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A few important points about form corrections that might help: 1. Make sure you're using the ORIGINAL payer/payee information when filing corrections. Any tiny discrepancy between your original filings and corrections can cause matching issues. 2. If you filed through a third-party service, check if they have a specific correction process. Some services handle the correction relationship automatically in their system. 3. Document EVERYTHING. Save copies of all original filings, corrections, and any communication with the IRS. If penalties do come up, you'll need this documentation. 4. Consider sending your explanation letter via certified mail with return receipt to prove the IRS received it.
Do you know if these penalties are per form, or per recipient? I filed for a small business with multiple forms for the same person in some cases (different types of payments).
The penalties are assessed per form, not per recipient. So if you filed multiple incorrect forms for the same person, you could potentially face multiple penalties. This is why correcting them properly is so important. That said, if you're submitting corrections and an explanation letter demonstrating reasonable cause (like not being aware of the form change), the IRS often waives penalties entirely, especially for small businesses making good faith efforts to comply. Keep detailed records of when you discovered the error and how quickly you moved to correct it - that timeline helps establish reasonable cause.
Hey I went through this EXACT thing last year with about 25 forms. Here's what worked for me: 1) Filed the corrected 1099-MISC forms with zeros and checked the CORRECTED box 2) Filed new 1099-NEC forms 3) Included a short letter explaining I wasn't aware of the form change but had filed the information on time 4) Sent everything certified mail The IRS never charged me a penny in penalties. They understand this kind of confusion happens with form changes. Just be honest, fix it ASAP, and document everything. Their goal is compliance, not collecting penalties.
Thank you so much for sharing your experience! That's incredibly reassuring. I'll follow the exact steps you outlined. Did you include anything specific in your letter that you think helped your case?
Don't forget about state taxes too! Depending on where you live, you might pay an additional 5-13% on capital gains at the state level. I sold a property in California last year and the state taxes were almost as painful as the federal. Some states have lower capital gains rates, but many just tax it as regular income. Might be worth talking to a CPA who specializes in your state's tax code before you pull the trigger on the sale.
That's a really good point I hadn't considered. I'm in Tennessee which I think doesn't have state income tax, but I should double check how they handle capital gains specifically. Do you know if there's a good resource to check different state rules?
You're in luck with Tennessee! They don't have a state income tax on earned income or capital gains. They used to have something called the Hall Tax on investment income, but that was fully phased out as of 2021. I usually just google "[state name] capital gains tax rate" and look for the official state department of revenue website for the most accurate info. Each state has different rules and exemptions, so it's worth checking the official source.
Is anyone else annoyed that someone making $115k plus almost half a million in capital gains is worried about taxes while most of us are struggling to pay rent? The capital gains rates are already way lower than what we pay on our regular income. Must be nice to worry about which tax loopholes to use on your rental empire profits.
That's not really helpful. People at all income levels have legitimate tax questions, and capital gains rules are complicated. Plus, we don't know OP's situation - they could have owned those properties for decades and this might be their retirement money.
You're right, sorry for the negative comment. Tax season makes me grumpy. I just get frustrated seeing the different tax rates for different types of income. Wishing everyone good luck with their filings.
To actually answer your original question about TurboTax - I've used it for the past 5 years and it's fine. Not amazing, not terrible. Here's my honest take: PROS: - Really easy interface - Imports W-2s automatically if your employer supports it - Good at finding common deductions - You can pay the fee out of your refund CONS: - They constantly try to upsell you - Basic version is limited, you'll probably need Deluxe ($60ish plus state) - Customer service can be slow during peak season - The "audit defense" they sell is overpriced for most people If you're comfortable with slightly less hand-holding, check out FreeTaxUSA. I switched this year and saved about $70 for basically the same result.
Thanks for the breakdown! That's really helpful. Did you find it easy to switch to FreeTaxUSA after using TurboTax for years? Was there a learning curve?
There was a small learning curve switching to FreeTaxUSA, but nothing major. The interface isn't quite as polished as TurboTax, but all the same information is there. The biggest difference is that FreeTaxUSA doesn't push upgrades constantly, which was refreshing. One helpful thing is that FreeTaxUSA lets you import your previous year's return from TurboTax, so I didn't have to re-enter all my personal info. The actual filing process took maybe 15 minutes longer than TurboTax, but saving $70 was totally worth it to me.
Just FYI - if your income is under $73k, you can use the IRS Free File program to access TurboTax and other tax software completely free. Don't go directly to TurboTax.com - instead go through the IRS website (https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free). The software companies hide these free versions on their own sites.
This!! I accidentally paid $120 for TurboTax last year when I could've gotten it free. They're super sneaky about it. Always go through the IRS Free File page.
Another option if you're concerned - just call H&R Block's customer service number directly from their main website (the hrblock.com one) and ask them to verify if gethrblock.com is legitimate. That's what I did when I was in the same situation last year. They confirmed it's their official download portal for retail software purchases.
Do you happen to have that number handy? I'm having the same issue but with TaxCut software (which I think is also H&R Block?).
I don't have the exact number saved, but you can find it at the bottom of hrblock.com under "Contact Us" or "Support." Yes, TaxCut was H&R Block's older product name - they rebranded it to H&R Block software several years ago. So if you have TaxCut, that's definitely an older version of their software. You might want to check if it's still supported for this tax year. They typically only support the current and previous year's versions, so depending on how old your TaxCut software is, you might need to upgrade.
I download H&R Block every year and yes gethrblock is legit. They use different websites for different things. Kind of confusing but totally safe.
I'm having the same issue, but mine is from Target and the site looks a bit different than what was described. Does H&R Block use multiple download sites or should they all look the same?
Owen Devar
One thing to consider: even after you move abroad, as a US citizen you'll still have to file US tax returns every year and report your worldwide income. The US is one of only two countries that taxes based on citizenship rather than residency. Look into the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit to avoid double taxation. Won't apply to your initial capital gains from selling your US house, but will matter for any income you earn while living abroad.
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Daniel Rivera
ā¢Also don't forget about FBAR requirements! If you have foreign financial accounts that together total over $10,000 at any point during the calendar year, you have to report them to FinCEN. Penalties for not filing can be harsh - even if it's an honest mistake.
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Sophie Footman
Make sure to keep all your receipts for home improvements you've made over the years! Those get added to your cost basis and reduce your capital gain. A lot of people forget this and end up overpaying their taxes. Every dollar you can add to your basis is a dollar less in potential capital gains. Things like a new roof, HVAC system, renovations, additions, etc. all count. Even some closing costs from when you bought the house can be added to your basis.
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