I just want to add that I went through this exact situation last year with my mom who gets Medicaid waiver payments. What we found was that H&R Block's paid professional service (not their DIY software) was able to e-file her return even with the $0 Box 1 W-2. It cost about $150 but honestly worth it to avoid the paper filing headache. The tax pro told us they have special software that can handle these cases. Might be worth considering if you can't get into a VITA site.

I've been helping caregivers with this exact issue all tax season. The confusion around Medicaid waiver W-2s is really widespread this year since it's the first year many people are getting them. Just to reinforce what others have said - you absolutely must include ALL W-2s with your return, even ones with $0 in Box 1. The IRS considers this a complete reporting requirement regardless of the amounts. The e-filing block you're hitting is real and affects most consumer tax software. The IRS validation system expects certain relationships between wages, Social Security wages, and Medicare wages that don't exist when Box 1 is zero but other boxes have amounts. One thing I haven't seen mentioned yet is that some online tax services like TaxSlayer Pro actually CAN handle these situations and allow e-filing. It's worth checking with a few different services before giving up on e-filing entirely. Regarding whether to include the Medicaid payments as earned income - run the numbers both ways if possible. Sometimes including them gets you a larger Earned Income Credit that more than makes up for any additional tax. Other times it's better to exclude them. It really depends on your specific situation, income level, and family size.

This thread has been incredibly helpful! I'm in a similar boat with variable income from my small business, and the annualized income installment method has always seemed too complicated to tackle on my own. Based on all the recommendations here, I'm leaning toward trying taxr.ai first since multiple people have vouched for its accuracy and ease of use. The ability to handle both federal and state calculations in one place would be a huge time-saver for me. I'm also definitely taking the advice about record keeping to heart. I've been pretty sloppy about documenting my estimated payment rationale in the past, which always makes tax season more stressful than it needs to be. One follow-up question: for those using these online calculators, do you still work with a tax professional for your annual filing, or do the tools provide enough guidance that you can handle everything yourself? I'm trying to decide if I should view this as a supplement to professional help or a replacement for it.

This is exactly what I needed! I'm dealing with seasonal consulting income that's nearly impossible to predict - some quarters I barely make anything, others I have huge project payments. The traditional quarterly approach has been a nightmare for me. I'm definitely going to try taxr.ai based on all the positive feedback here. The fact that it can handle both federal and state calculations while adjusting for actual income throughout the year sounds perfect for my situation. One thing I'm curious about - for those who've used these tools, how far in advance can you run "what if" scenarios? Like if I'm expecting a large payment in Q3, can I model different timing scenarios to optimize my estimated payments? Sometimes I have some control over when clients actually pay their invoices, so being able to plan around that would be incredibly valuable. Also, the record keeping advice is spot on. I learned this lesson the hard way during my 2023 filing when I couldn't remember why I calculated certain payments the way I did. Now I document everything, but having a tool that generates its own audit trail would be even better.

14 Did you check if there were any non-cash distributions included in that K-1 total? Sometimes S-Corps distribute property or pay expenses on behalf of shareholders that count as distributions but don't show up as direct deposits.

This sounds incredibly frustrating! I went through something similar with my S-Corp K-1 last year. The key thing to understand is that S-Corporations are "pass-through" entities, which means you're taxed on your proportional share of the company's total profits, regardless of how much cash was actually distributed to you. That $20,000 difference likely represents retained earnings - profits that the company earned but kept in the business rather than distributing to shareholders. Unfortunately, you still owe taxes on it even though you never received the cash. My advice: 1) Request a detailed breakdown from the company's accountant showing exactly what makes up your K-1 amounts, 2) Ask for documentation of all distributions made during the tax year, and 3) Get clarification on any retained earnings or reinvested profits. The good news is that when the company eventually does distribute those retained earnings in future years, you won't be taxed again since you already paid taxes on them. Your "basis" in the company increases by the amount of undistributed income you're taxed on. Keep detailed records of this for future reference!

I used to work at one of the major tax prep companies and can tell you the pricing tiers often include the features you need. For TurboTax, you need the Premier version to get the investment data import feature, which is why it costs more than FreeTaxUSA. Some tips: 1. Check if any financial institutions offer discounted or free tax software. Many brokers offer TurboTax at a discount to their customers. 2. If you decide to pay for TurboTax, buy it directly through their website, not in-store. There are often online-only discounts. 3. Consider a multi-year strategy: Use TurboTax in years with heavy trading, FreeTaxUSA in quieter years. 4. Often overlooked: TaxAct has import capabilities for major brokerages at a lower price than TurboTax. Don't dismiss the time value - if you have hundreds of transactions, paying $70 more for software that saves you 3+ hours of data entry is worth it for most people.

Another option to consider is TaxHawk - I've been using it for the past couple years and it's significantly cheaper than TurboTax but has better import capabilities than FreeTaxUSA. They support direct import from most major brokerages including Schwab, Fidelity, Vanguard, and E*TRADE. The interface isn't quite as polished as TurboTax, but for investment transactions it gets the job done. I was able to import about 150 transactions last year without any issues. They also handle wash sale calculations automatically which saved me a lot of headache. Price-wise, their Deluxe version (which includes investment features) runs about $40-50, so it's a nice middle ground between FreeTaxUSA and TurboTax Premier. Might be worth checking if they support your specific broker before you decide on going back to TurboTax.

Has anyone here tried using a written business plan to document your intent with the vehicle? My CPA had me create one for my Turo business to show legitimate business purpose.

I've been through this exact scenario with my luxury SUV on Turo. The harsh reality is that you can't deduct the entire $165k purchase price even with 100% business use for those 2 months. The IRS calculates business use percentage based on the entire tax year, so 2 months = roughly 16.7% maximum deduction. Even with Section 179 and bonus depreciation for vehicles over 6,000 lbs, you're still limited to that business use percentage. Plus, there are luxury auto depreciation limits that cap your deductions regardless. The bigger issue is that switching to personal use right after taking business deductions could trigger recapture rules and look like tax avoidance to the IRS. I'd strongly recommend keeping it as business use for at least the full year if you're going this route, and definitely consult a tax pro before dropping $165k on this plan.