to add this additional depreciation to your original calculation. If your home office included any portion of these improved areas, that would increase your annual depreciation from the point those improvements were made. It makes the calculation a bit more complex, but still very doable even without all your old returns.

Yes there definitely can be. The IRS requires you to recapture ALL depreciation that was "allowed or allowable" - meaning even if you didn't claim it but could have, you still have to recapture it. If you underreport, you could face accuracy-related penalties plus interest on the underpaid taxes.