You mentioned a company car - was that during your contract work or only after becoming an employee? If you had it during contract work, there might be tax implications there too.

I went through something very similar last year - owing a big chunk because of mixed W-2 and 1099 income. The self-employment tax on that $13,500 is probably what's killing you the most. A few things that helped me: 1. Double-check if your employer reimbursements were incorrectly included in your 1099-NEC income 2. Even small business expenses add up - phone usage, internet, any equipment or supplies 3. Set up quarterly estimated payments for next year to avoid this mess again The underpayment penalty stings, but at least it's relatively small compared to your total bill. I'd definitely recommend seeing a tax pro - they often find deductions that save more than their fee costs. Don't beat yourself up too much, this is a super common situation when transitioning from contract to employee work.

Thanks everyone for the detailed explanations! This has been super helpful. Just to summarize what I'm understanding: 1. Traditional IRA and Rollover IRA are identical for tax purposes - same contribution limits, same tax treatment, same RMD rules 2. The "Rollover" designation is mainly for bookkeeping to track where funds came from 3. Keeping them separate might be useful if I plan to roll funds into a future employer's 401k plan 4. There could be considerations for backdoor Roth conversions down the line I think I'm leaning toward opening a Rollover IRA since I do have an old 401k I want to move over, and it sounds like keeping that separate from regular contributions might give me more flexibility later. One follow-up question - if I open a Rollover IRA now for my old 401k, can I still open a separate Traditional IRA later for regular annual contributions? Or do I need to pick one account type and stick with it?

Great thread everyone! I'm a tax professional and wanted to add one more consideration that might be helpful for Emily and others in similar situations. If you're planning to contribute to IRAs regularly going forward, I'd actually recommend starting with a Traditional IRA for your annual contributions first, then opening the Rollover IRA specifically when you're ready to move that old 401k money. This way you establish your contribution history in the Traditional IRA and keep a clear paper trail. Also, when you do roll over that 401k, make sure to do a direct trustee-to-trustee transfer rather than taking a distribution and rolling it over yourself. The direct transfer avoids the 20% mandatory withholding and eliminates any risk of missing the 60-day deadline. One last tip - before you roll over from your old 401k, check if it has any unique investment options or institutional share classes with lower fees that you can't get in a regular IRA. Sometimes it's worth keeping a small balance in the old plan if the investment options are superior.

I got a K-1 from my deceased father's estate, and it shows negative income in Box 1. Does anyone know how to handle this on my taxes? Do I get to deduct the loss?

Great question! I was in a similar situation when I first got involved with a partnership investment. Just to clarify a few key points that might help: 1) You as the individual partner don't "file" the K-1 - the partnership files Form 1065 and prepares K-1s for each partner 2) You'll receive your K-1 from the food truck partnership (they're required to send it to you by March 15th for calendar year partnerships) 3) You then use the information from your K-1 to complete various parts of your personal Form 1040 - typically Schedule E for ordinary business income/loss 4) There's no income threshold that exempts you from receiving a K-1 if you're a partner One thing to keep in mind with food truck partnerships - make sure you understand whether you're considered an "active" or "passive" partner, as this affects how losses can be deducted. If you're just a silent investor, any losses would be subject to passive activity loss rules. The partnership should handle most of the heavy lifting in terms of calculating your share of income, deductions, and credits. Your main job is making sure you report everything correctly on your personal return when you receive the K-1.

Has anyone used TurboTax Business to handle this kind of transition? I'm in a similar situation but trying to do it myself without an accountant.

This is a great discussion with lots of helpful insights! I wanted to add one more consideration that I learned the hard way: make sure to coordinate the timing of your final partnership tax return with your first S-Corp return filing. We made the mistake of filing our final 1065 too early in the process, before all the ownership transfer documentation was finalized. This created a gap period where the IRS wasn't sure what entity type we were, and we ended up having to file amended returns to clarify the timeline. My recommendation would be to have everything - the spousal transfer agreement, partnership dissolution paperwork, and S-Corp election forms - completely ready before filing that final 1065. That way you can include a clear statement in the return about the transition date and attach supporting documentation. Also, definitely keep detailed records of any partnership assets and their basis. When those assets transfer to the S-Corp, you'll need that information for depreciation schedules and potential future asset sales. The IRS can ask for this documentation years later during audits.

Has anyone considered that exclusive use is sometimes not easy to prove? I use a room that's technically a bedroom as my home office, but it has absolutely nothing in it except office furniture and equipment. Would an IRS agent look at the room layout and decide it's not exclusive use just because it could be a bedroom?

One thing I haven't seen mentioned yet is the importance of tracking your actual work hours between locations. Since you mentioned going to the firm office every 2-3 weeks, you should document the time spent at each location throughout the year. The IRS uses this as a key factor in determining your "principal place of business." Keep a simple log showing dates, hours worked from home vs. firm office, and types of activities performed at each location. This becomes crucial evidence if you're ever audited. Since you're working 40+ hours weekly from home and only visiting the firm office occasionally, your documentation should clearly support that your home office is indeed your principal place of business. Also, make sure you're not mixing any personal activities in that dedicated room - no personal computer use, no storing personal items, etc. The exclusive use test is where many people trip up during audits.