


Ask the community...
Stupid question maybe but is this the same for crypto transactions? My 1099-B from Coinbase has some transactions marked as "noncovered" but has cost basis for most of them.
Not a stupid question at all! Crypto is actually treated similarly but with some key differences. The reporting requirements for cryptocurrency have been evolving, but generally, crypto transactions on your 1099-B that are marked "noncovered" follow the same principle - the basis isn't being reported to the IRS even if it's on your form. However, there's an important distinction: cryptocurrency doesn't follow the same covered/noncovered security date rules as stocks. The classification is more about whether the exchange had sufficient information to calculate an accurate basis. Either way, you should report the basis yourself on Form 8949 with the appropriate codes.
This is a really common source of confusion, and you're definitely not alone in wondering about this! The key thing to understand is that "noncovered security" refers to the broker's reporting obligation to the IRS, not what appears on your copy of the 1099-B. Even though your broker filled in the basis amount on your form, because it's marked as "noncovered," they are NOT required to (and likely did not) report that basis information to the IRS. This typically happens with securities acquired before 2011 or transferred between brokers without proper basis tracking. You'll need to report the basis yourself on Form 8949. Use code "B" in column (f) for short-term gains/losses or code "E" for long-term. This tells the IRS you're providing basis information for a noncovered security. Since you mentioned these were stocks from your grandpa, make sure you're using the correct basis. If they were gifted to you while he was alive, you generally use his original cost basis. The basis amount your broker shows might not be accurate for gifted securities, so you may need to do some research to find the correct amount. Keep all your documentation - gift records, any basis information you can find, etc. - in case you need to substantiate your basis calculation later.
This is exactly the clarification I needed! I was so confused about why they would fill in the basis but then mark it as noncovered. It makes sense now that it's about their reporting obligation to the IRS, not what they show me on my copy. I'll definitely need to dig up the original gift documentation to make sure I'm using the right basis amount. My grandpa was pretty good about keeping records, so hopefully I can find what his original cost was. Thanks for explaining the Form 8949 codes too - that part always seemed intimidating but knowing to use code "E" for long-term makes it clearer. One follow-up question though - if I can't find his original basis records, is there any way to estimate or research what he might have paid? Or do I need to have exact documentation?
FYI - sometimes "SR" can mean "Supplemental Rate" too. When I worked at my last job, I had regular medical coverage plus a supplemental critical illness policy, and it showed up exactly like this. "Medical EE" was the base plan and "SR" was the add-on. Worth checking if you have multiple types of coverage.
I think it varies by company too. At my previous job, "SR" meant "Self + Room/Boarder" because I had a domestic partner on my insurance who wasn't legally a spouse. So many different systems all using the same abbreviations for different things!
This thread has been super helpful! I work in benefits administration and can confirm that payroll codes are unfortunately not standardized across companies. "Medical EE - SR" could mean several different things depending on your employer's system: - Employee - Standard Rate (most common) - Employee - Senior Rate (age-based pricing) - Employee - Spouse Rate (family coverage) - Employee - Supplemental Rate (additional coverage) The best approach is definitely to check with your HR department first, as they'll have the specific definitions for your company's codes. If you can't get clear answers there, your insurance card usually has a member services number that can help explain what coverage you're actually paying for. One tip: if you're budgeting, remember that most medical insurance premiums are deducted pre-tax, which reduces your taxable income. So while you see the deduction on your gross pay, it's actually saving you money on taxes compared to paying the same amount out-of-pocket after taxes.
One more thing to consider - if your main employer offers any kind of reimbursement for mileage (even partially), make sure you're taking advantage of that too. Its not double dipping to get reimbursed from your employer AND deduct your self-employment miles separately. Just don't claim the same miles twice. Also, don't forget about potential home office deduction if you have a dedicated space for your consulting business. That can also increase the deductible miles since you'd count trips from your home office to clients as business miles rather than commuting.
I thought the home office deduction was also eliminated with TCJA for employees? Or does it still work for self-employed people?
You're absolutely right to clarify that! The home office deduction was eliminated for W-2 employees under the Tax Cuts and Jobs Act, but it's still available for self-employed individuals and independent contractors filing Schedule C. So for your consulting business, you can still claim the home office deduction if you have a dedicated space used exclusively for that work. This is actually a great point Connor made - having a qualified home office can turn what would normally be considered "commuting" miles into deductible business miles. So trips from your home office to client sites would be business travel rather than commuting, which can significantly increase your deductible mileage. Just make sure the space is used exclusively and regularly for your consulting business to meet the IRS requirements.
Great question about vehicle expenses! As others have mentioned, you're absolutely fine to deduct mileage for your consulting business as long as you keep proper records. This is completely legitimate and not double dipping at all. One thing I'd add that hasn't been mentioned yet - make sure you're aware of the updated 2024 standard mileage rate, which is 67 cents per mile for business use (up from 65.5 cents in 2023). With 8,700 miles for your consulting work, that's a potential deduction of $5,829, which is definitely worth claiming properly. Also, since you're driving 50k miles annually, make sure you're factoring in the increased depreciation on your vehicle. Even though you can't deduct your W-2 job mileage, that heavy usage does affect your vehicle's value, so maximizing legitimate business deductions becomes even more important. Keep detailed logs with date, destination, business purpose, and odometer readings for each consulting trip. A simple spreadsheet or mileage tracking app works great for this. The IRS just wants to see that you can substantiate the business purpose of each mile claimed.
Does anyone know if the payment processors send you a receipt or confirmation? I paid through one last year but never got anything by email, just the confirmation number on the screen which I wrote down. Is that normal?
For anyone still concerned about the 1040-V voucher - I had the same worry last year! The key thing to remember is that when you pay online with a credit card, the payment processor automatically links your payment to your tax return using your SSN and other identifying info you enter during checkout. The 1040-V is essentially just a paper trail for mailed payments. Think of it like a deposit slip at the bank - if you're doing online banking, you don't need the paper slip because the electronic transaction handles all the routing. One tip: after you make your online payment, you can check that it went through by logging into your IRS account online after a few business days. It should show up under your payment history, which gives you extra peace of mind that everything was processed correctly.
Carmen Diaz
Don't overlook the marketplace facilitator laws! If you decide to expand beyond your website to sell on platforms like Amazon, Etsy, or eBay, those platforms handle the sales tax collection and remittance in most states now. This might be a way to expand your business without increasing your sales tax burden, especially for those occasional sales in states where you're not registered.
0 coins
Andre Laurent
ā¢This is accurate but incomplete advice. While marketplace facilitator laws do help with the collecting and remitting part, you still need to deal with income tax reporting in states where you have nexus. And some states still require you to register for a sales tax permit even if the marketplace is handling the actual sales tax.
0 coins
Jackie Martinez
I understand your frustration completely - I went through the exact same confusion when I started my dropshipping business two years ago. Here's what I learned that might help simplify things: First, don't panic about registering in every possible state from day one. Most states have economic nexus thresholds (usually $100k in sales or 200 transactions annually) that you likely won't hit initially. Focus on your home state first, which you've already done correctly. For the supplier issue, try this approach: Ask your supplier if they'll accept a multi-jurisdiction resale certificate along with documentation showing you're registered in your home state. Many suppliers will accept this as reasonable good faith effort, especially for smaller businesses. Another practical tip: Keep detailed records of where your sales actually go. You might find that 80% of your orders come from just a few states, making your compliance much more manageable than you think. The reality is that perfect compliance from day one is nearly impossible for small businesses, but good faith effort and proper documentation go a long way. As your business grows and you can afford professional help, you can tighten up your compliance. Don't let analysis paralysis stop you from growing your business!
0 coins