Did anybody mention TSP loans? Since you're working for the federal government now, once you've been contributing to your TSP for a while, you can take loans from it without the tax penalties of an early withdrawal. Interest rates are pretty reasonable too, and you pay the interest to yourself. Might be something to consider for future needs rather than tapping retirement accounts and paying penalties.

Hey Freya! I was in a similar situation a couple years back with an old 403b from a teaching job. One thing I learned that might help - since you're now a federal employee, you might want to consider if you qualify for any of the hardship exceptions that could waive the 10% penalty. Things like unreimbursed medical expenses, higher education costs, or even certain unemployment situations can qualify. Also, don't forget about state taxes! Depending on which state you're in, you could owe anywhere from 0% to 10%+ on top of federal taxes. Some states don't tax retirement distributions at all, while others treat them as regular income. The partial rollover idea mentioned earlier is really smart too - you could roll most of it into your TSP (yes, you can roll a 403b into TSP!) and just take out what you absolutely need in cash. That way you minimize the tax hit while still getting some immediate funds. Just make sure to get everything in writing from your 403b administrator about exactly how much will be withheld and when you'll receive the funds. Some plans can take weeks to process distributions.

Great question! I just went through this exact scenario last year. Refinancing itself doesn't directly impact your capital gains calculation - what matters is your cost basis (purchase price + qualifying improvements + certain costs) versus your sale price. The key thing to understand is that if you do a cash-out refinance, HOW you use that money makes all the difference: - Use it for home improvements (kitchen, bathroom, roof, etc.) = increases your basis and reduces future capital gains - Use it for non-home expenses (debt consolidation, investments, etc.) = no impact on basis Since you mentioned you've built up good equity over 7 years, you'll likely qualify for the primary residence exclusion ($250K single/$500K married) if you've lived there 2+ years. Just make sure to keep detailed records of any improvements you make with refinance proceeds. Your mortgage broker was right about documentation - keep all settlement statements, improvement receipts, and contractor invoices. The IRS can ask for proof of your basis calculation even years later.

Just wanted to add one important point that might help with your refinancing decision - timing matters for the capital gains exclusion! Since you've owned your home for 7 years, you're well within the "2 out of 5 years" primary residence requirement. But if you're planning to sell in 2-3 years, make sure you don't accidentally disqualify yourself by moving out too early. Also, regarding documentation your broker mentioned - beyond keeping refinance paperwork, I'd suggest starting a "house file" right now with: - Original purchase documents - All refinance settlement statements - Every improvement receipt (even small ones add up!) - Photos before/after major renovations - Contractor invoices and permits I learned this the hard way when my accountant asked for documentation of improvements I'd made 5 years prior. Having everything organized ahead of time will save you major headaches when it's time to calculate your actual gain. The peace of mind alone is worth the effort!

This is a common confusion. LLCs are state-level entities, but how they're taxed is a federal matter. The IRS doesn't actually recognize LLCs directly - they look at how you operate. Since you have 2 people sharing profits, the IRS considers it a partnership regardless of state paperwork. Filing Schedule C is ONLY for sole proprietors. Your partner's CPA is correct - you need Form 1065. By the way, you should definitely amend that LLC registration too.

Just wanted to add some clarity on the TurboTax question - when you're preparing a partnership return (Form 1065), you'll actually need TurboTax Business, not the individual version. In TurboTax Business, you select "Partnership" as your business type, then indicate it's an LLC taxed as a partnership. The software will walk you through entering both partners' information and generating the required K-1 forms for each partner. One important note: make sure you have an EIN (Employer Identification Number) for the partnership before you start filing. Even if your LLC originally had an EIN as a single-member entity, you may need a new one now that it's being treated as a partnership for tax purposes. The IRS website has a clear guide on when you need a new EIN versus keeping your existing one.

One important thing nobody mentioned yet - if you're filing electronically, you need to make sure you're using the right form! The IRS has been phasing out 1099-MISC for nonemployee compensation and now requires 1099-NEC for contractor payments. 1099-MISC is still used for other types of payments like rent, prizes, etc. Made this mistake last year and had to refile everything 😭

Just want to add another perspective on electronic filing options! I've been helping small businesses with their 1099 filings for years, and here's what I've found works best: For someone with 8 contractors like you mentioned, I'd definitely recommend going with a reputable tax software or third-party service rather than trying to navigate the IRS FIRE system directly. The learning curve and time investment just isn't worth it for that volume. A few additional tips that might help: - Make sure you have all your contractors' correct legal names and TINs BEFORE you start filing. Mismatched information is the #1 cause of rejections. - Keep digital copies of all the 1099s you send to contractors - you'll need them for your own tax return. - If you use accounting software like QuickBooks, make sure it's the version that includes 1099 e-filing. The basic versions sometimes don't have this feature. Also, don't stress too much about the electronic vs paper distinction - the IRS actually processes electronic returns much faster and with fewer errors. You made the right choice switching away from paper filing! The electronic confirmation you get when filing is also really helpful for your records.

I think most people are overlooking something important - the $47,000 in renovations mentioned in the original post. Those receipts are GOLD when calculating your adjusted basis! Make sure you've kept meticulous records of EVERYTHING you've done to improve the property. Not just the obvious renovations, but also: - Roof repairs - HVAC upgrades - Plumbing or electrical work - Window replacements - Landscaping improvements (if they add value) - Deck or patio additions I had a client who nearly forgot about $23,000 in windows and insulation they'd added over the years. That significantly reduced their taxable gain. Also, don't forget to include closing costs from when you purchased as part of your basis, and selling costs (commissions, etc.) as deductions from the sale price.

As someone who works in real estate tax consulting, I want to emphasize a key point that might provide additional peace of mind: the FIRPTA withholding requirement has specific safe harbors built in precisely for situations like yours. Since you're selling your primary residence and the sales price is likely under $1.1 million (based on your mention of the $500k capital gains exclusion being relevant), there's actually a buyer's exemption that can apply. If the buyer is acquiring the property as a residence and the purchase price is $1.1 million or less, they're not required to withhold under FIRPTA even if you were considered a foreign person (which you're not as a green card holder anyway). This creates a double layer of protection in your situation. However, I'd still recommend getting the proper documentation from your title company to avoid any confusion or delays at closing. One practical tip: when you compile those renovation receipts, organize them chronologically and create a simple spreadsheet showing the date, description, and amount for each improvement. This will make things much smoother for both the closing and your tax return preparation. The IRS loves organized documentation, and it shows you're taking the reporting requirements seriously.