Has anyone actually called the IRS helpline about this? I had almost the exact same situation and they were surprisingly helpful in explaining the process.

I went through this exact same situation last year and ended up working with a tax professional who specializes in HSA issues. One thing that helped me was understanding that the IRS Publication 969 actually has specific examples for excess contribution corrections when there are losses instead of gains. The key point everyone seems to be missing is that you need to be very careful about the timing. If you're already past the tax filing deadline (including extensions), you're stuck paying the 6% excise tax regardless of whether you withdraw the excess. But if you're still within the deadline, the withdrawal approach is definitely the way to go. Also, make sure when you request the excess contribution removal that you specify the exact tax year the excess occurred in. I made the mistake of not being clear about this initially and my HSA provider processed it as a regular distribution, which created even more paperwork headaches. The proportional loss calculation really isn't as complicated as it seems if you have all your statements. Most HSA providers can actually do this calculation for you if you ask the right person - I had to escalate past the first-level customer service to get to someone who understood the process.

Just want to point out that the IRS is actually super backlogged right now. My friend had a similar excess contribution issue from 2022 and didn't get an IRS notice about additional penalties until January 2025 - almost 3 years later! So just because you haven't received a notice doesn't mean you're in the clear. The interest keeps accumulating the whole time, even if they're slow sending the notice. Better to be proactive like you're doing!

I went through something very similar last year and can offer some perspective on the timeline and what to expect. First, yes, you likely do owe additional penalties beyond the $390 excise tax. The failure-to-file penalty for Form 5329 is typically 5% of the unpaid tax per month (up to 25%), and failure-to-pay is 0.5% per month (up to 25%), plus interest compounding daily. For your situation, filing almost 2 years late, you're probably looking at the maximum penalties plus accumulated interest. In my case, a similar delay resulted in about $180 in additional penalties and interest on top of the base excise tax. Regarding the IRS notice - don't count on getting one anytime soon. The IRS is massively backlogged, and many people are waiting 2-3 years for notices on issues like this. The interest keeps accumulating whether they send you a notice or not. My recommendation: Call the IRS directly (or use a service to get through faster) to get the exact amount you owe. Once you have that number, pay it immediately to stop further interest accumulation. You can also explore the reasonable cause exception if this was truly an honest mistake - the IRS sometimes waives additional penalties for first-time errors when you demonstrate good faith efforts to correct the situation. The key is being proactive rather than waiting for them to contact you, which may never happen or could take years.

This is such a comprehensive discussion and exactly what I needed to see! I'm a UK resident dealing with the same 1099 vs 1042-S issue with E*TRADE right now. Reading through everyone's experiences, it's clear this is unfortunately a widespread problem across multiple brokerages, not just Robinhood. The common thread seems to be expired W-8BEN forms that most of us had no idea needed renewing every 3 years. I particularly appreciate the insider perspective from Jace about how these systems work internally - it explains why having a US mailing address can trigger the wrong classification even when you've properly filed your W-8BEN. For anyone else dealing with this: I just called E*TRADE's international department after reading this thread and they confirmed my W-8BEN expired last year. They're processing a new one and promised to issue corrected 1042-S forms within 10 business days. The key was definitely asking for their specialized international team rather than general customer service. One additional tip I'd add - if you're in the UK like me, remember that the UK-US tax treaty reduces dividend withholding to 15% instead of the standard 30%, so double-check that rate on your corrected 1042-S as well. Thanks to everyone who shared their experiences - this thread should be bookmarked by anyone investing in US markets as a non-resident!

As someone who works in tax compliance, I want to emphasize a crucial point that hasn't been fully addressed here - timing matters significantly for this issue. While everyone is focused on getting the correct 1042-S form (which is absolutely the right approach), don't forget about the reporting deadlines on both ends. If you're a non-US resident who received an incorrect 1099, you may still have filing obligations in your home country that need to be met by specific deadlines. Many countries require you to report foreign investment income by certain dates regardless of whether you have the correct US tax forms yet. My recommendation: while you're waiting for Robinhood to issue the corrected 1042-S, gather all your investment statements and transaction records. Calculate your actual dividend income, capital gains, and any US tax that was withheld. You can often file your home country tax return with this information and then amend it later once you receive the proper 1042-S. Also, keep in mind that the incorrect 1099 isn't just a paperwork error - the IRS has a copy of that form too. Make sure when Robinhood issues your corrected 1042-S, they also send a correction to the IRS to avoid any future matching issues. You don't want the IRS thinking you're a US person who failed to report income. This whole situation is exactly why I always recommend non-residents set up a simple tracking system for their US investments rather than relying solely on broker-issued forms.

One thing I haven't seen mentioned yet is the potential for Georgia to change its tax rates in the future. While you're planning this move around the current 4.75% rate, there's always risk that state tax rates could increase over time, especially if you're planning to hold these investments for many more years after the move. Also, consider whether you have any state tax credits or deductions in Georgia that might offset some of the capital gains tax impact. Some states offer various credits that could reduce your effective rate below the statutory 4.75%. Another angle to think about: if this job opportunity in Georgia comes with equity compensation (stock options, RSUs, etc.), you'll want to factor in how Georgia will tax that future income as well. Sometimes it makes sense to optimize your overall tax strategy across multiple types of investment income, not just the current unrealized gains. Finally, make sure you understand Georgia's specific rules about part-year residents. Some states prorate taxes based on the portion of the year you were a resident, which could affect the timing of when you actually need to complete this transaction.

This is exactly the kind of complex tax planning decision where professional advice really pays off, but I can share some insights from a similar move I made a few years ago. One factor that hasn't been fully explored is the opportunity cost of the cash you'll need for the tax payment. If you realize $675k in gains now, you're looking at roughly $101k in federal taxes (assuming 15% LTCG rate). That's $101k that won't be working for you in the market during the time between now and when you would have otherwise sold. However, there's also a psychological benefit to consider - having a stepped-up cost basis on those investments after the sale/repurchase can give you more flexibility in your future investment decisions without being anchored to those old, highly appreciated positions. I'd also suggest running some scenarios where you only realize a portion of the gains now - maybe $300-400k worth - and keep the rest. This could help you optimize the timing while managing the tax impact across multiple years. You might find that partial realization gives you most of the state tax savings while minimizing some of the other complications like NIIT exposure. The key is making sure your residency documentation is absolutely bulletproof for whenever you do make these transactions. Keep detailed records of everything that establishes your Florida residency at the time of sale.

This thread has been incredibly helpful! I'm in a similar situation as the original poster - had some good luck with sports betting apps this year and realized I have no idea what I'm doing tax-wise. One question I haven't seen addressed: what happens if you have a really good year gambling but then lose most of it back in the following tax year? Like if I win $15,000 in 2024 but then lose $12,000 of it in early 2025, I still have to pay taxes on the full $15,000 for my 2024 return, right? Those 2025 losses can't offset the 2024 winnings? Also, for anyone using the betting apps - do they automatically send you tax forms at the end of the year if you hit certain thresholds, or do you have to request your win/loss statements? I've been pretty lucky on FanDuel and DraftKings but haven't gotten any tax documents yet. Thanks to everyone who's shared their experiences here, especially about the record-keeping requirements. Definitely going to start taking screenshots of everything going forward!

Something I want to add that hasn't been covered much - if you're gambling across multiple platforms and casinos, you'll want to consolidate all your records early in the process rather than waiting until tax time. I made the mistake of keeping separate logs for each app and casino, thinking I'd combine them later. Come April, I had scattered records across 4 different betting apps, 2 casinos, and a bunch of handwritten notes from poker games. Trying to reconcile everything into one coherent picture was a nightmare, especially when some dates didn't match up between my bank statements and my gambling logs. Now I update one master spreadsheet every week with all activity from all sources. It takes about 15 minutes but saves hours of headache later. I also take a photo of any physical tickets or receipts immediately and upload them to a dedicated folder on my phone. The key is building the habit before you really need it. When you're having a good run and winning regularly, it's easy to think you'll remember everything or that you'll "figure it out later." Trust me - you won't, and it becomes exponentially harder to reconstruct accurate records as time goes on.