Just a heads up that HR Block and TurboTax both handle these 1099-R Code G situations pretty well. If you use either software, they'll walk you through the right questions to determine what type of transaction it was and how to report it.

I had a very similar situation last year and it turned out to be exactly what others have mentioned - an in-plan Roth conversion that I had completely forgotten about! The key thing to remember is that when you convert traditional 401k money (which was contributed pre-tax) to Roth 401k money (which grows tax-free), you have to pay income tax on the converted amount. That's why you're seeing a taxable amount in box 2a even though you didn't "withdraw" anything. Code G on a 1099-R doesn't always mean a traditional rollover between different accounts. It can also indicate in-plan conversions, automatic plan transfers when providers change, or other internal movements of retirement funds. Since you mentioned finding paperwork about "optimizing your retirement tax strategy," this almost certainly sounds like an in-plan Roth conversion. The good news is there's no early withdrawal penalty - you just need to include that amount as taxable income for the year. Make sure to report the 1099-R correctly on your tax return, and consider setting aside money for the tax bill if you haven't already. Definitely confirm with your plan administrator, but this sounds very straightforward once you know what happened!

Since you're in Texas specifically, I wanted to mention that while we don't have state income tax (which is amazing), you might still have some local tax considerations depending on your situation. Some cities require permits or have special local taxes for certain types of businesses. Also, if you're doing any kind of physical product sales with your 1099 work, don't forget about sales tax collection requirements - that catches a lot of people by surprise here.

For most consulting services in Texas, you typically don't need special permits at the state level, but it can vary by city and county. Since you're doing remote consulting, you're probably fine, but I'd recommend checking with your local city clerk's office just to be safe. The main thing to consider is whether you need a general business license in your city - some require it for any business activity, even if it's just consulting from home. Also, if you're using a business name that's different from your legal name, you might need to file a DBA (Doing Business As) with your county. For tax purposes though, none of this changes your 1099 obligations. You'll still need to set aside that 30-35% regardless of permits. The good news is that any business license fees or permit costs are tax-deductible business expenses!

I'm a new government employee and this thread has been incredibly helpful! I've been maxing out my TSP (the federal equivalent of a 401k) and had the exact same concerns about Social Security credits. What really sealed it for me was when I called the SSA directly (took forever to get through) and the representative confirmed that TSP contributions work the same way as 401k contributions - they're subject to FICA taxes but not income taxes. So my full salary counts toward Social Security quarters and future benefits calculations. For anyone else in federal service reading this, the rules are identical. Your TSP contributions don't hurt your Social Security credits at all. I was worried I was being too aggressive with my TSP contributions in my first year of federal employment, but now I realize I'm actually setting myself up perfectly for retirement with both a robust TSP account AND full Social Security credits. One tip: if you're having trouble getting through to SSA like I was, the online my Social Security account at ssa.gov is really helpful for verifying that your earnings are being properly recorded. You can see your complete earnings history and confirm that your full wages (including retirement contributions) are showing up correctly.

This thread has been incredibly educational! I work in benefits administration for a mid-size company and this question comes up constantly during our 401(k) enrollment meetings. What I always tell employees is to think of it this way: your 401(k) contribution is like money that's "invisible" to the IRS for income tax purposes, but completely "visible" to Social Security. The Social Security system doesn't care that you chose to defer some income for retirement - it still counts that money as earnings for your quarters of coverage and future benefit calculations. I've seen so many employees unnecessarily reduce their 401(k) contributions because they were worried about Social Security credits, especially younger workers who are just starting their careers. It's unfortunate because they're missing out on years of tax-advantaged growth for no reason. For anyone reading this who's still uncertain, I'd recommend looking at your most recent paystub. You'll see that FICA taxes (Social Security and Medicare) are calculated on your gross wages before any 401(k) deduction. That's your visual confirmation that the entire amount counts for Social Security purposes. Keep maximizing those retirement contributions - you're building wealth on multiple fronts!

Welcome to the community! As someone who's helped many taxpayers navigate this exact situation, I can assure you that your concerns are completely understandable but likely unnecessary. The key thing to remember is that the IRS distinguishes between personal property sales and business income. When you sell personal items like your laptop, clothes, and household goods for less than you originally paid, you're realizing what's called a "personal loss" - and personal losses on items used for personal purposes aren't taxable events. Here's my recommended approach for your situation: **For items already sold:** Create a simple spreadsheet documenting each sale. Include the item description, your best estimate of the original purchase price, the actual sale price, and approximate purchase/sale dates. For items like electronics, you can often find historical pricing information online or use current retail prices as a baseline (most electronics depreciate significantly over time). **For documentation:** While receipts are ideal, the IRS accepts reasonable estimates backed by logical methodology. For that $1200 laptop sold for $400, that's clearly a loss - technology depreciates rapidly and the IRS understands this. **Tax reporting:** When you receive your 1099-K, you'll report it as income but then offset it by documenting these were personal items sold below their cost basis. Most modern tax software has specific workflows for this scenario now. The bottom line: You're decluttering and taking losses on personal property. The IRS isn't interested in taxing those transactions. Just keep reasonable records and don't stress about perfect documentation for every small item!

Welcome to the community! Your situation is incredibly common and I completely understand the anxiety around this new reporting requirement. As someone who's been through this exact scenario, let me put your mind at ease. The most important thing to understand is that selling personal items at a loss is NOT taxable income. When you sell that $1200 laptop for $400, you're not making $400 in profit - you're actually taking an $800 loss on a personal item. The IRS recognizes this distinction. Here's what I recommend for your peace of mind: **Start documenting now:** Create a simple spreadsheet with columns for item description, estimated original cost, sale price, sale date, and platform used. Even without receipts, reasonable estimates are perfectly acceptable. **For original price estimates:** Use current retail prices for similar items and adjust downward. For electronics especially, you can often find historical pricing data online. A 3-year-old laptop selling for 1/3 of its original price is completely normal depreciation. **The 1099-K reality:** Yes, you'll receive these forms, but they're just reporting tools. When you file your taxes, you report the 1099-K income and then document that these were personal items sold below cost. Most people in your situation end up with zero additional tax liability. **Keep it simple:** For small items like clothes, you can group similar items together rather than documenting every individual piece. The IRS isn't trying to catch people decluttering their homes - they're targeting actual businesses that aren't reporting properly. Your casual selling activity is exactly what the personal property exemption is designed for. Don't let tax anxiety stop you from decluttering!

I just wanted to add my experience to this helpful discussion! I was in the exact same boat last year - on Medicaid for several years and completely confused when my tax software suddenly started asking about Form 1095-A. I actually delayed filing my taxes for almost a month because I was convinced I was missing something important! After reading through all the great explanations here, I want to emphasize one key point that really helped me understand: the tax software companies are required to ask comprehensive health insurance questions to cover every possible scenario, which is why they ask EVERYONE about 1095-A forms, even people like us on Medicaid who will never receive one. The bottom line is simple: if you only have Medicaid coverage, you can confidently answer "No" when asked about receiving a 1095-A form and continue filing normally. Medicaid fully satisfies all health insurance requirements under the ACA. I filed successfully this way and received my refund without any issues. Don't let the generic software questions stress you out - you have everything you need to file your taxes! This community thread has been incredibly helpful for clearing up what seems to be a very common source of confusion.

I'm so glad I found this thread! I'm a tax preparer and I see this exact confusion with Medicaid clients every single tax season. You absolutely do NOT need Form 1095-A if you only have Medicaid coverage. That form is exclusively for marketplace insurance purchased through Healthcare.gov or state exchanges. Here's what's happening: Tax software companies are legally required to ask about all possible tax scenarios, so they ask EVERYONE about 1095-A forms even though most people don't need them. It's frustrating because they don't explain this context. For Medicaid recipients like yourself: Simply answer "No" when asked about receiving a 1095-A and continue filing. Your Medicaid coverage satisfies all health insurance requirements. You might receive a 1095-B form for your records, but you don't need to wait for it or attach it to your return. The reason you didn't encounter this in previous years is likely because tax software has become more comprehensive in their questioning, but the actual tax rules for Medicaid haven't changed. You're perfectly fine to file your taxes right now with just your standard documents!