Super confused about all this Form 8453 stuff... Is this only for paper filing or do I need it for e-filing too? I made about $200 in stock trades last year.

I went through this exact same situation last year with about $25 in stock profits. After reading through all the comments here, I decided to call the IRS directly (yes, it took forever to get through). The agent told me something that might help clarify things for everyone: The key isn't the profit amount - it's whether your broker reported the cost basis to the IRS on your 1099-B. Look at your 1099-B form and check if there's basis information included. If it shows "basis reported to IRS" or has the cost basis filled in, then the IRS already has all the information they need and you likely don't need Form 8453. However, if your 1099-B shows the sale proceeds but NOT the cost basis (common with older accounts or certain types of trades), then yes, you need to send Form 8453 with documentation regardless of the tiny profit amount. For my $25 situation, it turned out my broker HAD reported the basis, so I didn't need to send anything extra. Check your 1099-B first before assuming you need to mail anything!

Quick question for anyone who knows - if I have capital loss carryover and also did a Roth conversion this year, can I use the capital losses to offset the income from the Roth conversion? Or does that count as ordinary income subject to the $3000 limit?

This is such a great question and the answers here are spot on! I went through something very similar last year. Had about $8,000 in carryover losses from some bad stock picks in 2021, then finally had a good year with $5,000 in capital gains. Just to add to what others have said - make sure you keep good records of your carryover losses year to year. I almost lost track of mine and had to dig through old tax returns to reconstruct the carryover worksheet. The IRS doesn't send you a reminder of what you're carrying forward, so it's on you to track it. Also, if you're using tax software, it should automatically calculate this for you once you enter your prior year carryover and current year gains/losses. But it's still good to understand how it works like you're doing. You'll use $7,000 of your carryover against your gains, then $3,000 against ordinary income, leaving you with $0 carryover going into next year. Pretty efficient way to finally clear out those old losses!

Have you considered using a Volunteer Income Tax Assistance (VITA) site? If your income is under $60,000, you can get your taxes prepared for free by IRS-certified volunteers. They handle most common tax situations including Form 1040 schedules, itemized deductions, and education credits. What specific tax forms did you need that required the TurboTax upgrade? Some alternatives handle certain forms for free that TurboTax charges for.

I've been using TaxAct for the past two years after getting fed up with TurboTax's pricing, and it's been solid for my situation. I have rental income, some freelance 1099-NEC work, and investment accounts, and TaxAct handled everything for around $50 total (federal + state). The key thing I learned is to check each software's fee structure BEFORE you start entering data. TaxAct shows you upfront what each "tier" covers, so there are no surprises halfway through like with TurboTax. Their "Premier" version covers most investment forms and rental property schedules without additional fees. One tip: if you're organized with your records like you mentioned, consider doing a "dry run" with the IRS Free File Fillable Forms (basically electronic versions of paper forms) just to see exactly which forms you need. Then you can choose software that covers all those forms at their base price level.

Has anyone tried the IRS's Free File program? I heard they have direct options now for filing without using third-party software if your income is under a certain amount. Wondering if it's user-friendly or if it's better to just pay for one of the options mentioned.

I made the switch from TurboTax to FreeTaxUSA two years ago and it's been great! The savings are definitely real - I went from paying around $100 with TurboTax to about $25 total with FreeTaxUSA (federal + state). For your situation with W2, mortgage interest, and stock sales, FreeTaxUSA handles everything smoothly. The stock transaction entry is actually pretty intuitive - you can import from most major brokers or enter manually. The mortgage interest deduction process is straightforward too. One tip: if you're worried about making the transition, FreeTaxUSA offers a side-by-side comparison tool where you can prepare your return in both systems to make sure you get the same result. I did that my first year for peace of mind. The interface isn't as flashy as TurboTax but honestly, once you get used to it, it's just as functional for a fraction of the cost.

Am I the only one wondering if you should revise your K-1s? If one business shows $675k profit and another shows $985k loss, that's a massive swing. Might be worth having your accountant review if all expenses and income are properly allocated. Sometimes large losses can trigger IRS scrutiny anyway, so might be worth getting everything double-checked before dealing with the SEP issue.

One option nobody has mentioned - could you carry the SEP deduction forward to future years when you have sufficient income? I'm not certain if this is allowed with SEP contributions specifically, but some business deductions can be carried forward when you can't use them in the current year.