Has anyone used TurboTax for reporting a big capital gain like this? I'm worried it won't handle all the nuances correctly and I'll miss deductions.

With a $2 million profit on this scale, you definitely need professional help. I'd strongly recommend getting both a tax attorney and a CPA who specialize in real estate transactions to review your situation before you sell. A few things to consider beyond what's already been mentioned: 1. **Dealer vs. Investor Status**: Since you built this specifically to sell, the IRS might classify you as a dealer rather than an investor. This would mean your profits get hit with ordinary income tax rates (up to 37%) plus self-employment tax, rather than the lower capital gains rates. 2. **State Taxes**: Don't forget about state capital gains taxes if you're in a state that has them. Some states have no capital gains tax, while others treat it as ordinary income. 3. **Estimated Taxes**: With a gain this large, you'll likely need to make quarterly estimated tax payments to avoid underpayment penalties. 4. **Timing**: Consider the timing of your sale. If you're already in a high-income year, it might make sense to delay the sale to the following year to manage your overall tax bracket. The potential tax bill on $2 million could easily be $500K+ depending on your situation, so spending a few thousand on proper professional advice is a no-brainer. Don't try to navigate this alone with software or generic advice.

Have you checked if these specific employees might have student loan forgiveness that's being incorrectly applied in your payroll system? There was a weird bug in QuickBooks Payroll last year where employees who indicated they had student loans were sometimes getting zero federal withholding due to a misinterpretation of the temporary COVID relief measures (even though those expired long ago).

I'm dealing with something very similar at my company right now! We've had about 4 employees in the past few months with the exact same issue - zero federal withholding despite normal-looking W-4s and salaries in the $50-70k range. What helped us identify the root cause was creating a spreadsheet comparing all the affected employees' data points - hire dates, salary amounts, department codes, etc. We discovered that all of our problem cases were hired within a specific 6-week window when our payroll system had received an update. I'd recommend documenting everything systematically: exact hire dates, salary amounts, which payroll runs they first appeared in, and any system updates that happened around those times. This pattern recognition approach helped us provide much more specific information to our payroll provider, who was finally able to trace it back to a configuration error that occurred during their system update. Also, definitely have those employees submit amended W-4s in the meantime - even if the forms look identical, sometimes re-processing them through the current system version can resolve the issue while you're working on the bigger fix.

Don't forget about gift tax implications too! If you're not charging at least the Applicable Federal Rate (AFR), the IRS might view the "uncharged" interest as a gift subject to gift tax rules. The AFR changes monthly, but right now short-term rates are around 4-5%, so your 6% should be fine. Also, if your family member defaults and you decide to forgive the loan, the IRS might consider that a gift too. Just something else to keep in mind.

I did something like this last year! One tip - keep REALLY good records of every payment. I used a simple spreadsheet that broke down each payment into principal and interest portions. When tax time came, I just totaled the interest column and reported that amount on Schedule B line 1. Also my tax guy said even tho I didn't need to issue a 1099-INT to my brother, he still needed to report the interest he paid me as interest expense on his return (he used the $$ for his business).

Anybody else notice how the whole 1099 vs W2 thing is getting more confusing every year? My tax guy told me that the IRS is cracking down on misclassification big time in 2025.

You're absolutely right to be concerned about this. Required training is one of the biggest red flags for misclassification. The IRS specifically looks at whether the company controls not just what work you do, but HOW you do it - and mandatory training falls squarely into that "how" category. Here's what I'd suggest: Document everything about this training requirement (emails, contract language, etc.) and consider getting a professional assessment of your contractor status before proceeding. You mentioned you've been contracting for years - this kind of requirement is definitely outside the norm for true independent contractor relationships. If you decide to push back, focus on the business relationship aspect: "As an independent contractor, I typically determine the methods and training needed to deliver the agreed-upon results. I'm happy to ensure I have the necessary knowledge to complete the project successfully - would you prefer I handle system familiarization independently, or would you like to adjust our contract to reflect an employee relationship with the associated benefits and protections?" This approach makes it clear that you understand the legal implications while giving them a face-saving way to back down from the requirement.

Quick tip from a tax prep perspective: you can actually see the breakdown of all these taxes on your W-2 form at tax time: Box 1 shows your wages subject to federal income tax Box 3 shows wages subject to Social Security (OASDI) Box 4 shows Social Security tax withheld Box 5 shows wages subject to Medicare Box 6 shows Medicare tax withheld If you look at Box 4, it should be approximately 6.2% of Box 3, and Box 6 should be approximately 1.45% of Box 5. This is a good way to verify everything is being withheld correctly.

This is such a common source of confusion! I went through the same thing when I first started working. One thing that helped me understand the full picture was realizing that these taxes fund completely different programs: - Your federal income tax goes to general government operations (defense, infrastructure, etc.) - OASDI (Social Security) goes specifically to the Social Security trust fund for retirement and disability benefits - Medicare tax goes to Medicare trust fund for healthcare benefits So when you retire, your Social Security benefits are based on what you paid into OASDI over your working years, not your income tax payments. Same with Medicare eligibility - it's tied to having paid Medicare taxes. Also worth noting that unlike income tax which can vary based on deductions, credits, etc., the OASDI and Medicare taxes are pretty straightforward - you pay the set percentages on your wages regardless of your filing status or other tax situations. The progressive tax bracket explanation others gave is spot on too. Your effective tax rate on $100k is much lower than 22% even though that's your marginal bracket.