For those of you trying to figure out if you're over the Roth IRA contribution limits, remember that the MAGI calculation is different from your AGI! I messed this up too. For Roth IRA purposes, your MAGI is your AGI with certain deductions added back in, like student loan interest, tuition deductions, and some others. That's probably why the OP didn't realize they were over the limit until after reviewing their tax forms. Anyone recommend a good tax software that automatically flags potential Roth IRA contribution issues based on calculated MAGI? My current one didn't catch this.

Your tax preparer is absolutely wrong about this being "immaterial." The IRS doesn't have a materiality threshold for excess Roth IRA contributions - $780 is definitely something you need to address. Here's what you need to know about timing: 1. You have until your tax filing deadline (including extensions) to remove the excess contribution plus any earnings. For 2024 contributions, that's typically October 15, 2025 if you file an extension. 2. If you remove the excess before this deadline, you'll avoid the 6% excise tax that applies each year the excess remains in your account. 3. However, any earnings on the excess contribution must be reported as income on your 2024 tax return (the year you made the contribution), not your 2025 return. I'd strongly recommend contacting your brokerage immediately to initiate an excess contribution removal. They'll calculate the earnings portion using an IRS-approved formula based on your account's performance. You'll then need to either amend your 2024 return if already filed, or include those earnings when you file. Don't let this sit - that 6% penalty compounds annually until resolved, and it's much easier to fix now than later.

Has anyone here used turbotax for claiming unconventional dependents like adult siblings? does it walk you through all this complicated 50% support calculation stuff?

Just wanted to add something that might help with documentation - keep a detailed spreadsheet throughout the year tracking every expense you pay for your siblings. Include dates, amounts, and what the expense was for (medical bills, groceries, clothing, etc.). Also calculate the fair market value of services you provide. If you drive them to appointments, research what medical transport would cost. If you help with personal care, look up what aide services charge in your area. These indirect supports count toward your 50% calculation too. I learned this the hard way when I got audited for claiming my adult sister. Having that paper trail made all the difference in proving I provided more than half her support even though she lived elsewhere.

Also make sure you're using the correct year's TurboTax software! If you accidentally started your return in last year's version (2023), it might be telling you to wait until "next year" (meaning 2024) because the withdrawal date you entered is in 2024. The version of TurboTax you should be using right now for a 2024 1099-R is the 2024 version (which would typically be labeled as TurboTax 2024, for filing in 2025).

Based on what you've described, you definitely need to report this 1099-R on your 2024 tax return. The key rule is that retirement distributions are reported in the tax year shown on the 1099-R form, regardless of when you requested the withdrawal. Since you mentioned this was a complete cash-out (not a rollover) and the form is dated 2024 with distribution code 7, this is a straightforward taxable distribution that belongs on your 2024 return. The TurboTax issue is likely one of two things: either you accidentally answered a question suggesting it was a rollover, or there's a glitch in the software's interview process. I'd recommend deleting the entry completely and re-entering it from scratch, being very careful to indicate that you kept the money rather than rolling it over. If the software continues to give you the wrong guidance after re-entering, that's definitely a software error and you should contact TurboTax support. Don't let the software convince you to delay reporting this - the IRS expects to see this 1099-R on your 2024 return since that's what your financial institution reported to them.

Quick tip: If you do decide to amend, make copies of EVERYTHING before sending it in. I had an amended return get "lost" by the IRS last year and had to resend the whole package. Also, if you mail it, use certified mail with tracking so you have proof it was delivered!

Just wanted to chime in as someone who went through this exact situation a couple years ago! I missed claiming about $400 in student loan interest and ended up amending to get back around $85. Here's my honest take: Yes, absolutely do it! Not just for the money (though $69 is definitely worth it), but also because it's great practice for understanding the tax system better. The amendment process taught me so much about how deductions actually work. One thing I'd add to the great advice already here - when you're filling out the 1040-X, the form asks you to explain the changes you're making. Be specific but concise. I wrote something like "Adding previously unreported student loan interest deduction of $381 per Form 1098-E" and attached a copy of my 1098-E form. Also, don't stress too much about making it perfect. The IRS will contact you if they need clarification on anything. Good luck with your first amendment - you've got this! 😊

Just wanted to add my experience since I went through this exact situation last year with my daughter. I paid her $425 for social media help with my consulting business. I ended up putting it on line 48 (Other expenses) with the description "Contract services - family member" after consulting with a CPA. The reasoning was that it provides clearer documentation for the IRS about the nature of the payment, especially since no 1099 was issued. One thing I learned that might help others - make sure you and your daughter are consistent about how you both report this. I reported it as a contractor payment on my Schedule C, so she needed to report it as self-employment income on her Schedule C (even though it was under $600). The IRS can cross-reference these if they want to, so consistency is key. Also, even without a formal contract, I created a simple written record of what work she did and when, along with copies of her deliverables (social media posts, graphics she made, etc.). This gave me solid backup documentation in case of questions later. The amount doesn't matter for deduction purposes - you get the same $387 deduction whether it goes on line 11 or line 48. It's really just about clear documentation and making sure both parties report consistently.

I've been dealing with similar questions about family member payments for my home-based business. One thing that helped me was understanding that the IRS doesn't really care which line you use (11 vs 48) as long as the expense is legitimate and properly documented. What I found most important was creating a clear paper trail. Even for small amounts like your $387, I recommend: 1. Write up a simple agreement or work order describing what your daughter did 2. Keep records of when the work was performed 3. Document how you paid her (check, Venmo, etc.) 4. Have her create basic invoices for the work The "Other expenses" approach on line 48 with a description like "Contract services - family member" or "Freelance work - under $600" seems to be the preferred method among tax professionals I've spoken with. It's more transparent and less likely to raise questions since you're clearly indicating this was a small contractor payment that didn't require a 1099. Just make sure your daughter reports it correctly on her return. If this was her only freelance income and she's not running a regular business, she might be able to report it as "Other income" instead of setting up a whole Schedule C, which could save her from self-employment taxes.