


Ask the community...
After trying several options over the years, I think FreeTaxUSA is seriously underrated. Used it last year after switching from TurboTax (which was getting too expensive for what it offers). FreeTaxUSA handles everything the expensive software does including self-employment, investments, and itemized deductions. Federal filing is free and state is only like $15. Interface isn't as pretty as TurboTax but it gets the job done.
Does FreeTaxUSA handle investment sales with basis reporting? That's where I got stuck with another budget option last year and had to upgrade.
Yes, FreeTaxUSA handles investment sales with basis reporting really well. I had about 20 stock transactions last year with various purchase dates and it handled everything smoothly without making me upgrade. The interface for entering the information is straightforward - you can either enter transactions manually or import a spreadsheet if your broker provides one. Much better than my experience with other budget options that either couldn't handle investments or required upgrading to a premium tier.
One important thing nobody's mentioned - if your income is under $73,000, you might qualify for IRS Free File which gives you access to premium tax software completely free. Check the IRS website before paying for anything! The software companies hide these free versions on their own websites but they're required to offer them through the IRS Free File program.
I tried Free File last year and it was confusing because there were multiple options. How do you know which one to pick?
Don't forget state tax returns! Different states have different retention requirements. For example, California has a 4-year statute of limitations instead of the IRS's 3 years. If you've moved between states, you might need to check the rules for each state you've filed in.
Oh snap, I didn't even think about state returns! I've lived in three different states over the last decade (moved for work a couple times). Does that mean I need to look up each state's rules?
Yes, you should check each state's rules where you've filed. The statute of limitations varies - California is 4 years, New York is 3 years, and some others have different timeframes. If you want to keep things simple without researching each state, just keep everything for 7 years. That covers the longest standard statute across all states and the federal extension for substantial underreporting. But if you're really tight on space, it's worth looking up the specific states where you filed.
I learned a neat trick from my accountant - take pictures of all tax docs with my phone and save them to a dedicated Google Drive folder each year. Then I have a reminder set for 7 years later to delete that year's folder if I want. Easy system and doesn't take up any physical space!
Is that secure enough though? I'm worried about tax docs in the cloud. Wouldn't a local hard drive be safer?
3 Another important thing to consider - if your girlfriend claims the kids with such low income, she might qualify for other government benefits too. When I was in a similar situation, my tax refund helped me qualify for education grants that completely covered my associate's degree. Make sure she also checks if this will affect any benefits she's already receiving. Sometimes a big tax refund can temporarily push you over income limits for certain programs, so plan accordingly!
17 This is really good advice! My sister got a huge refund from EIC and it messed up her Medicaid for two months because it counted as income. She had to pay out of pocket for her prescriptions until it got sorted out. Definitely worth looking into how it affects other benefits.
3 Absolutely right about the potential Medicaid issue. The good news is that tax refunds only count as a resource for 12 months after receiving them for Medicaid purposes, so it's temporary. For SNAP benefits (food stamps), federal tax refunds don't count as income at all. For education grants, the FAFSA doesn't count tax refunds as income either, which is why it can be such a good opportunity for low-income parents. I was able to use my refund to cover childcare while I took classes, and the Pell Grant covered everything else. Changed my whole career trajectory!
14 Just to add another perspective - I was in your girlfriend's exact situation in 2022. I only made about $5800 that year while my boyfriend supported us and our twins. I claimed both kids and received almost $11,000 in tax refunds through EIC, Child Tax Credit, and Recovery Rebate Credit (that was during Covid). The only issue we ran into was that my boyfriend had already claimed one of our kids the previous year, so the IRS flagged our returns for review. We had to submit extra paperwork showing our living situation had changed, but ultimately everything was approved. Just document everything - keep records showing the kids live with you both (school records, medical records), proof of your address, etc. Better safe than sorry!
I work at a bank (not for the IRS) and I can tell you that sending 183,000 money orders would probably result in them being returned to you unprocessed. We have policies about handling large volumes of instruments like this, and I'm sure the IRS does too. Plus, money orders usually cost $1-2 each to purchase, so you'd be spending an extra $183k-$366k just on fees! If you're serious about resolving your tax issue, consider reaching out to a tax attorney who specializes in IRS disputes. The upfront cost might seem high, but they often save you way more than their fee in the long run.
I never thought about the fees for the money orders! That would be wild to pay double just to make a point. Do tax attorneys actually have any success fighting the IRS? Everyone I've talked to makes them sound like an unstoppable force.
Tax attorneys absolutely can be successful against the IRS. The key is finding one who specializes specifically in tax controversy or tax resolution, not just a general tax preparer. The IRS makes mistakes all the time, and they have various programs like Offers in Compromise that can reduce legitimate tax debts. I've seen clients get tax bills reduced by 50-70% with the right representation. The IRS is powerful but not infallible, and they have internal procedures for resolving disputes. The biggest mistake people make is trying to handle complex tax issues themselves without understanding the technical aspects of tax law.
Have you considered requesting an audit reconsideration? If the amount is incorrect, you can submit documentation showing why the assessment is wrong. I had a $68k bill that was based on incorrect information from my employer, and after filing for reconsideration with the right documentation, it was reduced to under $4k.
This is the real answer! Audit reconsideration saved me when I had a similar issue. The key is having all your documentation extremely organized and being very specific about what errors were made in the original assessment.
Pedro Sawyer
This is another reason why I'll always check my Return & Analysis section in tax software now. Found out the hard way that you can see all the forms that have been reported to the IRS with your SSN before you file. Would have saved me a similar headache last year!
0 coins
Mae Bennett
ā¢Wait, there's a way to see what forms have been sent to the IRS under your SSN before you file? How do you access that? That would be super helpful.
0 coins
Pedro Sawyer
ā¢Not all tax software has this feature, but many do now. In TurboTax, there's a "Tax Data Verification" section where you can import forms the IRS has received. H&R Block has something similar called "Tax Identity Shield" where you can review reported forms. The most comprehensive way is to create an account on the IRS website and request a "Wage and Income Transcript" which shows all information returns (W-2s, 1099s, etc.) reported to the IRS. The only downside is that current year information might not be fully updated until summer, so it's most helpful for catching things you missed the previous year.
0 coins
Beatrice Marshall
The same thing happened to me but with a 1099-MISC for some freelance work. I amended through TurboTax and it was accepted in about 12 weeks. Here's my advice - pay the estimated additional tax when you file the amendment. Don't wait for the IRS to bill you, because the interest keeps accumulating.
0 coins
Melina Haruko
ā¢Did you have to pay a penalty too? I'm in a similar situation and wondering what the damage will be...
0 coins