This is such a helpful thread! I'm dealing with something similar from Charles Schwab and was totally lost. One thing I'd add - if you're still confused after reading all these great explanations, definitely check with a tax professional if the amounts are significant enough to worry about. I called my CPA about a similar situation last year and she said for amounts under $50 total, the IRS generally has bigger fish to fry, but technically all income should be reported. Also wanted to mention that some tax software (not just TurboTax) will let you manually override the import feature and enter forms that won't import automatically. In TaxAct, I found there's a "manual entry" option specifically for situations like this where the electronic import fails. Thanks everyone for breaking this down - De Minimus always sounded so fancy and complicated but it's really just "too small to bother with" in plain English!

This thread has been incredibly helpful! I just want to add one more perspective for anyone still feeling overwhelmed by this De Minimus situation. I work in tax prep (not giving professional advice here, just sharing general experience), and we see this confusion ALL the time during tax season. The key thing to remember is that "De Minimus" is more of an internal designation that brokerages use - it's not an official IRS term that you need to worry about understanding completely. What matters is: if you have a 1099 form (even one labeled as De Minimus), look at the actual dollar amounts in each box. If there are numbers there, enter them in your tax software. If the boxes are all zeros or blank, then there's nothing to report. The reason TurboTax and other software sometimes can't import these forms is because they're often generated differently or flagged in the system as "non-standard." But the manual entry process is usually very straightforward - just match the box numbers on your form to the corresponding fields in your tax software. Don't let the fancy Latin terminology stress you out - you've got this!

Has anyone dealt with the reporting requirements for the PERSON WHO PAID the settlement? I'm on the other side of this - I had to pay a settlement last year and am confused about how to report the attorney fees portion on the 1099-MISC I'm issuing.

Just want to add some clarity based on my experience as a tax preparer - the key thing everyone's touching on is correct: if your settlement was SOLELY for physical injuries from your workplace accident, it's likely not taxable under IRC Section 104(a)(2). However, be careful about one thing: if any portion of that $42,500 was for lost wages or punitive damages (rather than just compensating for the physical injury and medical expenses), that portion WOULD be taxable. Check your settlement agreement carefully - sometimes these get lumped together. If it's truly all for physical injuries, you don't report it as income, and the 1099-MISC in Box 3 becomes irrelevant for your tax return. But keep all your settlement documentation because the IRS will have a record of that 1099-MISC being issued to you. Also, even if you determine it's non-taxable, some tax software will still prompt you to enter the 1099-MISC and then allow you to mark it as "not taxable due to physical injury settlement" or similar - this creates a paper trail showing you received and considered the form.

Something nobody's mentioned yet - check if your employer 401k allows for "mega backdoor Roth" contributions. Mine does, and it lets me roll non-deductible amounts into my Roth directly through the plan. Completely avoided the whole Form 8606 hassle.

Don't forget to file Form 8606 with your taxes regardless of which option you choose! I messed this up one year and it was a nightmare to fix later.

Random tip - If you're addicted to gambling, the IRS actually allows you to deduct the cost of addiction treatment as a medical expense if you itemize and your medical expenses exceed 7.5% of your AGI. Just something to consider since getting help for the addiction is probably more important than the tax situation in the long run.

Hey Rudy, I went through something really similar last year with crypto gambling losses and unreported cash income. The stress was unreal, but it's totally fixable if you handle it right. First thing - yes, you absolutely need to report gambling activity even if you lost money. The IRS wants to see all your gambling transactions, wins AND losses. Keep detailed records of every bet, every payout, every loss. Screenshots, transaction IDs, everything. For your cash income situation, I'd recommend getting ahead of it before they find you. I ended up filing amended returns for the years I missed and used the IRS Voluntary Disclosure Program. Yeah, there were some penalties, but way less scary than waiting for them to audit me. About your "HandyHelp Solutions" name - definitely get that properly registered ASAP. File a DBA with your county and maybe get a basic business license. It shows good faith that you're trying to do things right going forward. The crypto gambling thing is tricky because different sites report differently to the IRS. Some offshore sites don't report at all, but that doesn't mean you're off the hook. I learned the hard way that "they can't track it" isn't actually true anymore. Get professional help if you can afford it. A tax pro who knows crypto saved me from making this way worse than it had to be.

Make sure to keep copies of both the original 401k provider's 1099-R AND documentation from Vanguard showing the rollover was completed. My friend got audited for exactly this situation and having both sets of documents made it super easy to resolve. The IRS just wanted to verify the money actually went into another retirement account.

Just to add some reassurance - I work in retirement plan administration and see this situation all the time. The key thing to remember is that if your 1099-R has distribution code G in box 7, the IRS already knows this was a direct trustee-to-trustee rollover. They're not going to come after you with penalties or anything dramatic. That said, you absolutely should amend to properly report it. The IRS has automated systems that match 1099 forms to tax returns, and eventually they'll send you a notice asking about the missing form. It's much easier to proactively amend than to respond to an IRS notice later. When you amend, you'll report the gross distribution on your 1040 but then show it as a nontaxable rollover, so your tax liability won't change. The amendment is really just about proper reporting compliance. FreeTaxUSA's amendment process is pretty straightforward once you have your refund in hand.