The 1040 instructions for line 4a state "generally, you should enter the total amount of distributions from all your IRAs" so I think FreeTaxUSA might actually be right to add both? The exception cases in the instructions are super confusing tho.

I went through this exact scenario last year and can confirm TurboTax is handling it correctly. Only the conversion amount ($4,074) should go on line 4a, not the recharacterization amount. Here's what helped me understand it: think of a recharacterization as "undoing" the original contribution type. When you recharacterized from Roth to Traditional, it's as if you had originally contributed to the Traditional IRA. Then when you converted back to Roth, that's the only transaction that gets reported on line 4a. The statement TurboTax creates is crucial - it explains to the IRS why you have multiple 1099-R forms but only one amount on line 4a. Without it, your return would look like you're underreporting distributions. I was also worried about e-filing with the statement, but TurboTax handled it seamlessly. The IRS processed my return normally and I got my refund on schedule. Don't stress about it - you're doing it right!

I had this exact problem earlier this tax season. My check finally showed up 9 days after the DDD on my transcript. Are you signed up for Informed Delivery through USPS? That way you'll at least know when it's coming that day. Did your tax preparer acknowledge their mistake? Did they offer any compensation for the delay since it was their error?

I feel your frustration! I went through this same situation two years ago when my preparer made the same mistake. With a March 22nd DDD, you're realistically looking at receiving your check between March 27th-April 2nd if everything goes smoothly. The IRS usually mails checks the Friday of your DDD week (so March 21st or 28th in your case), and then it's up to USPS delivery times. Given that you need the funds for medical expenses, I'd recommend calling the IRS after April 7th if you haven't received it by then - that's when they'll typically start a trace. Also, definitely sign up for USPS Informed Delivery if you haven't already so you can see when it's coming that day. Hope this helps ease some of your worry!

Just a word of caution - the IRS has been heavily scrutinizing ERC claims, especially large ones. With a claim size of $8 million, there's a very high likelihood of an audit. Has your client thoroughly documented their eligibility? Many businesses are finding their claims denied or having to return funds.

Your client needs to understand that attempting to shield ERC funds from a valid $24 million judgment is not only unlikely to succeed, but could expose them to serious legal consequences. As others have mentioned, once ERC funds are received, they become regular business assets subject to collection. Given the size of both the judgment and the expected ERC payment, I'd strongly recommend your client consider a few key points: 1. **Immediate settlement negotiations**: Sofia's suggestion about offering the $8M ERC as settlement for the full judgment is probably their best option. A 33% recovery might be very attractive to the landlord versus the uncertainty of collecting the full amount. 2. **Timing is critical**: If the landlord's attorneys become aware of the incoming ERC funds, they'll likely file for garnishment before the money even reaches your client's accounts. The sooner settlement talks begin, the better. 3. **ERC audit risk**: Dmitry raised an excellent point about IRS scrutiny. An $8M claim will almost certainly trigger an audit, and if the claim is reduced or denied, your client loses their primary settlement leverage while still owing the full judgment. 4. **Asset protection alternatives**: Rather than trying to hide funds (which could constitute contempt of court), explore legitimate options like appealing the judgment or filing for bankruptcy protection if the business truly cannot pay. The reality is that $8M toward a $24M judgment is a significant payment that most creditors would seriously consider, especially given collection uncertainties.

Anyone else notice the IRS has been taking longer to process CAA-submitted W7 applications lately? Last year I was telling clients 4-6 weeks, but now I'm seeing 8-10 weeks minimum.

Thanks for bringing up this processing time issue - I've definitely noticed the same trend. I'm also a newer CAA (about 8 months now) and I've been tracking my application timelines. My first few submissions in September/October were processed in about 5-6 weeks, but everything I've submitted since January has been taking 9-12 weeks. I think part of the issue is that the IRS is still catching up from the pandemic backlog, plus they've had budget constraints affecting staffing levels. What I've started doing is being very upfront with clients about current processing times and explaining that while CAA applications don't get lost in the mail like regular submissions can, the review process itself is just taking longer right now. I also make sure to emphasize the other benefits - like not having to mail original documents and generally having fewer rejections due to documentation issues since we verify everything upfront. It's not ideal, but at least clients appreciate the transparency about realistic timelines.

Trust me, file everything now. The penalties for not reporting income are WAY worse than whatever you might owe. Plus theres tons of deductions you might qualify for to reduce what you owe. Check out taxr.ai - saved my butt when I was in the same boat

You absolutely cannot split W2s between tax years - that's tax fraud. All W2s for income earned in 2024 must be reported on your 2024 return, period. The IRS gets copies of every W2 and will catch this immediately. If you're worried about owing money, look into these legitimate options: 1) Check if you qualify for any deductions or credits you missed, 2) Set up an IRS payment plan if you do owe (they're actually pretty reasonable), 3) Consider adjusting your withholdings for next year so you don't face this again. The penalties for not reporting income are way worse than whatever you might owe now.