Thanks for this tip. I went back and checked all my numbers again and noticed I accidentally entered my student loan interest as $45,000 instead of $4,500. That was part of the problem! Still working through the rest of the issues, but every bit helps.

Glad you caught that! Student loan interest is an easy place to make a mistake since there's a cap on how much you can deduct anyway (I think it's $2,500 max for 2024). Another thing to check is filing status - if you accidentally selected "Married Filing Separately" instead of "Single" it can sometimes cause weird tax calculations. Also verify your state residency information is correct if you're filing state taxes too.

I've used both and definitely prefer FreeTaxUSA. TurboTax seems designed to upsell you on premium features while FreeTaxUSA just lets you file without all the marketing. Plus it's WAY cheaper.

Does QuickBooks automatically know who should get a 1099? I've paid several people but I'm not sure which ones qualify for needing the form.

QuickBooks doesn't automatically determine who needs a 1099 - you need to properly categorize your vendors first. Generally, you need to send 1099s to any unincorporated businesses or individuals you paid $600+ for services during the tax year. When you set up vendors in QB, there's an option to mark them as 1099 vendors and enter their tax information. At year-end, the system will identify all 1099 vendors who've been paid over the threshold amount. You can then review the list, make any needed adjustments, and process the forms directly through their e-filing service.

This is accurate. I made the same mistake my first year with contractors. The 1099-NEC is what you need for anyone who did contract work for your business. MISC forms are for things like rent, prizes, etc. The instructions on both forms explain the difference pretty well.

Wait seriously?? I've already sent the contractor the 1099-MISC Copy B. Do I need to send them a 1099-NEC now instead and withdraw the MISC form somehow? This is getting more confusing.

I did look through everything and found some creative "deductions" she included! She claimed I had over $7,500 in unreimbursed employee expenses (which aren't even deductible for most people now) and $4,300 in charitable contributions I never made. She also somehow found a "home office deduction" even though I work full-time at my employer's location. No wonder I was getting a refund! Definitely doing my taxes myself now.

That's exactly what I was afraid of. Those are the exact same tactics my cousin's ghost preparer used! It might be worth checking if you qualify for the IRS Identity Protection PIN program. It's an extra layer of security that prevents anyone from filing a tax return in your name without that special PIN. You can request one through the IRS website, and it makes it nearly impossible for someone to file a fraudulent return using your info.

For real! My neighbor got hit with a $12k bill from the IRS for returns a ghost preparer filed THREE YEARS ago. He had no idea anything was wrong until he got the audit notice. By then the "preparer" was impossible to find.

Thanks! That's really helpful to know about the Schedule NR. I was confused about how to handle the allocation. I've got pretty good records of when I was physically in each state, so that should help. Do you remember if there were any special forms needed to establish the date when you officially became an Illinois resident? Or do you just put the date on the regular tax form?

You just enter the date you became an Illinois resident directly on the IL-1040 form - there's a specific line for it (I think it's line 8 or 9). No special additional forms needed for establishing residency date. However, keep documentation that supports your residency date (lease agreement, utility bills, etc.) in case you're ever audited. One more tip - if you had any investment income (interest, dividends, capital gains) during the year, Illinois will consider that to be earned based on your residency status on the date it was received. So if you received dividends while a Texas resident, that portion won't be taxable by Illinois, but you'll need to allocate it properly on Schedule NR.

Just to add to this excellent advice - I missed filing FBAR for a couple years (didn't know about it) and had to use the Streamlined Filing Procedures to catch up. It was

Thanks for mentioning the loan interest - that hadn't even occurred to me. So even though I took this huge financial hit, I still can't deduct the interest I'm paying on the loan? That seems like salt in the wound. For the police reports, I filed one locally but haven't done the IC3 report yet. Will that specifically help with the tax situation or is it just generally a good idea?

Unfortunately that's correct about the loan interest. Personal loan interest isn't deductible regardless of what happened to the money. It's definitely salt in the wound, but that's how tax law works currently. The IC3 report is important specifically for tax purposes because it serves as official documentation of the fraud. If the IRS ever questions your claimed losses, having both a local police report and an IC3 report significantly strengthens your position that this was a legitimate scam and not just a bad investment. The more official documentation you have, the better positioned you'll be to defend any deductions you claim related to this incident.

I spoke with a CPA who specializes in crypto, and she said it depends on how you document it. If you can prove it was truly worthless (complete loss with no chance of recovery), you can potentially claim the full loss in the year it became worthless. But you need strong documentation - police reports, evidence of the scam, etc. Most people just default to the capital loss approach because it's safer.