Has anyone actually had the IRS question their return over this specific issue? I have the same problem with my W-2 but I'm wondering if it's worth the hassle of getting a corrected form if the IRS doesn't typically flag this.

This is exactly why proper W-2 reporting is so important! I work in tax preparation and see this mistake frequently. Your employer definitely needs to issue a corrected W-2 because the IRS computers are programmed to flag dependent care FSA amounts over $5,000 in Box 10. The transportation benefits should have been handled completely separately - they reduce your taxable wages in Box 1 but don't belong in Box 10 at all. When you contact HR again, you can reference IRS Publication 15-B which clearly states that qualified transportation fringe benefits are reported differently than dependent care assistance. If you're filing soon and can't wait for the correction, you could file with Form 8862 attached explaining the employer error, but getting the corrected W-2 is definitely the cleaner approach. Don't let them tell you it "doesn't matter" - it absolutely does for IRS matching purposes.

Just a heads up that the "lived in for 2 out of 5 years" rule isn't as straightforward as it sounds. Those two years don't have to be consecutive, but there are specific ways the IRS calculates this. You might want to check out IRS Publication 523 for the details. Also, how much are we talking about here in terms of potential capital gains? Because if it's less than $500k total, the 1031 might be unnecessary complexity.

This is a great question that highlights the complexity of combining these two tax strategies. Based on your timeline (12 years of primary residence, then 2-3 years as rental), you should be well-positioned to use both benefits. Here's what you need to know: The Section 121 exclusion ($500k for married filing jointly) can apply to the portion of your gain attributable to the years it was your primary residence. Any remaining gain - particularly the portion from the rental years and depreciation recapture - could potentially be handled through a 1031 exchange. A few critical considerations for your planning: 1. Get a professional appraisal when you convert to rental to establish the basis split between personal and rental use 2. Keep meticulous records of all rental income, expenses, and depreciation 3. The depreciation recapture will be taxed at 25% regardless of the exclusion 4. Consider whether your total expected gain even warrants the complexity of a 1031 exchange Given the stakes involved, I'd strongly recommend consulting with a tax professional who specializes in real estate transactions. They can run the numbers and help you determine if the 1031 complexity is worth it for your specific situation, or if the primary residence exclusion alone might handle most of your tax liability.

Has anyone actually successfully achieved "trader tax status" with the IRS? I keep hearing mixed things about whether day trading qualifies as a "business" or just as investment activity.

Great discussion here! I'm dealing with a similar situation and want to add a few considerations that might help others: One thing to really think about is the timing of setting up your business structure. If you're planning to elect Mark-to-Market status (Section 475), you need to make that election by April 15th of the year it takes effect, and it's generally easier to do this when you first establish your trading business rather than switching later. Also, don't forget about state taxes in your decision. Some states have different rules for S-Corps vs LLCs, and if you're doing well with trading, state tax implications could be significant depending on where you live. From my research, the "reasonable salary" requirement for S-Corps is probably the trickiest part. The IRS doesn't publish specific guidelines for traders, so you really need documentation showing what comparable professionals earn. I've seen suggestions ranging from 40-60% of net trading income as salary, but definitely get professional advice on this. One last thing - make sure whatever structure you choose, you're keeping meticulous records. Trading businesses get audited more frequently than other types of businesses, so having everything properly documented from day one is crucial.

Am I the only one who thinks it's absolutely ridiculous that Robinhood references boxes that don't exist on their actual forms?? Every year I go through this same confusion. Why can't they just format their 1099bs like everyone else??? Or at least include a guide that matches THEIR form instead of some standard form they don't actually use!

I completely understand your frustration with the Robinhood 1099-B format! I went through this exact same issue this year and it drove me crazy too. After digging through everything, I finally figured out that what they call "box 12" is actually the "Basis Reported to IRS" information that appears in the transaction details section as a Y/N column. The key thing to understand is that Robinhood consolidates everything into their own format instead of using the traditional 1099-B layout with numbered boxes. When tax software or instructions reference "box 12," they're asking whether your cost basis was reported to the IRS - which you can find by looking at that Y/N indicator column in your transaction details. If you see mostly "Y" entries, it means Robinhood reported your cost basis to the IRS and you can use their numbers directly on Schedule D. Just make sure to also account for any wash sale adjustments that are shown in another column. Hope this helps clear up the confusion!

Has anyone actually received a 1099-R that correctly shows only the gain as the taxable amount? My experience with 3 different insurance companies is they always put the full amount in box 2a (taxable amount) and you have to file Form 1040 with an adjustment.

This is really helpful information everyone! I'm in a similar situation with a policy my parents bought for me. One thing I'd recommend is requesting a "cost basis statement" or "tax basis report" directly from your insurance company before surrendering. Most major insurers can provide this and it shows exactly what your basis is (total premiums paid minus any dividends received in cash). When I called my insurance company, they were able to email me this statement within 24 hours, and it made the tax calculation crystal clear. The statement showed my basis as $4,200 and surrender value as $4,850, so I knew I'd only owe taxes on $650. Also, if you're planning to surrender soon, consider the timing. If you surrender early in the year, you'll have more time to plan for the tax liability. If you surrender late in December, you might want to wait until January if the tax hit would push you into a higher bracket for the current year.