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I know I am exempt from paying Social Security (FICA) because I have never paid any since I became a care- giver for DSHS in Washington State in 2017, and in Oregon for DHS when I moved there in August of 2020. As a caregiver whose client lived with me while I was living in Washington the state, they had me sign a form that I was exempt  from paying any all taxes, federal and FICA. NO taxes were ever withheld from my paychecks due to Difficulty of Care Notice 2014-7. When I moved to Oregon they withheld FICA from my paychecks even though they should not have, and then I would file Form 843 every year and get them refunded with interest. This continued for 4 years. Then I faxed the Form to the number I was give and did not receive the refund as I had in the past. I finally found out why I was no longer getting the refund in 2024 for the 2023 tax year. It turned out that the person at the IRS who had been processing the refunds for me had retired and no one working there knew to process them. A few months ago I was finally able to talk to the person who took over that position, she took several months trying to figure out how to process my refund. She told me she worked in the corporate division of the department that processes Form 843 and she just needed time to figure out how to do it. There were about 5 phone calls between us and several faxes. She finally called me back last month and said she was told by her boss that I needed to amend my taxes instead of filing Form 843 to get the refund. She told me to file Form 1040X as a $1300 overpayment of FICA on line 12 and enter the explanation as: "Due to Difficulty of Care Notice 2014-7". The IRS told me that Oregon is not supposed to be withholding any FICA out of my paychecks and that they are the only state that refuses to cooperate with that law. Anyone that has been paying FICA and is not supposed to can fill out Form 1040X and get a refund for up to 3 years of their FICA payments, plus interest. Why do you think I am supposed to pay FICA and the IRS tells me I do not need to pay it and refunds it every year?

To enter, change or delete a refund from the prior year applied to this years taxes (Federal, State, Local) - Click on Federal Taxes (Personal using Home and Business) Click on Deductions and Credits Click on I'll choose what I work on (if shown) Scroll down to Estimates and Other Taxes Paid On Income Taxes Paid, click on the start or update button On the next screen select the options under 2023 Refund Applied to 2024 Or enter refund applied to this year in the Search box located in the upper right of the program screen. Click on Jump to refund applied to this year The prior year federal tax refund amount applied is shown on Form 1040 Line 26

I appreciate that idea, but I've already got all of my data in TurboTax, and its what-if worksheet is plenty easy to use as long as it works, and I've been trusting TurboTax enough that I've used it to file my taxes for the past 20 years, so all of that points me towards wanting to use the built-in function. But if it doesn't work as advertised or has undocumented quirks or produces different answers from my tax return, that makes me wonder if I'm making a mistake in trusting TurboTax at all, to do my actual return.   Are actual Intuit representatives visiting the forums this time of year, or is it just peer-to-peer support?

@harrisbmo If this is for tax year 2024 and you have the license code you can download the 2024 software from this website - https://turbotax.intuit.com/personal-taxes/cd-download/install-turbotax/   Otherwise, you can contact TurboTax support on Tuesday, 05/27, and see if they will push an installation file to your download account. See this TurboTax support FAQ for contacting support - https://ttlc.intuit.com/turbotax-support/en-us/help-article/account-management/turbotax-phone-number/L0Od33nMQ_US_en_US?uid=lfgviwbm

2023 TurboTax based the 2024 estimated tax calculation on your 2023 tax liability, AGI and the assumption that your tax withholding in 2024 will be the same as in 2023.  If your tax withholding in 2024 ended up being lower, the 2024 estimated tax payments determined by 2023 TurboTax will have been too low unless you indicated to 2023 TurboTax that your 2024 tax withholding would be the lower amount.   When calculating the quarterly estimated tax payments, 2023 TurboTax took, depending on AGI, 100% or 110% of your 2023 tax lability, subtracted the assumed or indicated withholding amount, then divided by 4.

I did that already before I posted yesterday but it wants me to buy it again.  I bought the dvd at Sam’s but I always register the product on my account every year so I have the activation code. Thanks for the link though. I was just hoping it was somewhere else. After I posted this I dug out my old laptop and installed it there so at least I have a working copy now. Just have to have patience for the old slow machine which I was hoping to avoid. 

I used Perplexity and Gemini AI and I received 2 different answers which is also different from Ricks.  This is why I am confused about debt relief when it is a Final K1.  What is the correct way?   Perplexity results: How Basis and Distributions Work When you receive a distribution (cash or property) from a partnership, it reduces your outside basis at the time of the distribution. When you are relieved of partnership liabilities, that also counts as a distribution (deemed cash) and reduces your outside basis. Here’s the correct order: Adjust your basis for all K-1 items (income, loss, contributions, etc.). Reduce your basis by all distributions (including actual cash and deemed cash from debt relief). If the total distributions exceed your basis, the excess is recognized as a gain. Your Numbers, Step-by-Step Step 1: Adjust Basis for K-1 Items (before distributions) Prior year outside basis: $140,922 Other increase/decrease: $42,211 Current year increase/decrease: $13,447 Subtotal: $140,922 + $42,211 - $13,447 = $169,686 Step 2: Distributions Cash distribution: $1 Debt relief (liabilities go to zero): $169,685 Total distributions: $1 + $169,685 = $169,686 Step 3: Basis After Distributions $169,686 (basis before distributions) $169,686 (total distributions) = $0 Step 4: Is There a Gain? If distributions do not exceed your basis, there is no gain. If distributions exceed your basis, the excess is a gain. In your case: Distributions ($169,686) equal your basis ($169,686), so no gain is recognized. Key Point: You do not recognize a $1 gain. The $1 cash distribution is already included in the total distributions that reduce your basis. You do not subtract it twice. Summary Table Item Amount Adjusted Basis (pre-distribution) $169,686 Debt Relief $169,685 Cash Distribution $1 Total Distributions $169,686 Basis After Distributions $0 Capital Gain $0   Conclusion You do not have a capital gain. Your total distributions (cash + debt relief) exactly equal your outside basis after all K-1 adjustments. If you have more distributions than basis, the excess is gain. If not, there is no gain.   Gemini Results: Here's how to approach calculating your outside cost basis, sale price, and capital gain for a limited partner in a real estate partnership, considering the information you've provided: Understanding the Key Concepts  * Outside Cost Basis: This represents your basis in your partnership interest. It's an evolving number that starts with your initial investment and is adjusted annually by various items, including your share of partnership income/loss, contributions, distributions, and changes in partnership liabilities.  * Debt Relief: When a partnership's liabilities decrease, and you are relieved of your share of that debt, it's treated as a deemed cash distribution to you. This reduces your outside basis and can potentially create a taxable gain if it exceeds your basis.  * Sale Price: For a partnership interest, the "sale price" isn't just the cash you receive. It also includes your share of any partnership liabilities from which you are relieved. This is a crucial point often misunderstood.  * Capital Gain: This is calculated as your Sale Price minus your Adjusted Outside Cost Basis at the time of sale. Breaking Down Your Numbers Let's use the information you've provided:  * Last Year Outside Cost Basis: $140,922  * Last Year Liabilities (included in basis): $169,685 This Year (Final K-1):  * Current Year Increase/Decrease (from ordinary business income/loss, etc.): -$13,447  * Other Increase/Decrease (often includes separately stated items like depreciation recapture, Section 1231 gains/losses, etc.): $42,211  * Withdrawals & Distributions: -$1 The Missing Piece: Debt Relief You mentioned "Last year outside cost basis is $140,922 This Includes $169,685 Liabilities." This indicates that your prior year's basis had your share of partnership liabilities embedded in it. To determine your debt relief, you need to know your share of partnership liabilities at the end of this year (the final K-1 year). The difference between your share of liabilities at the beginning of the year and at the end of the year is your debt relief or increase. Since it's a "Final K-1," it's highly likely that your share of liabilities at the end of the year is $0, meaning you are relieved of all your prior share of debt. If your K-1 (specifically, Box K on Schedule K-1 for limited partners, or a statement accompanying the K-1) doesn't explicitly show your ending share of nonrecourse and recourse liabilities, you would typically assume it's zero upon termination or sale of the partnership interest. Assuming Debt Relief = Last Year's Liabilities ($169,685) This is a common scenario when a partnership interest is liquidated or sold, and the partner is no longer responsible for any partnership debt. Calculations Let's calculate step-by-step: 1. Calculate Your Adjusted Outside Cost Basis (Before Debt Relief) This is your starting basis, adjusted for the current year's activity excluding the impact of debt relief as a distribution.  * Last Year Outside Cost Basis: $140,922  * Add: Other Increase/Decrease: $42,211  * Subtract: Current Year Increase/Decrease: -$13,447 (this is already a negative number, so we add it)  * Subtract: Withdrawals & Distributions: -$1 (this is already a negative number, so we add it) Adjusted Outside Cost Basis (before debt relief distribution) = $140,922 + $42,211 - $13,447 - $1 = $169,685 Wait, this looks familiar! This suggests that the "Current year Increase/Decrease" and "Other Increase/Decrease" along with the withdrawal effectively offset the basis adjustments, bringing it back to what looks like the liability amount. This is a common occurrence as your basis should generally equal your capital account plus your share of liabilities. 2. Determine Your "Deemed Cash Distribution" from Debt Relief  * Debt Relief (Assumed): $169,685 3. Calculate Your Final Adjusted Outside Cost Basis Your basis is reduced by the deemed cash distribution from debt relief.  * Adjusted Outside Cost Basis (before debt relief distribution): $169,685  * Subtract: Deemed Cash Distribution (Debt Relief): $169,685 Final Adjusted Outside Cost Basis = $169,685 - $169,685 = $0 In a typical scenario, your basis would be reduced to zero, and any debt relief exceeding your basis would generate a gain. 4. Determine Your Sale Price Your sale price is the sum of any cash received and the amount of debt relief.  * Cash Received (Withdrawals & Distributions): $1 (This appears to be a cash distribution, not necessarily cash received from a sale. If you received additional cash for the sale of your interest, that would be added here.)  * Debt Relief: $169,685 Sale Price = Cash Received (from sale, if any) + Debt Relief Assuming the -$1 is the only cash received related to the liquidation/sale, and it's a net withdrawal: Sale Price = $1 + $169,685 = $169,686 If the -$1 refers to a prior distribution and you received no additional cash for the termination of your interest, then your sale price would solely be the debt relief. However, "Withdrawals & distributions -$1" strongly suggests a cash component. Let's assume this $1 was the net cash distribution upon final liquidation. 5. Calculate Your Capital Gain (or Loss) Capital Gain = Sale Price - Final Adjusted Outside Cost Basis Capital Gain = $169,686 - $0 = $169,686 Summary of Your Answers (Based on Assumptions)  * What do I do with the debt relief?    Debt relief of $169,685 is treated as a deemed cash distribution, reducing your outside cost basis. It also forms a part of your "amount realized" (sale price) for calculating capital gain.  * What is my Cost Basis?    Your final adjusted outside cost basis before calculating the gain from the deemed distribution is $169,685. After accounting for the debt relief as a distribution, your basis becomes $0.  * What is my Sale Price?    Your sale price is the sum of any cash received ($1) and the debt relief ($169,685), totaling $169,686.  * What is my Capital Gain?    Your capital gain is your Sale Price ($169,686) minus your Final Adjusted Outside Cost Basis ($0), resulting in a capital gain of $169,686. Important Considerations and Next Steps  * K-1 Review: Double-check your final K-1 very carefully.    * Look for Box K (Partner's share of liabilities) at the beginning and end of the year. This is crucial for confirming the exact amount of debt relief.    * Review any attached statements for additional details, especially regarding the disposition of your interest.    * The "Current year Increase/Decrease" and "Other Increase/Decrease" lines can be complex. Ensure you understand what specific items make up those figures (e.g., Section 1231 gain/loss, depreciation recapture, etc., which might be reported separately on Form 4797).  * Suspended Losses: If you had any suspended passive activity losses from prior years, the disposition of your entire partnership interest would allow you to deduct those losses. This would not affect your capital gain calculation but would affect your overall taxable income.  * Recapture: A portion of your capital gain might be recharacterized as ordinary income due to depreciation recapture (Section 1250 gain for real estate). This is typically reported on Form 4797. Your K-1 should provide information if this applies.  

Thanks Rick for responding.   The debt relief of -$28,763 should that be added to my distribution because it exceeds my remaining outside basis? Cost Bases = 0 Sales Price = $28,764 ($1 Distribution + $28,763 Excess Debt Relief) Capital Gain = $28,764   This is the part of confusion for me.  Please confirm Thanks again

@Leo N very few people are "legally" separated.  It would be quite unusual.    While you may have a separation agreement with your spouse that is legally binding, only if the Judge signs off on it would you be "legally" separated.  That doesn't normally occur.  Unless that step occurs, you are still legally married in the eyes of the IRS and filing SINGLE is not an option.    The IRS does make a huge distinction between "legally separated and divorced".     if you are LEGALLY separated or divorced, then you file SINGLE .  If you are simply SEPARATED, then you file either MFJ or MFS.   There are options to file HOH when there are children involved, but since you have not indicated that is the case, let's leave that aspect lie.    Let's look at it this way.  As of 12/31/24, could you legally re-marry? Ask your attorney😉.