I've been doing backdoor Roth conversions for about 5 years now and have some tips for Form 8606. FreeTaxUSA actually handles it pretty well, but there are a few tricky parts: 1. Make sure you're entering the non-deductible contribution on lines 1-3 of Form 8606 2. The conversion amount goes on lines 8-9 3. If you had zero earnings between contribution and conversion, lines 8 and 3 should match 4. Line 14 should be zero if you converted the entire amount Most important: keep records of all your Form 8606s from previous years! The IRS doesn't track your basis for you, and if you're audited, you'll need to prove your basis history.

Friendly warning from someone who messed this up last year: make absolutely sure you check that final Form 8606 before filing! FreeTaxUSA got my basis wrong because I had done partial conversions over multiple years. Double check that: - Line 2 shows any carryover basis from prior years (should be $0 for your first backdoor) - Line 14 should be $0 if you converted everything - Line 18 should match your conversion amount - Don't forget to include the 1099-R for the conversion!

For anyone on the fence about FreeTaxUSA vs 1040.com - I just finished filing with FreeTaxUSA and wanted to add one thing the original poster didn't mention. FreeTaxUSA now offers a feature where you can import your previous year's return from other tax services (including TurboTax, H&R Block, etc). This saved me SO much time in the setup process - all my personal info, dependents, employer details carried over automatically. It's under "import data" on the first few screens. Also FYI - if you're active duty military, FreeTaxUSA gives you both federal AND state completely free! Found that out because my husband is in the service.

Great writeup about your experience! I had a similar issue with 1040.com last year but with California state forms - they weren't ready until late February. Really frustrating when you're trying to file early. One thing I'd add for anyone considering these platforms: check if your state has its own free filing option directly through their tax department. California's CalFile is completely free and worked great for me, though it's pretty basic. Might be worth checking if New York has something similar before paying the $24 FreeTaxUSA fee. Also, for future reference, the IRS Free File page usually notes when state forms aren't available yet - it's in small print under each provider's description. Easy to miss but can save you time if you check before starting.

Does anyone know if you have to pay self employment tax if your net business income was negative? I had about $2,800 in freelance income but spent over $3,000 on equipment and supplies. Will I still have to pay the SE tax even though I technically lost money?

This is a really helpful thread! I'm dealing with a similar situation where I have both W-2 income and some 1099 contractor work. One thing I learned the hard way is that even if you have taxes withheld from your regular job, it doesn't necessarily cover the self-employment tax from your side income. The SE tax is calculated separately and can't be satisfied by withholding from your W-2 job. So even if you think you've had "enough" taxes taken out throughout the year, you might still owe when you file if you have self-employment income. For next year, I'm planning to either increase my W-4 withholding at my main job to cover the expected SE tax, or make quarterly estimated payments specifically for the self-employment portion. The IRS has worksheets to help calculate how much you should set aside - it's usually around 25-30% of your net self-employment income to cover both the SE tax and any income tax on that earnings.

Has anyone used TurboTax for handling the 1099-K for online selling? I'm wondering if it walks you through this properly or if I should use something else.

One thing I'd add to all this great advice - don't stress too much about the gap between your 1099-K and net income. It's actually really common for resellers to have large differences because platforms report gross payment processing volume, not actual profit. I've been selling vintage items on multiple platforms for 3 years now and my 1099-K amounts are always 3-4x higher than my actual business income after expenses. The key is just keeping good records like you're already doing. Make sure you're tracking platform fees separately from shipping costs though - they go on different lines of Schedule C. Platform fees like Poshmark's 20% commission go under "Commissions and fees" while shipping you pay out of pocket goes under "Other expenses" with a description. Your detailed spreadsheets sound perfect for this - you're already ahead of most sellers who get these forms!

Quick tip that saved me last year: If you're setting up a SEP for the first time, remember that some brokerages take several days to process new account applications. Don't wait until April 14th to start the process! I use Vanguard and it took about 7 business days from application to being able to fund my account. Also, keep in mind that the 25% limit is really closer to 20% of your net profit due to the way the calculation works. There's a specific formula the IRS uses that reduces your maximum contribution.

One thing nobody's mentioned - make sure you're calculating your contribution correctly if you have an LLC or S-Corp! The rules are different depending on how your business is structured. With my S-Corp, I pay myself a salary and the SEP contribution limit is based on my W-2 wages, not my total business profit.