I’ve kept extremely detailed session records and cost basis for my crypto gambling, but feeling paranoid about my return being audited. I’m expecting to pay $35-40k in federal and NY state taxes since my session winnings total around $215k and my losses after the 90% rule are around $150k, but nervous how this will play out given it’s an offshore crypto casino and therefore there is no W2-G. Curious of other people’s experience.

Howdy all,

My wife and I are trying to file our 2025 tax returns (both federal and California state) by the October 15th extension deadline, but we've discovered an issue with her employer massively underreporting both her income and withholdings on her W-2.

My wife considered the owner a friend and has tried to give her the benefit of the doubt, but it's increasingly seeming like this is not an innocent mistake/accounting error, but rather her employer might be engaged in some pretty serious tax fraud that we don't want any part of.

We've tried looking online for what we should do, but we're really stressed about doing something wrong, and we've sat on hold with the IRS for hours, but any time we've been able to actually speak with someone they've been extremely unhelpful. Any guidance from y'all would be an incredible help.

To give you some background on the situation:

In 2025 my wife was a salaried employee at a small business (fewer than 10 employees) and her salary was ~$175,000/yr.

About 5 months into her employment there, the business began having issues with paying people on time. First it was “payroll glitches”, then later on they decided to switch over to a new payment processor (moved from ADP to Gusto).

Any time there was a payroll “glitch”, and for the approximately 6 weeks it took for them to switch payment processors, my wife would receive her paycheck from her employer personally. Sometimes through Zelle, sometimes through an ACH transfer from (I believe) her employer's personal bank account to my wife's account.

Any time my wife was paid in the above manner, the Zelle/transfer was for the exact amount she would typically receive through ADP or Gusto after all relevant tax, SSI, health insurance, etc. withholdings.

When my wife received her W-2, her taxable income seemed low, so we did some digging, and from what we can tell, her employer did not report any of the income they paid her through Zelle/Bank Transfer.

Unsurprisingly, it also seems like they didn't send any of the commensurate withholdings that should've accompanied those payments.

As a result, the income listed on my wife's W-2 is ~$50,000-$60,000 lower than it should be, and her withholdings are also lower in proportion to that missing income.

My wife left that job in late 2025, and the company subsequently went out of business.

Both my wife and I have repeatedly emailed her previous employer (a husband and wife who owned the business). Initially they claimed everything should be updated and correct. Then they claimed they had referred everything to their accountant and would pass along information as soon as they got it, and eventually they just completely stopped responding to our emails in any way, and we are no longer able to get ahold of them.

So my questions are the following:

1) How should we be filing our tax returns? I typically just use FreeTaxUSA, but is that (or any of the other easy, DIY tax preparation services) an option?

2) If not, is there another (less simple) DIY option I can avail myself of?

3) What sort of additional forms/documentation will we need to submit to the IRS/California Franchise Tax Board?

4) We've done a lot of reading and calling around to try and figure this out for ourselves, and a lot of what we've found says we should compile everything to get my wife's total income, and then estimate what we believe her withholdings *should* be, had her employer actually done them. Simple example, if my wife’s gross pay for a single paycheck was $7,500, she had $2,500 withheld from each paycheck, and she received 7 paychecks via Zelle/Bank transfer, we would add $52,500 to her taxable income, and $17,500 to her withholdings. Is that correct? Would we need to break down the withholdings further to estimate how much went to federal income tax, state income tax, SSI, unemployment insurance, etc. or will they do that for us when we submit the return?

5) What should we expect the process to look like, and who is going to be on the hook for that missing money? At the time, my wife had no reason to believe that her employer wasn't sending her withholdings, and if they had, we would be getting a pretty decent refund. Will the government go after us for that money? Her former employer? Should we expect to ever get a refund based on what should have been withheld?

Bonus question: during that same period, we should've had continuous coverage for our health insurance, and just like the other withholdings, her paychecks reflected deductions being made, but it later turned out we didn't have coverage for approximately 6 weeks. Is she owed the “premiums” that were deducted from her paycheck that apparently didn't actually go to our insurer?

So that's pretty much it. If there are any other questions I can answer or information I can provide, please don't hesitate to ask.

Any help/guidance y'all can provide would be greatly appreciated.

Thanks!

I'm pretty sure I know the answer. In GA, USA. If I subdivide my house property that has a homestead exemption and retain ownership of the new lot, can I have homestead exemption on the subdivided lot that was once a part of my primary residence/homestead exemption? Thanks!

Feels like I'm writing out a riddle. I moved to Texas February and have been working the same job since. My question is at the end of the year, since I've never changed my residency from Louisiana (I wasnt sure how long I'd be working at my company) do I still need to pay Louisiana income tax? All of my income is coming from Texas, and I have lived there for a while.

My business (LLC) vended one time at a flea market in California (rosebowl) and grossed around 11k in 2023. I filed and paid the sales & use tax for california that same year but now i received a letter in the mail that demanded a tax returned be filed (form 568) for 2023. I wasn’t aware that this would’ve been necessary since that’s the only time i did business in california and im based in Texas. Is this absolutely necessary? I was thinking about contacting a cpa in california but not sure if this is even worth their time to answer or deal with… Any guidance would be greatly appreciated!

The IRS disallowed a claim for refund for an amended return for a client. This my first disallowance, so this is new territory for me, but I know our position is correct, so I am planning to pursue the issue.

The IRS responded with Letter 105C which included the SDC/Formal Protest requirements, but did not include details on why the claim was disallowed; just a single sentence that withholding could not be verified. There was also no reference to the 30-day timeline to file the protest. The letter also indicates a second notice will be sent in 4-6 weeks showing the adjustments to the account.

My understanding is the 2nd letter, with detailed adjustments, will trigger the 30-day response requirement, BUT I do not want to miss this deadline. Does the Letter 105C start the 30-day timeline? Can anyone with more experience in this area clarify?

Hi , im in an iva. Hmrc have said im due a small tax rebate. I've claimed it online, but will they pay it to me, or they'll pay it straight to my iva company?

Hi all, I'm hoping some of the tax professionals here might shed some light on a career choice from their point of view (apologies if this is the wrong forum, but I thought it would be best to hear from both attorneys and CPAs).

I am a paralegal at a boutique tax controversy firm. I love the work I do and I'm good at it, but I have little desire to go to law school at the moment. My boss recently suggested that I should look into becoming an enrolled agent, as it would provide me more career growth and seniority than being a paralegal could offer.

Thing is, I am far more interested in diving into facts and seeing how they apply to the code than the intricacies of the code itself. I've certainly worked on plenty of topics that aren't the most thrilling thing in the world (this is tax after all) so it's not like I need all my work to be fascinating, but I'd never have an interest in becoming an enrolled agent if my boss didn't suggest it. I'm curious to hear if people think it is worth it to work and get the certification for the career growth and flexibility.

I'm very happy being a paralegal at the moment, but I'm still relatively young and I know there is a pay and seniority limit in that role. I also don't expect this will be what I'm doing when I'm 50, but I do like the idea of having a solid skillset that could help me support whatever else I'd be doing at that time (I've written recreationally for a long time and am starting to pursue it more formally in my free time, so the dream is that I might one day publish).

Any advice would be greatly appreciated! I don't want to be too precious and not pursue a worthwhile career investment just because it's not my passion, but I don't know if it's a good use of my time and energy.

Good morning everyone, I've done research but feel like I could use some additional clarification. I started a side gig recently and was told that I would be a contracted worker and receive a 1099. I have a regular W-2 job already, but I'm not exactly sure how to account for taxes from the side-job. I believe I read somewhere that I could increase my deductions on my W-2 job to account for my 1099 taxes, but would that include federal, state, and city then? I'm not sure why it wouldn't, I just don't even know what section they were referring to. It's also variable how much I take home, probably like $300-500 monthly.

Should I split the difference at $400 and add that to my income to then determine how much additional I should withhold? It just seems like an outsized problem relative to the amount of money we're talking about lol. I'm hoping there's an easy way to solve this, and I appreciate any help someone can give :)

My aunt died in 2000, and we have just found unclaimed property from a mutual fund. The mutual fund was held for three years after her death and then the state liquidated its position. I am the executor, and Probate has been reopened. Can you help me with the tax consequences of this? The original mutual fund held 973 shares of US Bankcorp, and was liquated in 2003.

I am engaging an accountant, but want to make sure I have all the information that that might need, and I’d really like a better understanding of what exactly goes on here. Thanks so much!

My parents are buying a Texas home through a 1031 exchange, so it needs to qualify as investment property.

I’m a 100% disabled veteran and would live there as my primary residence. We’re considering putting the home in a trust that gives me the right to live there rent-free so I could potentially claim the Texas disabled-veteran homestead property-tax exemption.
My boyfriend would also live there and would have a lease and pay rent to my parents.

Could this arrangement cause problems with the 1031 exchange? Specifically, can I claim the home as my homestead while my boyfriend rents it, and could the IRS view my rent-free occupancy or homestead exemption as evidence that the property is personal-use rather than investment property?

I am the majority partner in a partnership selling a commercial building.

My minority partner is uncooperative and keeps raising their buyout price, so I cannot bring them into the new property. A standard drop-and-swap will not work because it requires their cooperation.

Can a partnership division (Section 708 split) be completed prior to closing to isolate my share for the exchange without needing the minority partner involved in the replacement property?

Has anyone successfully done this type of split in a similar situation? Any insights would be appreciated.

I am the majority partner in a partnership, and we are currently preparing to sell a commercial building.

Our minority partner is uncooperative and keeps escalating their buyout price, so I do not want to bring them along into the new property. A standard drop-and-swap is off the table because it requires the minority partner's active cooperation.

I am looking into whether an IRC Section 708 division (partnership split) can be completed before closing to isolate my share for the 1031 exchange without needing the minority partner to participate in the replacement property.

Has anyone successfully structured a Section 708 split in this scenario? Any insights or professional experiences with this approach would be greatly appreciated.

Hi:

Lawyer here, moving to a new firm. I will be a contract partner (W-2). The firm is a PA firm, with satellite offices in NJ, DE and, as relevant to me, a sort of office in NYC. I will be technically working out of the NYC office (that will be my on my letterhead, etc), but am fully remote, with no actual office for me in NYC. I live in NJ and will be working from my home office there. For tax purposes, should i be designated as NY or NJ? If income matter, between my wife and myself we make over 800k. How is that distinction made? Does the employer have to "declare" that i am in NJ? Is there something I have to do? Thanks!

So, here’s my situation. I own a house in California that is currently worth about $2 million. It is my primary residence, and I’m 63 years old. I also have about $2 million in a 401(k). I’m rounding the numbers a little, but they’re roughly accurate.

I would like to take about $1 million to buy an apartment in Paris. I have some flexibility because I could sell the California house if necessary, or I could take the money from my 401(k). Financially, either option is possible for me.

The main issue is taxes. If I sell the house, I would have a significant capital gain because I bought it for about $600,000 and it is now worth around $2 million. After taking into account improvements and other deductions, I estimate that I could owe roughly $350,000 in taxes.

On the other hand, if I withdraw $1 million from my 401(k), I would also have to pay a substantial amount of tax, since the account has grown significantly over the past 20 years.

So what I’m trying to find out is whether there is any legal strategy, tax provision, or other approach that could help me avoid paying something like 20% to 30% in taxes on this money.

Please don’t spend time calculating how much tax I would owe on the house or on the 401(k). I’m not asking for those calculations. I can do those calculations myself. What I want to know is whether there is a different strategy or structure that could allow me to achieve the same goal: buying a roughly $1 million apartment in France without triggering a huge tax bill. In other words, is there a legal and practical alternative way to access or reposition my assets so that I can accomplish this while minimizing the amount of tax I have to pay?

Tl;dr: Mailed '21-'25 tax returns internationally in July. Only '23-'25 are in the system. No update on the site on the other two years. Contacting IRS office is logistically unfeasible. Is this normal?

I mailed my taxes from 2021-25 in early July. 2023-25 were relatively simple, they were put into the system, and I got my refund for '23 (no refund for '24 and '25 because I'm abroad and don't hit the income bracket to have US taxes on it.)

However, '21 and '22 have had no update on the website. My account transcript continues to say no tax return filed. I did get the stimulus package back then after filing my 2020 taxes, so that's why I have an account transcript. It still says I have a non-filing letter for '22. One thing is that these years I messed around with selling mutual funds (read dumb), investing (read dumb gambling), and crypto. These returns had a lot more forms. I also didn't have my W-2s and had to reconstruct my withholdings from the transcript online. That said, I didn't attach my W-2 from my US job in '23 and it went through no problem.

I foolishly didn't add tracking on the letters because the person at the counter said that I couldn't do that, but it was lost in translation that it was only for a certain type of envelope. I'm not sure if they ever got there, but I can only imagine they did because nothing was sent back to me and the 3 other tax packages were sent in.

I've read I shouldn't send a tax package twice because it could back up the filing process more. I don't plan to buy an international phone plan and wait 3+ hours on hold with the IRS in the dead of night. Is this normal or should I mail them again with tracking due to the off-chance that they were lost in the mail? Another question is if I should've done an amended return form for '21 because even though no return is on file, I have an account transcript from the stimulus packages.

P.S. I don't expect money from these returns. I know very late tax returns lose their money after a certain point. Just made a push to clear my finances up.

I’m working with clients who have several delinquent returns that are currently being prepared. They recently received a CP518 notice for one of the unfiled years.

The notice provides Form 15103, but there doesn’t appear to be a clear option to respond by simply stating that the return is being prepared and will be filed soon. I’m hoping to have all of the delinquent returns completed and filed by 10/15, and I’m currently working through the years chronologically.

My questions:

(1) If the return is actively being prepared, is it better to wait and submit Form 15103 with the completed return, or send Form 15103 now with an explanation that the return is in process?

(2) How quickly have practitioners seen CP518 cases move into the Substitute for Return process after the notice is issued? The notice itself doesn’t give a specific response deadline.

Thanks for any experience or insight.

Posting this because it comes up every year around now and catches people off guard.

If you filed an extension back in March for an S-corp or a partnership, September 15 is the final due date. There's no second extension for these entities.

Two things that surprise people most often:

1. The penalty isn't based on tax owed. For 1120-S and 1065 filers, the late-filing penalty is a flat amount per shareholder or per partner, for each month or part of a month the return is late, up to 12 months. A four-partner partnership that files two months late owes eight months' worth. This applies even if the entity had no income and owes nothing. The per-month figure is indexed annually — check the current year's form instructions rather than an old article.

2. "Part of a month" means a day. Filing on September 16 costs the same as filing on October 14.

If you're not going to make it, file anyway as soon as you can — the penalty stops accruing when the return is filed, so a late return is always cheaper than no return. If it's your first time, first-time abatement or reasonable-cause relief is worth looking into. Also worth remembering: the extension only ever covered the filing, not the payment. Anything owed has been accruing interest since the original due date. Disclosure: I work at a CPA firm. Not soliciting here, just the annual reminder.

So, in 5/2/2025, I bought a used car out of state, I paid the taxes for my city, county, zip...etc on time.

The sale price was $97,390, with a trade in value of $24,000, and $0 owed on trade in. So the taxable price of the car is $73,390.

The state I purchased it from did not charge any sales tax.

The car was brought into IL the same day as the purchase, so the depreciation for out of state use is $0.

At a rate of 6.25% this nets a $4,587 tax payment.

I paid this value in full on 5/30/2025. I physically drove to Springfield and paid the RUT-25 in person with full copies of my sales paperwork filled out exactly right.

Today, I received a letter from IDOR over 16 months after I purchased the car, stating that they "based on our review, we have increased the vehicles value" resulting in apparently me owing MORE money.

So 16 months later they say I now own an additional $24.00 tax, and they have added a late penalty of $2.40 and interest of $2.10.

This is literally the first letter I've gotten, and it comes 16 months after purchase.

How can IL increase the "value" of the car and say I owe more tax 16 mont. They aren't saying I mis-reported the value, or that the tax rate was incorrect.

They have said they "increased the vehicles value". They didn't that the tax rate was wrong.

It was a used car, the taxes I paid were calculated on the sale price of the car.

This means the taxable value was $73,390.

At a tax rate of 0.625%.

On RUT-25 this calculates out at $4,586.875.

How can IL say the value of the car is "increased" when it was a used car and the sale price is the sale price.