I just wanted to chime in as someone who's been through this exact scenario multiple times. Code "B" is absolutely the right choice for your situation - when your 1099-B shows that cost basis wasn't reported to the IRS, that's exactly what Code "B" is designed for. One thing that might help ease your mind: this is actually a very common situation, especially with certain brokers who don't report cost basis for all types of transactions. The IRS is completely used to seeing Code "B" on Form 8949, and as long as you have your purchase records to support the cost basis you're reporting, you're in good shape. I'd also recommend double-checking your math before submitting - make sure the gain/loss you calculate by subtracting your cost basis (column e) from the proceeds (column d) makes sense based on what you remember about those trades. It's an easy way to catch any data entry errors before filing. You're doing everything correctly by selecting Box B at the top and using Code "B" for each transaction. Don't let the complexity of the instructions psych you out - your situation is straightforward and you've got all the information you need to file accurately.

I've been dealing with this same issue and wanted to share what I learned from my tax preparer. When your 1099-B shows "basis not reported to IRS," you're absolutely on the right track with Code "B" in column (f). One thing that helped me understand this better: the reason your broker didn't report the cost basis to the IRS is often because they don't have complete records of when you originally purchased the stock (maybe you transferred it from another broker, or it was gifted/inherited, etc.). But since YOU have the purchase information, you're required to report it yourself on Form 8949. The key is making sure you have documentation to back up the cost basis you're reporting. Keep your purchase confirmations, transfer statements, or whatever records show how you arrived at that cost basis number. Also, just a heads up - if any of these transactions resulted in losses and you have similar stocks, double-check that you're not dealing with wash sale rules. That would require a different code and adjustments in column (g). But for straightforward unreported basis situations like yours, Code "B" is definitely the way to go.

One thing to consider - the excise tax is only $2.10 (6% of $35), which is less than the $25 processing fee for withdrawing the excess. Financially, you made the right call. If I were you, I would: 1. Answer "No" to FreeTaxUSA's question about withdrawing the excess 2. Make sure Form 5329 is included with your return (the software should handle this) 3. Pay the small excise tax now 4. Keep documentation from your HSA custodian showing the recharacterization 5. When filing next year, be aware that your 2025 contribution limit effectively includes this $35 The most important thing is proper documentation. As long as you have proof of what happened and report it accurately, you'll be fine!

Great advice from everyone here! I just want to add one more thing that might help - when you're dealing with HSA overcontributions in the future, timing really matters. If you catch the error before your tax filing deadline (including extensions), you can withdraw the excess contribution AND any earnings on it without penalty. But once you file your return, you're locked into either paying the 6% excise tax or dealing with more complex correction procedures. For your current situation, you've already made the right choice given the circumstances. The $2.10 excise tax is definitely better than the $25 processing fee, and you avoided the hassle of dealing with earnings calculations. Just make sure to adjust your HSA contributions for 2025 to account for that $35 that's being applied to next year's limit!

As a newcomer to this community, I have to say this thread has been incredibly educational! I'm currently going through a refinance on my 2016 mortgage and my lender mentioned something about "grandfathering" but didn't really explain what it meant for taxes. After reading everyone's experiences here, I'm definitely going to make sure my tax preparer understands these rules. It sounds like Sofia's situation could happen to anyone, and the difference in deductions could be significant for larger mortgages. One question for the group - should I be asking my mortgage lender for specific documentation about the grandfathering status when I close on my refinance? Or is it enough to just keep my original loan documents from 2016 along with the new refinance paperwork? Thanks to everyone who shared their knowledge and resources. This is exactly the kind of real-world guidance that's so hard to find elsewhere!

As someone who just joined this community, I'm blown away by how helpful and detailed everyone's responses have been! This thread perfectly demonstrates why I was drawn to this community in the first place - real people sharing actual experiences with complex tax situations. Sofia, I'm glad you got the clarification you needed about your grandfathered status. It's honestly shocking that your CPA got this wrong, especially since the rules around mortgage refinancing and grandfathering are so clearly laid out in IRS publications. This thread has made me realize I should probably double-check my own tax preparer's work more carefully. What strikes me most is how many people have similar stories about tax preparers misunderstanding these mortgage interest deduction rules. It makes me wonder how many taxpayers are missing out on legitimate deductions simply because their preparers aren't staying current with all the nuances of tax law changes from the Tax Cuts and Jobs Act. Thanks to everyone who shared resources like Publication 936 citations and practical tools. As a newcomer, having these specific references and real-world examples is invaluable for understanding not just this issue, but how to research and verify tax advice in general. This community is definitely a goldmine for navigating complex government services and tax situations!

Anyone know if Qualified Terminable Interest Property (QTIP) trusts have different tax rules? My spouse and I are updating our estate plan and our attorney mentioned QTIP but I'm not sure about the tax implications.

One thing to consider that hasn't been mentioned much is the "throwback rule" for complex trusts. If a trust accumulates income for several years and then makes a large distribution to beneficiaries, the IRS can "throw back" that income to prior years and tax it at higher rates, plus add interest charges. This can create a nasty surprise for beneficiaries who receive distributions from trusts that have been accumulating income. Also, watch out for state tax implications - some states don't recognize grantor trust status and will tax trust income at the state level even if it's flowing through to you federally. Others have no state income tax on trusts at all. The state where the trust is established, where the trustee resides, and where beneficiaries live can all potentially create tax obligations. If you're thinking about funding the trust with appreciated assets, remember that trusts don't get a stepped-up basis like inherited property does. So if you put stock worth $100k (that you bought for $20k) into a non-grantor trust, and the trust later sells it, the trust pays capital gains tax on the full $80k gain.

I just want to echo what others have said about TurboTax being able to handle this situation - I used it for a similar multi-state move from Michigan to Florida last year and it worked great. The software really does walk you through everything step by step. One additional tip I haven't seen mentioned yet: when you're entering your information, pay close attention to the "income allocation" screens. TurboTax will ask you to confirm how much income was earned in each state based on your move date. Double-check these numbers against your pay stubs to make sure the allocation looks reasonable - this is where you can catch any errors before filing. Also, don't be surprised if your Arizona return shows you owe a small amount even after withholding. This happened to me with Florida (well, Florida doesn't have income tax, but with Michigan) - sometimes the withholding calculations don't perfectly align with part-year resident tax calculations. It's usually not a big amount if your employer was withholding at reasonable rates. The whole process took me about 2 hours using TurboTax, including time to gather documents and double-check everything. Way less stressful than I expected!

I've been through a very similar situation and can definitely relate to the stress you're feeling! Moving mid-year and dealing with multi-state taxes for the first time is overwhelming, but it's actually much more manageable than it seems initially. You're absolutely correct that you'll need to file part-year resident returns in both Colorado and Arizona. Colorado will tax the income you earned while living there (January through July), and Arizona will tax income earned while you were an Arizona resident (July through December). Your suspicion about the continued withholding being wrong is likely spot-on - this is an extremely common payroll mistake. The good news is that when you file your Colorado part-year return, you should get a refund for any taxes they withheld on income earned after you moved to Arizona. I had a similar situation when I moved from Ohio to Tennessee, and I got back almost $1,800 in incorrectly withheld taxes. Don't worry about the Box 16 amounts not matching Box 1 - this is completely normal because states have different rules about what constitutes taxable income. Some items that are federally taxable might not be state taxable and vice versa. TurboTax can definitely handle your situation. When you get to the state section, you'll indicate that you moved during the year and it will guide you through allocating income between the states based on your move date. Just make sure you have your exact move date ready - the software does all the calculations from there. One tip: keep documentation of your move date (lease agreements, utility connections, etc.) just in case, though it's rarely needed for electronic filing. The whole process seems scary but once you start, you'll see it's quite straightforward!