Filing Taxes

• Complex Tax Scenarios Supported by Our Premium Subscription

  In this article, we’ll outline some of the most common tax scenarios that are covered by our premium subscription. If you're dealing with complex tax situations that aren’t fully addressed in our standard filing process, or if you have specific tax forms and credits not supported in the regular filing flow, our premium plan may be able to help.

  The premium subscription offers a comprehensive range of services beyond what’s included in the Annual plan. With the premium subscription, you'll have access to the following:

  • Complex Tax Returns: We provide personalized support for more intricate tax situations, such as handling Schedule K-1s, foreign income, rental income, and most complex scenarios related to sole proprietorships.
  • Amendments: If you missed income or forgot to claim a credit, we can amend your return for any year from 2021 onwards. Our premium plan covers amendments to ensure your return is accurate.
  • Quarterly Tax Assistance: We help you calculate and prepare for each quarterly tax deadline, making sure you stay on top of your tax obligations throughout the year.
  • Prior Year Returns: In addition to your current year return, we assist with preparing and filing one return for a previous year (2021 onwards).
  • Audit Protection: Should the IRS audit your return, we’ll support you every step of the way, offering full representation and helping to resolve any penalties or issues that arise.

   

  Complex Tax Scenarios/Forms

  Schedule E (Form 1040), Supplemental Income and Loss

  Schedule E (Form 1040) is designed for reporting income or loss from various sources, including rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in Real Estate Mortgage Investment Conduits (REMICs).

  When it comes to rental income, you can report it on either Schedule E or Schedule C, depending on the nature of your rental activity.

  Use Schedule E when:

  • You are renting out property without providing substantial services to your tenants.
  • Common examples of substantial services include regular cleaning, changing linens, or offering concierge services. Most residential rental activities fall into this category.

  Use Schedule C when:

  • You provide substantial services to your tenants, similar to a hotel or bed and breakfast.
  • You are actively engaged in the daily management and operations of the rental property, beyond simply maintaining it and collecting rent.

  In summary, if you're renting out property without significant services, use Schedule E. If your rental business is more service-oriented, opt for Schedule C.

  📝 If your rental income needs to be reported on Schedule E, we can help you with this through our premium subscription. Additionally, remember not to track expenses related to your rental income in the app if it needs to be reported on Schedule E. We only track expenses associated with your business or self-employment that are reported on Schedule C.

   

  Schedule K-1s

  A Schedule K-1 is a tax form used to report income, deductions, and credits from partnerships, S corporations, estates, and trusts to the IRS. If you're a partner in a partnership, a shareholder in an S corporation, or a beneficiary of an estate or trust, you'll receive a Schedule K-1. This form details your share of the entity's income, deductions, and credits, which you then report on your individual tax return.

  Here’s a quick breakdown of the different types of Schedule K-1:

  • Form 1065, Schedule K-1: For partnerships.
  • Form 1120S, Schedule K-1: For S corporations.
  • Form 1041, Schedule K-1: For estates and trusts.

  Each type of Schedule K-1 contains important information that you need to include on your personal tax return. If you're a premium subscriber and have received this tax form, please inform us so that we can incorporate the details into your tax return.

   

  Depreciation (Asset Depreciation and Section 179 Deduction)

  Currently, our annual subscription supports depreciation only for vehicles and homes (if you have a home office). If you need to depreciate other assets, such as equipment or machinery, you'll need to upgrade to our premium plan.

  The Section 179 deduction is also available under our premium plan. This deduction allows businesses to expense the cost of certain qualifying property immediately, instead of capitalizing and depreciating it over time. For tax years beginning in 2023, the maximum section 179 expense deduction is $1,160,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,890,000.

  Qualifying property typically includes tangible personal property, like machinery, equipment, and certain software used in your business. Some improvements to nonresidential real property, such as roofs, HVAC systems, and fire protection systems, may also be eligible.

  For more information on applying Section 179 to your business vehicle, check out this article: https://www.keepertax.com/posts/is-buying-a-car-tax-deductible 

  Please note that the deduction cannot exceed your taxable income from your active trade or business. If your deduction is limited by your taxable income, you can carry forward the disallowed amount to future years.

   

  Part II of Form 8606: Conversions to Roth IRAs

  Part II of Form 8606 is used to report conversions from Traditional, SEP, or SIMPLE IRAs to Roth IRAs. This is where you detail the amount converted and calculate the taxable portion of the conversion.

  Here are some scenarios where you need to complete Part II of Form 8606:

  • Backdoor IRA: This is a strategy where you contribute to a Traditional IRA and then convert it to a Roth IRA. It's often used by high-income earners who exceed the income limits for direct Roth IRA contributions. The steps typically involve:

  1. Making a non-deductible contribution to a Traditional IRA.
  2. Converting that Traditional IRA to a Roth IRA.

  • Rollover Conversions: If you're rolling over funds from a Traditional IRA to a Roth IRA (which is essentially a conversion), you also report this in Part 2 of Form 8606. However, if you're rolling over funds between similar types of accounts (like from one Traditional IRA to another), this is not reported on Form 8606.

  If you utilized the backdoor IRA strategy or have rolled over funds from a Traditional IRA to a Roth IRA, we can assist you with this under our premium subscription.

   

  Form 8283, Noncash Charitable Contributions

  This form is necessary if you've donated something other than cash (like a car, a piece of furniture, or a stock) to a charity and the value is more than $500. The IRS uses this form to verify the details of your noncash donation and the deduction you're claiming on your taxes. If you have any noncash charitable contributions to report, you'll need to be on the premium plan to include them in your tax return.

   

  Schedule R, Credit for the Elderly or the Disabled

  Schedule R is used to calculate the Credit for the Elderly or the Disabled. This credit is designed to help individuals who are either aged 65 or older or who are permanently and totally disabled. If you qualify to claim this credit, you'll need to be on our premium plan for it to be included in your tax return.

   

  Form 8379, Injured Spouse Allocation

  Form 8379, known as the "Injured Spouse Allocation," is utilized by married couples who file a joint tax return but seek to safeguard one spouse's share of the refund from being diverted to cover the other spouse's outstanding debts. These debts may include child support, federal debts, state taxes, or other obligations. Essentially, the form allows the couple to ensure that the portion of the refund attributable to the "injured spouse" is protected.

  If you're the "injured spouse" (the one not responsible for the debt), you can file Form 8379 through our premium subscription to request your portion of the joint refund.

   

  Form 1099-C, Cancellation of Debt

  Form 1099-C, known as the Cancellation of Debt, is an important document that lenders use to report any canceled debt of $600 or more to both the IRS and the borrower. When a lender forgives or cancels a debt, the amount forgiven is typically treated as taxable income for the borrower and must be reported on their tax return. With our premium subscription, we can assist you in including the details from this form on your tax return.

   

  Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

  Form 8936 allows you to claim the Qualified Plug-in Electric Drive Motor Vehicle Credit, commonly referred to as the Clean Vehicle Credit or EV Credit. This credit is available for certain electric vehicles (EVs) that you purchase or lease.

  Here’s a quick overview:

  • Eligibility: To qualify, the vehicle must be a new plug-in electric drive motor vehicle. It should have at least four wheels, be primarily used on public streets, roads, and highways, and have a battery capacity of at least 4 kilowatt-hours.
  • Credit Amount: The credit amount varies based on the vehicle's battery capacity, starting at $2,500 and potentially reaching up to $7,500.

  Keep in mind that this credit is non-refundable. This means it can reduce your tax liability to zero, but you won’t receive a refund for any excess credit. Additionally, the credit may be phased out based on the manufacturer’s sales, so it's wise to verify the current status of the specific vehicle you’re considering.

  If you qualify for this credit, we can help you include it on your tax return through our premium plan.

   

  Form 2555, Foreign Earned Income

  Form 2555 is designed to help U.S. citizens and resident aliens claim the Foreign Earned Income Exclusion, allowing them to exclude a portion of their foreign earned income from U.S. taxation.

  Here’s a brief overview:

  Who Can Use Form 2555?

  • U.S. citizens or resident aliens who live and work outside the United States.
  • To qualify, you must meet either the Bona Fide Residence Test or the Physical Presence Test.

  Exclusion Amount

  • For 2023: You can exclude up to $120,000 of foreign earned income.

  Housing Exclusion/Deduction

  • In addition to the income exclusion, you may also qualify to exclude or deduct specific housing costs.

  If you’re eligible for the Foreign Earned Income Exclusion, we can assist you in including this form on your tax return through our premium plan.

   

  Schedule F (Form 1040), Profit or Loss From Farming

  Schedule F (Form 1040) is used to report profit or loss from farming activities. If you are engaged in farming as a trade or business, this form allows you to detail your income and expenses related to your farming operations.

  Here’s a quick overview:

  Income

  You will report various types of farm income, including:

  • Sales from livestock, produce, grains, and other products you have raised.
  • Distributions from cooperatives.
  • Payments from agricultural programs.
  • Commodity Credit Corporation (CCC) loans.
  • Proceeds from crop insurance and federal crop disaster payments.

  Expenses

  You will also report your farming expenses, which may include:

  • Costs for feed, seed, and fertilizer.
  • Labor expenses for hired help.
  • Repairs and maintenance costs.
  • Interest paid on farm-related loans.
  • Depreciation of farm equipment and buildings.
  • Utilities and other farming-related expenses.

  If you’re involved in farming as a trade or business, we can assist you in reporting your income and expenses on your tax return through our premium subscription.

  📝 Please remember not to enter your farming expenses as deductions in the app. We only track expenses related to your business or self-employment that are included in Schedule C (Form 1040).

   

  Form 1099-S, Proceeds from Real Estate Transactions

  Form 1099-S is utilized to report the sale or exchange of real estate. If you have sold a house, land, or any other type of real estate, you will likely receive this form. With our premium subscription, we can help you incorporate the details from this form into your tax return.

• Filing with Keeper

  Why File with Keeper?

  Filing your tax return with Keeper is easy! Our user-friendly system will walk you through the process with straightforward questions. Simply upload your W-2, 1099, investment documents, or any other income forms, and Keeper will take care of everything else!

  Don’t worry about those business deductions we’ve been tracking for you all year. We’ll automatically include them in your tax return when you file with us.

  To file your taxes with Keeper, you’ll need either the Keeper Annual or Premium subscription.

  Here’s what’s included with each subscription:

  • Annual ($192/year): This plan offers free tax filing for both federal and state returns for the current tax year while your subscription is active, covering up to two state returns. You’ll also have access to the app and all its expense-tracking features. If you decide to file elsewhere, you can request an export of the deductions you've tracked throughout the year.
  • Premium ($396/year): This subscription includes everything in the Annual plan, along with additional services like filing amendments, handling prior year returns, providing quarterly tax assistance, and offering personalized support for complex tax situations. While these services aren't available directly in the app, if you're on the Premium plan and need assistance, just let us know, and we will assist with these matters further via email.

  When Can You File with Keeper?

  Missed the April 15, 2024 deadline for your 2023 tax return? No problem! You can still file using our app or web dashboard.

  For assistance with your 2022 or 2021 tax returns, our premium membership provides access to our tax experts who are ready to help.

  How to File with Keeper

  Tax filing is available to all Annual and Premium subscribers. As soon as you subscribe, you can file your return.

  To file within the app, go to the “File Taxes” tab. If you prefer using a desktop, log into your account at dashboard.keepertax.com.

  Make tax season stress-free—let us handle it for you!

• ID Verification

  For compliance with IRS regulations, Keeper needs to confirm your identity when submitting your tax returns through our platform. Before forwarding your return to the IRS, you will be prompted to respond to three random security questions.

  You'll be given one hour to answer the questions. If that time elapses, fresh questions will be presented.

  If you're unsure of the answers, you can leave the filing flow and return later. Upon your return, new questions will be provided.

  If you get a possible audit risk found notification; this may mean you need to go back to the name, SSN, and address sections — please go into the filing flow under Household details to double-check your entries for each section. 

  

   

  If you don't encounter the above error notification, when your return is ready for you to confirm amounts, you'll be asked the three questions to validate your identity right before you submit your tax return to the IRS.

  Here are sample questions of what it looks like below:

  

   

   

• Taxpayer Identification, Taxpayer's ID Number (SSN or ITIN)

  A Taxpayer Identification Number is the unique number the Internal Revenue Service uses to identify you and track your tax obligations. The two primary types of TINs are Social Security Numbers (SSN) and the Individual Taxpayer Identification Numbers (ITIN).

  • Social Security Number (SSN): An SSN is a nine-digit number issued by the Social Security Administration (SSA). It’s primarily used for Social Security benefits and other government programs, but it’s also used as a TIN for tax purposes. SSNs are typically assigned to US citizens, permanent residents, and other individuals authorized to work in the United States.
  • Individual Taxpayer Identification Number (ITIN): An ITIN is a nine-digit number issued by the IRS to individuals who are required to have a US taxpayer identification number but are not eligible for an SSN. ITINs are primarily used by nonresident aliens, foreign nationals, and dependents or spouses of US citizens or residents without SSNs. ITINs enable these individuals to meet their tax filing and reporting obligations.
  • How to use when filing: When you’re working through our filing flow, you can use either of these numbers if you’re asked for your Social Security Number or TIN.

   

  What if I don't have a Social Security Number?

  Not everyone has a Social Security Number. But they still need to file taxes.

  In this scenario, you’ll need an Individual Taxpayer Identification Number (ITIN) to file your return. You can learn more about this in our article, “What Is an Individual Tax ID Number (ITIN) and How to Get One.” 

  Once you have your ITIN, head over to the “File Taxes” tab in the app to get started with your return.

   

  What if I don’t know my employer’s TIN?

  If you don’t have your employer’s full TIN, try checking any correspondence or statements you’ve received from them, as it’s usually listed there. If you’re still unable to locate it, you may need to contact your employer directly to request the full TIN.

   

  What should I enter if my spouse doesn’t have an SSN or ITIN due to being a foreign national?

  Keeper cannot e-file a return if one spouse does not have an ITIN or SSN and the filing status is either married filing jointly or separately. If you have a dependent, you might be able to file as head of household without including your spouse’s information. Otherwise, Keeper won’t be able to assist with your filing. You can still use the app to track your daily business expenses though!

   

  What should I do if my dependent doesn’t have an SSN yet?

  To claim a dependent on your tax return, you'll need to provide their Social Security Number (SSN) along with their personal details. If your dependent doesn’t have an SSN yet, follow these steps:

  • Apply for an SSN: Your dependent can complete Form SS-5 and submit it to the Social Security Administration (SSA) to apply for an SSN. You can find the form and more details on the SSA’s website or visit your local SSA office.
  • Amend Your Return: If you’ve already filed your return before receiving your dependent’s SSN, you can submit an amended tax return using Form 1040-X to include the SSN and claim your dependent.
• How to set up payments and receive refunds for your taxes

  Receiving Your Tax Refund

  When you file your tax return with us, you’ll need to provide your bank account details. If you’re eligible for a federal and/or state tax refund, the funds will be deposited directly into this account. However, if you prefer not to share your bank information, the IRS or your state’s Department of Revenue will mail you a check for any refund you’re owed.

   

  Paying Your Tax Bill

  The bank account you enter on your tax return isn’t just for receiving refunds; it’s also used to pay any taxes you owe. If you have a balance due, the payment will be automatically deducted from this account on the tax deadline, or if the deadline has already passed, as soon as your return is processed.

   

  Setting Up a Payment Plan with the IRS

  If you find yourself unable to pay the full amount of taxes due all at once, there's no need to worry. During the filing process, you can select the option to pay later.

  Once your tax return has been accepted, you can visit the IRS website directly to apply for a payment plan. It will guide you through creating or signing into your IRS Online Account, where you can manage your tax payments.

  By setting up an IRS Online Account, you'll gain access to a wealth of information, including your personal tax details, payment plans, and tax records. You'll also be able to view any notices or letters the IRS has sent you, helping you stay on top of your tax responsibilities.

  For more detailed guidance on setting up a payment plan with the IRS, feel free to visit this link: https://www.irs.gov/payments/payment-plans-installment-agreements 

   

  Setting Up a Payment Plan with Your State

  Many states also offer the option to set up a payment plan for your state taxes. However, the process can vary from state to state. To get started, you'll need to check with your state's Department of Revenue for specific instructions:

  Alabama (AL)	Illinois (IL)	New Hampshire (NH)
  Alaska (AK)	Indiana (IN)	New Mexico (NM)
  Arizona (AZ)	Iowa (IA)	Nevada (NV)
  Arkansas (AR)	Kansas (KS)	Ohio (OH)
  California (CA)	Kentucky (KY)	Oklahoma (OK)
  North Carolina (NC)	Louisiana (LA)	Oregon (OR)
  South Carolina (SC)	Maine (ME)	Pennsylvania (PA)
  Colorado (CO)	Maryland (MD)	Rhode Island (RI)
  Connecticut (CT)	Massachusetts (MA)	Tennessee (TN)
  North Dakota (ND)	Michigan (MI)	Texas (TX)
  South Dakota (SD)	Minnesota (MN)	Utah (UT)
  Delaware (DE)	Mississippi (MS)	Vermont (VT)
  District of Columbia (DC)	Missouri (MO)	Virginia (VA)
  Florida (FL)	Montana (MT)	West Virginia (WV)
  Georgia (GA)	Nebraska (NE)	Washington (WA)
  Hawaii (HI)	New Jersey (NJ)	Wisconsin (WI)
  Idaho (ID)	New York (NY)	Wyoming (WY)

   

  Applying for the IRS hardship program

  If you're experiencing financial hardship and can't pay your tax bill, the IRS offers several options to help you manage your tax debt. Here's a quick rundown of the steps you can take:

  1. Offer in Compromise (OIC): This program allows you to settle your tax debt for less than the full amount you owe. To apply, you'll need to complete Form 656, "Offer in Compromise," and Form 433-A (OIC) or 433-B (OIC), which detail your financial situation. Use the IRS's Offer in Compromise Pre-Qualifier tool to see if you might be eligible.
  2. Installment Agreement: If you can't pay your taxes in full, you can apply for a payment plan. You can request a short-term payment plan (up to 180 days) or a long-term installment agreement. You can apply online using the IRS Online Payment Agreement tool, or submit Form 9465, "Installment Agreement Request."
  3. Currently Not Collectible (CNC) Status: If paying your tax debt would cause significant financial hardship, you can request to be placed in CNC status. This means the IRS temporarily pauses collection efforts. To apply, you'll need to provide detailed financial information, typically using Form 433-F, "Collection Information Statement."
  4. Request a Penalty Abatement: If you have a reasonable cause for not paying your taxes on time, you can request a penalty abatement. This can reduce or eliminate penalties. You can submit Form 843, "Claim for Refund and Request for Abatement," or call the IRS to explain your situation.
  5. Temporary Delay in Collection: If you can't make any payments due to financial hardship, you can request a temporary delay in collection until your financial situation improves.

  We recommend contacting the IRS directly to discuss your situation and provide financial information. Remember, it's important to communicate with the IRS as soon as you realize you can't pay your tax bill. 

• Correcting your tax return

  I don’t see a deduction that I should have

  If you’re missing a deduction, start by double-checking your expenses to make sure it's not hiding somewhere before adding it manually —you don't want duplicates.

  If you don't see it, make sure it's been added to your list of expenses. You can manually add the expense in the app or link another card to ensure it's included.

  When you head back to your return, your missing expenses will be automatically added in.

  Can I still go back and add deductions?

  If you've just submitted your tax file for review, you can return to the File Taxes tab once the review is complete and select 'Unlock to make edits.' After unlocking, go to the Deductions tab to add any deductions you missed. Be sure to resubmit your return for review afterward.

  If you've already filed and submitted your return to the IRS, the only way to add deductions is by amending your tax return. For more information on how to file an amendment, please visit this link: https://www.irs.gov/newsroom/if-you-must-amend-your-return 

  If you need assistance with filing an amendment, our premium plan includes support for this process.

  I can't submit my return for review because a section is highlighted in yellow

  If you see a yellow exclamation mark or sections highlighted in yellow, it indicates that there’s missing information needed before you can submit your return for review. Please go back to all the highlighted sections and check the entries associated with the yellow exclamation marks.

  When you click on an entry, review all the boxes and questions to see if any are highlighted in yellow that require your attention. Make sure the information in those sections is accurate. Once all the yellow warning signs are gone, you'll be able to submit your return for review.

  If you need any further assistance in resolving this issue, don't hesitate to let us know!

  How do I make changes if I already submitted my return for review?

  Once you submit your return for review, it becomes locked, and no changes can be made until the review is finished. After the review is complete, go to the File Taxes tab and select 'Unlock to make edits' to make any necessary changes. Once you’ve made your updates, be sure to resubmit your return for another review.

  When the review is finished, you'll return to the File Taxes tab, where you'll see a confirmation that your return has passed the audit risk review.

  

   

  Simply click on Next, and it will take you to a page showing your tax file summary. You can edit your return by clicking on Edit at the right side of your tax info.

  

   

  After that, a message will pop up asking you if you'd like to edit your tax return.

  

  As long as you haven't confirmed the amounts of your return, we’ll get it opened so you can make edits. Be sure to resubmit it when you finish up!

  How do I make changes if I already submitted my return to the IRS?

  If you need to make any changes to your return, you must file an amended return. Here’s more info on how to file an amended return: https://www.irs.gov/newsroom/if-you-must-amend-your-return

  Keeper also offers a premium subscription that includes preparing and filing amended returns. 

  My return was rejected

  Maybe there was a typo with your Social Security number, or the IRS thinks something doesn't look right. If your return is rejected, we’ll be sure to let you know as soon as possible. This will come as a notification on the app, under the “File Taxes” tab.

  For minor issues, you’ll be able to update your return and resubmit it to the IRS. If the issue is a little more complex, we’ll guide you through all of your options.

  The IRS says my social security number was already used

  No one wants to hear that their return has been rejected, but it's not the end of the world. Just keep calm and work through it.

  If the IRS sends a notice that your Social Security number was already used, you'll want to review your personal details, like name, address, and SSN, to make sure everything is accurate.

  If it is, you'll also want to make sure you haven't already filed a return this year. In the rare event that someone else has actually used your Social Security to file, you should contact the IRS to discuss your options moving forward.

  You can find more info on the IRS website linked here: https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft 

  I received an IRS inquiry

  The IRS may send a letter requesting a little more information to finish processing your return. This doesn't mean you're being audited, so don't stress.

  The notice should clearly state the forms or information they’re seeking, as well as instructions on how to send them in. Take care of these inquiries as quickly as possible, so your return isn't delayed.

  If you need assistance or want to double-check that you're sending the correct forms, feel free to let us know. We’re here to help!

  I filed with Keeper and I’m being audited

  No one ever wants to hear the word audit. Most likely you never will — the likelihood of getting audited is less than 1%.

  Still, we want you prepared. If you filed with Keeper, we're here to help answer any questions as you work through collecting all necessary documents to send to the IRS. Our team of tax experts are available to answer all your questions.

  Don't assume your audit will be a drawn-out process, or that you'll necessarily receive a higher tax bill at the end. Most audits are done by mail, and you may have been selected for something as simple as making a typo when you entered your income. We all make mistakes.

  You should carefully read your IRS audit notice.  You might be given the option to:

  • Send in supporting documents
  • Pay an updated tax bill
  • Offer proof as to why the original numbers were actually accurate

  Once you’ve gathered all your documentation and sent in your response, the IRS will notify you of the final decision.

   

   

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