Just to add a small clarification that might help - there's also a separate ordering rule for Roth IRA withdrawals that determines what comes out first: 1) Regular contributions come out first (always tax and penalty free) 2) Conversion contributions come out next (might be subject to penalties if within 5 years of conversion and under 59½) 3) Earnings come out last (subject to tax and possibly penalties if you don't meet requirements) Since you're over 59½ and if your first Roth contribution was indeed in 2019, then starting in 2024, everything comes out tax and penalty free including earnings. This assumes 2019 was truly your first-ever Roth IRA.

This is a really helpful discussion! I wanted to add one more consideration that might be relevant for your planning. Even though you'll be able to withdraw everything tax and penalty-free once you meet both the age and 5-year requirements, it's worth thinking about the timing strategically. Since Roth IRAs don't have required minimum distributions (RMDs) like traditional IRAs do, you might want to consider leaving the money invested longer if you don't immediately need it. The tax-free growth can continue indefinitely, and it's one of the best tax-advantaged accounts you can pass to heirs. Also, if you're planning any large withdrawals, consider spreading them across multiple tax years to avoid bumping yourself into higher tax brackets with other income - though this is more relevant if you have traditional IRA distributions or other taxable income in the same years. The flexibility of having penalty-free access is great peace of mind, but the longer you can let that money grow tax-free, the better!

Has anyone actually been audited on this? What did the IRS actually accept as documentation? I haven't been keeping great records and I'm stressed about it.

Based on what I'm seeing here, it sounds like you're in a good position to benefit from the actual expense method given your high mileage and newer SUV. With 12,000 business miles out of 20,000 total (60% business use), you'd apply that percentage to all your vehicle expenses. Here's what I'd suggest for documentation: Start tracking now even if you haven't been perfect about it before. You don't need to log every single trip, but you do need enough records to prove that 60% business use. Since you're in sales visiting clients, your work calendar/appointment schedule could be really helpful here - note the mileage for client visits and use that pattern to establish your typical business driving. For a newer SUV with higher insurance costs, the actual expense method often beats the standard mileage rate (currently 67 cents per mile for 2024). Do the math both ways - 12,000 miles × $0.67 = $8,040 with standard mileage. If 60% of your actual car expenses (insurance, gas, maintenance, depreciation) exceeds $8,040, go with actual expenses. The key is starting good record-keeping habits now. Even if your past records aren't perfect, having solid documentation going forward will help if you're ever questioned about it.

Great discussion here! I'd like to add a few additional considerations for your situation: First, with your combined income of around $225k, you'll want to check if you're eligible for the full Child Tax Credit when filing jointly, as it phases out at higher income levels. For 2024, the phase-out begins at $400k for married filing jointly, so you should be fine, but it's worth confirming. Second, consider the Earned Income Tax Credit (EITC) implications. While you likely won't qualify due to your income levels, filing separately might put one spouse in a lower income bracket that could potentially qualify for other credits. Third, don't forget about state taxes! Some states have different rules for how they treat federal filing status, and this could impact your overall tax situation significantly depending on where you live. Finally, since you mentioned you both got significant raises recently, make sure to update your income information with your loan servicer for your annual recertification. If you're still on an older income amount, your current payments might be artificially low, which could cause issues later. I'd strongly recommend using one of the calculation tools mentioned here to run the numbers both ways, and definitely confirm your repayment plan type as others have noted. The REPAYE vs PAYE distinction could completely change your strategy.

This is such a complex situation, and I really appreciate everyone sharing their experiences and tools! As someone who works in tax preparation, I wanted to add a few thoughts based on what I've seen with clients in similar situations. One thing that often gets overlooked is the timing of when your child was born in 2024. Since you mentioned welcoming your first child in 2024, the full Child Tax Credit should be available regardless of when during the year they were born. However, if you're planning ahead for future years, this could affect your strategy going forward. Also, with your income levels ($118k + $107k), you're well below the phase-out thresholds for most credits when filing jointly, which is definitely in your favor. The question really becomes whether the immediate tax savings outweigh the long-term cost of higher student loan payments over your remaining 40 payments. Given that you're 80 payments into PSLF, you're so close to the finish line! At this point, I'd lean toward prioritizing keeping those payments as low as possible, especially since loan forgiveness is tax-free under current rules. The peace of mind of staying on track for forgiveness might be worth more than the immediate tax benefits. Have you considered consulting with a tax professional who specifically understands PSLF? Many general tax preparers don't fully grasp how the different filing statuses interact with income-driven repayment plans, but there are specialists who focus on this exact situation.

This is such a helpful thread! I'm dealing with a similar situation but with a $25,000 retention bonus that I had to repay when I left my job earlier this year. The company made it clear the repayment was required, but they didn't provide much guidance on the tax implications. From reading everyone's experiences here, it sounds like the credit method under Section 1341 would likely be better for me too, especially since my income was actually higher in the year I received the bonus compared to this year. One question I have - does it matter HOW you repaid the bonus? I had to write a personal check back to the company rather than having it deducted from final paychecks. I'm assuming that doesn't change the Section 1341 treatment, but I want to make sure I have the right documentation. Also really appreciate the mentions of taxr.ai and Claimyr - sounds like both could be helpful for getting the calculations right and actually talking to someone at the IRS about this. This is definitely not something I want to mess up!

This thread has been incredibly helpful! I'm a tax preparer and see Section 1341 situations maybe 2-3 times per year, so I don't always feel confident with the calculations. What I've learned from experience is that the documentation is absolutely critical - the IRS will scrutinize these claims pretty carefully. A few additional points for anyone dealing with this: 1) Make sure the repayment was actually REQUIRED, not voluntary. If you had a choice about whether to repay, Section 1341 doesn't apply. 2) The repayment has to be for income that was included in a prior year's return AND you had a legal obligation to repay it when you originally received it (even if that obligation was contingent). 3) If you're married filing jointly but only one spouse received/repaid the bonus, you still calculate as if it affected the joint return in both years. The $3,000 threshold mentioned earlier is correct - amounts under that must be handled as itemized deductions only. For amounts over $3,000, definitely run both calculations because sometimes the itemized deduction method can be better, especially if you're in a lower tax bracket now than when you received the income. Thanks to everyone who shared their experiences with the various tools and services - it's good to know what resources are out there for these complex situations!

Looking at all these responses, it sounds like you have three solid options to compare: staying on the domestic partner plan with the tax hit, getting your own ACA plan with unemployment subsidies, or considering marriage if that was already in your future plans. From a purely financial perspective, I'd strongly recommend getting actual quotes for an ACA plan before deciding. Since you just lost your job, your projected 2024 income might qualify you for substantial subsidies that could make individual coverage much cheaper than the ~$500+ monthly tax hit you'd face on your fiancée's plan. Here's what I'd do in your shoes: 1) Get that detailed breakdown from HR that Camila mentioned to make sure their $1,668 calculation is correct, 2) Get ACA quotes on healthcare.gov using your projected annual income including any unemployment benefits, and 3) Calculate the real after-tax cost of the domestic partner option using your fiancée's actual marginal tax rate plus FICA. The marriage route is definitely the cleanest solution tax-wise if you were planning to get married anyway - employer health benefits for spouses are completely tax-free. But if you weren't ready for that step, don't let health insurance be the only reason to rush it. Whatever you choose, make sure to act quickly since you mentioned your current coverage ends soon. Both ACA enrollment and adding you to your fiancée's plan will take some processing time.

I've been following this thread and wanted to share some additional considerations that might help with your decision. One thing I haven't seen mentioned yet is the potential impact on your fiancée's other tax benefits if her income increases by $1,668 monthly due to the imputed income. That extra $20,000+ in annual income could potentially push her into a higher tax bracket or affect eligibility for certain deductions and credits. For example, if she's close to income thresholds for student loan interest deduction, IRA contribution limits, or other phase-outs, this could create additional hidden costs beyond just the direct tax on the imputed income. Also, regarding the ACA option - make sure to factor in the potential differences in coverage quality. Employer plans often have better networks and lower deductibles compared to marketplace plans, even with subsidies. You might save money on premiums but end up paying more out-of-pocket for actual care. One more timing consideration: if you do decide on the domestic partner route, ask HR if there's any flexibility on the start date. Sometimes you can delay the coverage start by a few days to align with when your current coverage ends, which might save you from paying for overlapping coverage or having a gap. The documentation point that Malik made is really important too - I'd also suggest keeping records of any communications with HR about how they calculated the fair market value, just in case you need to justify it to the IRS later.