This is such a helpful thread! I was making the exact same mistake - I kept trying to use my take-home pay as the starting point for tax calculations because that's what I actually "received." But reading through everyone's explanations, it's clear that the IRS works backwards from gross income. What really clicked for me was understanding that my W-2 Box 1 is already a partially processed number - it's my gross income with certain pre-tax deductions already removed. So when I start my tax return with that Box 1 amount, I'm not starting with true gross income, but I'm also not starting with net income. It's this middle ground that represents my taxable wages before standard/itemized deductions. I think the confusion comes from thinking about our paychecks, where we see gross pay, then a bunch of deductions, then net pay. But tax returns don't follow that exact same flow since some of those paycheck deductions are already baked into the W-2 numbers we use.

This thread has been incredibly helpful! I work in payroll and see this confusion constantly with employees who don't understand why their tax calculations don't match their paycheck math. One thing I'd add that might help clarify: when you look at your final pay stub of the year, the year-to-date (YTD) gross pay amount is your true gross income. But your W-2 Box 1 will often be lower because it reflects gross pay minus pre-tax deductions like 401(k), health insurance, HSA contributions, etc. So the flow is: True Gross → W-2 Box 1 (gross minus pre-tax stuff) → AGI (Box 1 minus other adjustments) → Taxable Income (AGI minus standard/itemized deductions) → Tax calculation. The key insight is that you never actually use your "net" or take-home pay in tax calculations. Net pay is just what's left after taxes are withheld, but those withholdings are estimates that get reconciled when you file your return.

My dad sold a life insurance policy last year and we had to deal with the 1099-LS too. One thing to watch out for - if the policy had any outstanding loans against it, those affect the basis calculation. The loan amount that was forgiven as part of the sale is treated differently than the rest of the proceeds.

I'm dealing with a similar situation helping my neighbor with their taxes. One thing I discovered is that you should also check if your relative received any accelerated death benefits while the policy was still active - those would have been reported on a 1099-LTC and could affect the basis calculation for the 1099-LS. Also, make sure to look at Box 1 vs Box 2 on the 1099-LS form carefully. Box 1 shows the gross proceeds, but Box 2 shows the amount that may be excludable from income (like if there were any qualified distributions). The taxable amount for Schedule D would be Box 1 minus Box 2. Given the $47,000 amount you mentioned, this could have a significant tax impact, so it might be worth having a tax professional review it before filing, especially since this is your first time dealing with this type of form.

Has anyone else noticed that the 1095-A forms are weirdly confusing for marketplace plans? Like why don't they just issue the form to the person who's actually covered by the insurance? I had a similar issue last year and ended up just having the policy holder (my partner) claim everything and then we split the refund/payment based on our agreement. Not technically correct probably but way simpler than doing the allocation.

I just went through this exact situation last month! My mom received the 1095-A but I was the only one covered on the policy, and we file separately. Option A is definitely the way to go. Both you and your dad need to file Form 8962, but with the allocation percentages showing 0% for him and 100% for you. This is actually pretty straightforward once you understand what's happening - you're just telling the IRS who gets to claim which portion of the policy. A few things that helped me: - Make sure you both use the exact same allocation percentages (0%/100%) - You'll need each other's SSNs for Part IV of Form 8962 - Your dad's form will basically show zeros for everything after allocation, but he still needs to file it - Only your income matters for the premium tax credit calculation since you're getting 100% allocation The income difference between you and your dad won't mess anything up because once the allocation is done, his income is completely out of the equation. Your premium tax credit will be calculated based solely on your income and household size. Don't let the allocation part intimidate you - it's really just paperwork to clarify who gets what. The actual tax credit calculation happens separately for each person based on their allocated percentage.

One thing I haven't seen mentioned yet is quarterly estimated tax payments. Since your husband received a 1099-NEC and will owe self-employment tax on that $2,700, you might want to consider making quarterly estimated payments next year if he continues doing similar work. The IRS generally expects you to pay taxes as you earn income throughout the year, not just at filing time. If he does another internship or freelance work in 2025, you'll want to calculate roughly what he'll owe in self-employment and income taxes and make quarterly payments to avoid underpayment penalties. For this year's return though, you should be fine just paying everything when you file since this was likely unexpected income. But definitely keep it in mind for future planning - especially if he's in a field where internships and freelance work might be common during his remaining school years.

I went through this exact same situation with my daughter's marketing internship last year! The 1099-NEC definitely threw me for a loop at first too. Everyone here is giving you solid advice about Schedule C being the right approach. One thing that really helped us was keeping detailed records of ALL expenses related to the internship - even small things like parking fees, gas for commuting, and work-related meals. We also claimed a portion of our home internet since she did some remote work. TurboTax's interview process for Schedule C is actually pretty thorough in asking about potential deductions you might not think of. The self-employment tax was definitely a surprise (that 15.3% really adds up!), but between the deductions and the fact that your husband is a student, you might also qualify for education credits that can help offset some of that burden. Make sure you're claiming the American Opportunity Tax Credit if you haven't already - it can be worth up to $2,500. Don't stress too much about it - the fact that you're being careful and asking questions means you're on the right track. TurboTax will handle all the form generation once you input the information correctly.

This is exactly what happened to me last year! Got a CP24 notice in July saying I was owed a $1,247 refund for my 2022 taxes, but when I dug through my bank records, they had already deposited that exact amount back in May. The timing disconnect between their refund processing and notice generation systems is so confusing. I spent way too much mental energy worrying about whether I needed to do something or if they'd accidentally send me duplicate money. Turns out it was just their clunky way of saying "hey, we already fixed your return and sent you the correct amount." What helped me was logging into my IRS online account and seeing that my balance was zero with no pending transactions. That confirmed everything was squared away. I kept the CP24 notice filed with my tax documents for that year, but never had to take any action on it. It's frustrating how these notices are written in a way that creates unnecessary anxiety, but at least now I know what to expect if it happens again in future tax years!

I'm going through the exact same thing right now! Just got my CP24 yesterday saying I'm owed $2,847.22, but when I checked my account, that's exactly what they deposited back in March. The notice is dated June, so it definitely came after the refund. Reading through everyone's experiences here is such a relief - I was worried I'd messed something up or that they'd accidentally send me duplicate money and then demand it back later. It's crazy how their different systems don't sync up properly and create all this unnecessary confusion. I'm definitely going to check my IRS online account like several people suggested to make sure everything shows as balanced. And I'll keep this notice with my tax records just in case. Thanks everyone for sharing your stories - makes me feel so much better knowing this timing issue is super common and not something to stress about!