Does anyone use tax software that handles the 4137 form well? I'm struggling with this on FreeTaxUSA. It keeps giving me errors when I try to enter my allocated tips.

As someone who's been doing taxes for restaurant workers for years, I want to add a few important points that might help. First, make sure you're not double-reporting tips that were already included in your W-2 Box 1 wages - this is a common mistake that can lead to overpaying taxes. Second, keep detailed records going forward! A simple phone app or notebook where you track daily cash tips will save you so much stress next year. The IRS expects tip earners to maintain contemporaneous records. Finally, if your total unreported tips are less than $20 per month from any single employer, you don't need to include those on Form 4137. But if you're consistently earning tips, you'll likely be over that threshold. The form might seem intimidating, but once you understand it's just calculating the Social Security and Medicare taxes on unreported income, it becomes much clearer.

Has anyone used the IRS withholding calculator for this? I tried but it seems more designed for W-2 income than retirement accounts. Is there a better calculator specifically for retirees with IRA distributions?

Brady, congratulations on reaching retirement! This is such an important question and you're smart to think about it upfront. I went through this exact same situation about 2 years ago when I started my IRA withdrawals. The 10% default is rarely the right amount for most people. What really matters is your total tax picture - not just the IRA withdrawal itself. You'll want to consider: 1. Your other retirement income (Social Security, pensions, part-time work) 2. Your filing status and standard deduction 3. Any other taxable income or capital gains 4. Your state's tax treatment of retirement income I ended up needing to withhold 20% because I had Social Security and some rental income that pushed me into a higher bracket than I expected. The key is to think about your total annual income, not just the IRA portion. One practical tip: Start conservative your first year. You can always adjust the withholding percentage for future distributions based on how your first tax season goes. It's better to get a refund than owe penalties for underpayment. Have you calculated what your total retirement income will be for the year? That's really the starting point for figuring out the right withholding rate.

This whole thread has been incredibly eye-opening! I'm in a very similar situation - my 22-year-old son took 11 credits each semester at community college and earned about $12,000 working part-time. I've been stressing about this for weeks thinking I'd have to file single and owe a bunch of money. After reading everyone's experiences, I'm realizing I need to do a proper support calculation like Charity and others described. I pay for his housing, food, car insurance, health insurance, phone, and gave him money for textbooks and gas. When I rough-calculate it, I'm probably providing close to $20,000 in support while he maybe spent $3,000-4,000 of his earnings on personal expenses (the rest went into savings for a car). The disability accommodation angle is particularly interesting since my son has documented anxiety and receives testing accommodations. I never thought that could impact the full-time student requirement for tax purposes. I'm also impressed by how many people found success with both the AI tax analysis tool and the IRS callback service that were mentioned. It sounds like there are definitely more resources available than I realized for these edge cases. Has anyone dealt with a situation where the community college initially said 11 credits wasn't full-time, but then provided documentation showing it was appropriate for a student with accommodations? I'm wondering if it's worth reaching out to my son's disability services office before I file.

I'm new to this community but wanted to share what I learned after going through a nearly identical situation last year. My 21-year-old was taking 11 credits per semester (one short of full-time) and earning about $9,500 from a part-time job. The game-changer for me was understanding that the support test is about what they actually spend on living expenses, not their total income. I tracked every dollar - housing, utilities, food, insurance, phone, etc. Even though my son earned decent money, he was only spending about $2,800 of it on actual support (mostly gas and occasional meals out). The rest went to savings. Meanwhile, I was providing over $19,000 in support. What really surprised me was learning about the disability accommodation exception that Justin mentioned earlier. My son has documented ADHD, and when I contacted his college's disability office, they provided a letter stating that his 11-credit course load was considered full-time equivalent given his accommodations. This was crucial for the student status requirement. I also used both tools mentioned in this thread - taxr.ai helped me understand the specific IRS rules that applied to my situation, and Claimyr got me through to an IRS agent who confirmed my interpretation. Between the proper support calculation and the disability documentation, I was able to file head of household and save over $4,000. Jackie, definitely explore the disability accommodation angle if your son has any documented conditions requiring accommodations. And don't forget to calculate actual support provided vs. what your kids spend on their own living expenses - the numbers might surprise you!

I'm dealing with a very similar situation as trustee for my grandmother's estate, and this thread has been incredibly helpful! One thing I'd add from my recent experience is to make sure you understand your state's specific trust accounting requirements early on. In my state (Colorado), I discovered that trustees are required to provide annual accountings to beneficiaries that clearly separate trustee compensation from expense reimbursements. I wish I had known this from the beginning because I had been lumping everything together in my informal tracking. For the car rental situation specifically, what helped me was creating a simple spreadsheet with columns for: Date, Rental Period, Trust Business Conducted, Miles Driven, and Total Cost. This made it really easy to show the connection between each rental expense and specific trust administration activities when I prepared my formal accounting. Also, don't forget that some rental car insurance and gas costs might also be reimbursable trust expenses if they were incurred for trust business. I initially thought I could only claim the base rental cost, but my attorney confirmed that reasonable associated expenses are typically covered too. The peace of mind from having everything properly documented is worth the extra effort upfront!

The consensus here is spot-on - legitimate expense reimbursements from a trust are not taxable income to you as the trustee. The $9,500 in rental car costs you mentioned should be fine as long as they were necessary for trust administration and you can document the business purpose. A few additional points to consider: First, make sure you're creating clear paper trails going forward. Write separate checks or make separate transfers for trustee fees versus expense reimbursements, and note the purpose on each transaction. Second, since you've already incurred these expenses, gather all your rental receipts and create a detailed log showing dates, destinations, and what trust business you conducted each day. The fact that you have a good relationship with the other beneficiary is great, but don't let that tempt you to cut corners on documentation. Proper accounting protects both of you and is typically required by state law regardless of everyone's current agreement. One practical tip: going forward, consider whether the standard IRS mileage rate might work better for your situation. At 67 cents per mile, it might be more cost-effective than continued rentals, plus the documentation is simpler (just track mileage and business purpose). But for the expenses you've already incurred, focus on getting them properly documented and reimbursed through the trust's formal accounting process.

This has been such an educational thread! As someone who's been running a small consulting business as a sole proprietorship but considering the S-Corp election, reading through all these experiences has really highlighted how important it is to understand the fiscal year implications upfront. Emma, I'm glad you got everything sorted out! The confusion you described is exactly what I'd be worried about facing. It sounds like the key takeaways are: 1) file for the tax year when your fiscal year ends, 2) don't forget about the different quarterly payment schedules, 3) check state requirements separately, and 4) keep good records/calendars to track all the deadlines. One question for the group - for those of you who switched from sole proprietorship to S-Corp, did you find that having a fiscal year (vs. calendar year) actually provided meaningful business benefits? I'm trying to weigh whether the added complexity is worth it for the potential tax planning advantages, or if I should just stick with a calendar year S-Corp to keep things simpler. The resources mentioned here (Publication 538, the IRS Business Tax Calendar) are definitely going on my reading list before I make any decisions. Thanks everyone for sharing such detailed real-world experiences!

As someone who just went through this exact situation with my small architecture firm, I can definitely relate to the confusion! The fiscal year vs. tax year terminology really throws people off at first. One thing that helped me understand it better was thinking of it this way: the IRS doesn't care when your fiscal year *started* - they only care when it *ended*. So your June 30, 2024 fiscal year end means you're filing a "2024" return, even though that fiscal year actually began on July 1, 2023. The tricky part I ran into was making sure all my depreciation schedules and business deductions aligned properly with the fiscal year dates. I'd definitely recommend double-checking that your accounting software is set to your fiscal year dates rather than calendar year, especially for things like equipment purchases and business expenses that need to be allocated correctly. Also, since you mentioned this is only your second year with this setup, make sure you're keeping good documentation of when you adopted the fiscal year. The IRS sometimes asks for this information during audits, and having clean records from the beginning makes everything much smoother down the road.