Why does tracking home improvements matter for taxes? I thought those weren't deductible?

Home improvements aren't deductible yearly, but they increase your home's "cost basis." When you eventually sell your home, you'll pay capital gains tax on the difference between your selling price and your basis. Your basis is your purchase price PLUS the cost of substantial improvements. So tracking those improvements could save you thousands in capital gains tax when you sell. For example, if you buy at $400K, add $50K in improvements, then sell for $600K, you're only taxed on $150K of gain instead of $200K.

This is good advice but I thought there were income limits for taking the IRA deduction if you have a workplace 401k?

Can you still file Form 4852 if you've already received a W-2, but it's just missing the ISO income? And how do you calculate exactly how much should have been included? My company got acquired in 2024 too and I'm facing the exact same issue.

Yes, you can still file Form 4852 even if you received a W-2 that's incomplete or incorrect. The form specifically allows for situations where your employer issued a W-2 but it's missing information or has incorrect amounts. For calculating the ISO income, you'd take the number of ISO shares that were cashed out, multiply by the difference between your exercise price and the acquisition price per share. So if you had 1,000 ISOs with a $5 exercise price that were cashed out at $15 per share, you'd have $10,000 of ordinary income that should have been included in your W-2. You'd add this amount to what's already reported in Box 1 of your W-2 when completing Form 4852.

Thanks for mentioning the AMT angle - I hadn't even thought about that! So just to confirm, since my ISOs were automatically cashed out as part of the acquisition (not exercised and held), I shouldn't have to worry about AMT implications at all? That would be a huge relief. One more thing - should I be receiving any other tax forms for this transaction besides the W-2? Like a 1099-B or anything like that? I'm worried I'm missing something important.

Correct - since your ISOs were cashed out immediately as part of the acquisition (a disqualifying disposition), you won't face AMT implications. AMT issues with ISOs typically only arise when you exercise ISOs and continue to hold the resulting shares through the end of the calendar year. You typically wouldn't receive a 1099-B for this transaction since it was handled through the acquisition process rather than through a brokerage. The income should be reported on your W-2. However, for the portion you received in acquiring company stock, when you eventually sell those shares, you would receive a 1099-B for that transaction. Make sure you keep documentation of the value of those shares when you received them to establish your cost basis.

Do you know if there's a deadline for filing the Form 843 for FICA refunds? I just realized my employer was withholding these taxes during my OPT period last year.

Yes, there's definitely a deadline. You need to file Form 843 for FICA tax refunds within 3 years from the date you filed your income tax return for that year, or within 2 years from the date you paid the taxes, whichever is later. Since you're talking about last year's taxes, you have plenty of time, but don't put it off too long. The documentation requirements can be strict, and you want to submit while you still have easy access to all your visa and employment records.

I did mine myself last year and regretted it. Took me forever to figure out how to fill out Form 843 correctly and my claim was rejected twice for small errors. First time was because I didn't include a statement from my employer, second time because I didn't properly document my visa status. The specialized software is worth it IMO.

I'm actually using TaxAct and it's still a nightmare because I have to keep switching between the regular tax calculation and the special calculation for Form 8615. Have you dealt specifically with the Kiddie Tax situation? That seems to be what's making everything extra complicated.

I have dealt with Kiddie Tax and Form 8615, and you're right that it adds another layer of complexity. TaxAct should still handle the calculations, but it requires you to enter information very carefully. For Kiddie Tax situations, make sure you're entering the parent's tax information correctly when prompted, as that's a key input for Form 8615 calculations. Also, if you're filing separate returns for each child (rather than including them on your return), you need to ensure consistency across all the returns. The software should walk you through this, but it can be confusing when you have to switch between different calculations.

Totally agree! The complexity of the tax code punishes regular families trying to save and invest responsibly. My approach? Document your good faith effort to follow the rules, and don't lose sleep over small amounts that won't materially affect your tax liability.

Can they really go back indefinitely? I heard there was a 3 year limit on audits.

The 3-year limit applies to returns that have been filed. If you file a return but omit more than 25% of your gross income, the statute of limitations extends to 6 years. But if you don't file a return at all, there is NO statute of limitations. The IRS can come after you 10, 15, even 20 years later. And for criminal tax evasion (which hiding $1M could potentially be), the statute of limitations is 6 years. This is why tax professionals always advise filing something, even if you can't pay. Filing starts the clock on the statute of limitations, while not filing keeps your case open indefinitely.

Tax attorney here - generally no. Most tax debts survive bankruptcy. The rules are complicated, but for capital gains tax, you're typically stuck with it even after bankruptcy. Plus, if the IRS determines you deliberately avoided paying taxes, they might pursue criminal charges which definitely aren't dischargeable. To be eligible for discharge of any tax debt in bankruptcy, the taxes must be at least 3 years old, you must have filed a return at least 2 years before bankruptcy, and the IRS must have assessed the tax at least 240 days before you file. Willful evasion or fraud will make the debt non-dischargeable regardless.