Does anyone know if HRBlock handles this Form 8606 issue better than FreeTaxUSA? I'm considering switching tax software because I keep having issues with where to enter non-deductible contributions.

I ran into this exact same issue last year! The key is that FreeTaxUSA separates current year contributions from the basis tracking questions, which is super confusing. Here's what you need to do: 1. Go to the **Deductions** section (not the retirement/IRA section where you'd expect) 2. Look for "Traditional and Roth IRA Contributions" or similar wording 3. Enter your $7000 contribution for 2024 4. When it asks if the contribution is deductible, select **"No"** or **"Non-deductible"** 5. Complete any follow-up questions about income limits, etc. Once you do this, FreeTaxUSA should automatically populate Form 8606 Line 1 with your $7000. The form should then show: - Line 1: $7000 (2024 non-deductible contribution) - Line 2: $6500 (prior year basis) - Line 3: $13500 (total basis) The software will then correctly calculate that only the $1400 in gains from your 1099-R is taxable, not your $13500 in contributions. This workflow has caught me off guard before because logically you'd think all IRA stuff would be in the retirement section, but FreeTaxUSA requires you to enter contributions as potential deductions first before it knows to treat them as non-deductible basis.

For budget-friendly back tax filing, I'd definitely recommend getting quotes from at least 3-4 different sources before deciding. In my experience, the price differences can be pretty significant - especially for multiple years. One thing to keep in mind is that many CPAs offer discounts for filing multiple years at once, so make sure to ask about that when you're calling around. The house sale year will likely cost more due to the additional forms needed, but for the other straightforward years, you should be able to find reasonable rates. Local CPAs are often your best bet for both price and personalized service. They're more likely to work with your budget and explain everything clearly. I'd also suggest asking if they offer payment plans - many will let you spread the cost out over a few months, which can help with cash flow. Don't forget to factor in any potential refunds your cousin might be owed from those back years - that could help offset some of the preparation costs!

Another option worth considering is checking if your cousin qualifies for the IRS Volunteer Income Tax Assistance (VITA) program or similar community programs. While most VITA sites focus on current year returns, some locations do offer back tax preparation services, especially during off-peak seasons. You might also want to look into whether your cousin actually needs to file all three years. If his income was below the filing threshold for any of those years and he had taxes withheld, he might only need to file to claim refunds (and there's a 3-year limit on claiming refunds). But if he owes money, definitely file ASAP to minimize penalties. For the house sale year specifically - if it was his primary residence and he lived there 2 of the last 5 years, he might qualify for the capital gains exclusion (up to $250k for single filers), which could simplify things significantly. Many CPAs handle basic home sales regularly, so don't feel like you need a specialist unless the situation is truly complex. One last tip: if money is really tight, your cousin can always file the returns himself using tax software and then hire a professional later for amendments if needed. Getting something filed stops the failure-to-file penalties, which are usually much steeper than any accuracy issues.

Just wanted to share my experience from last year - I was in the exact same situation as you @c0a759d0a949! I had my paper 1040 ready to go but got so confused about the mailing addresses. After reading through all the conflicting info online, I ended up calling my local post office directly and they confirmed that the Ogden, UT address (Department of Treasury, Internal Revenue Service, Ogden, UT 84201-0002) is correct for California residents filing without payments via regular mail. I sent mine with certified mail for about $4 extra and got confirmation it was delivered within a week. The IRS processed my return normally and I got my refund without any issues. Don't overthink it - the address you found on the IRS website is the right one! Just make sure you're not including any payment checks, otherwise you'd need the Cincinnati address that others mentioned. If you're still worried about it, your local post office can double-check the address for you when you go to mail it. They deal with tax returns all the time during filing season.

I just went through this exact same situation last month! The confusion is totally understandable because there really are different addresses depending on how you're sending it. Since you're in California and filing a Form 1040 without a payment, the address you found is correct for regular USPS mail: Department of Treasury Internal Revenue Service Ogden, UT 84201-0002 The UPS employee was right that they can't use this address - private carriers like UPS and FedEx need the street address version, which would be: Internal Revenue Service 1973 Rulon White Blvd. Ogden, UT 84201 My advice? Just stick with regular USPS since you already have the correct address. You can even do certified mail for a few extra dollars if you want tracking and proof of delivery. I did that and had zero issues - got my refund processed normally. Don't stress about it too much, you've got the right info!

Quick question - I'm in a similar situation but my LLC is taxed as an S-Corp. Does that change what I need to file if there was no activity?

This is a great question that a lot of new LLC owners face! Just to add another perspective - if you're thinking about keeping the LLC for future use, you might want to consider the ongoing costs vs. the hassle of forming a new one later. In some states, the annual fees are pretty minimal (like $50-100), so it might be worth keeping it active if you think you'll use it in the next few years. But in states like California with that $800 annual fee, it's probably better to dissolve it and just form a new one when you actually need it. Also, make sure you're not missing any deadlines! Some states have specific timeframes for when you need to file annual reports or dissolve the LLC to avoid penalties. I learned this the hard way when I forgot about a deadline and got hit with late fees even though my LLC never made a penny. The IRS filing requirements are definitely confusing for inactive LLCs, but better to be safe and file the appropriate forms with zeros than risk penalties later.

5 Has anyone used an online tax program like TurboTax for reporting inheritance stuff like this? I'm wondering if they handle this situation correctly or if I need to see a professional.

Just want to add another perspective here - I went through something very similar when my grandmother passed and left her property to multiple heirs. The stepped-up basis rule that others mentioned is absolutely correct, but make sure you keep excellent records of everything. One thing I wish someone had told me: if there were any improvements or expenses related to settling the estate (like repairs needed before the sale, legal fees for the estate, etc.), those might affect your basis calculation. Also, if there was any time gap between your father's passing and when the property was actually distributed to you heirs, you might need to consider whether there was any appreciation or depreciation in that period. The 1099-S you received is just the IRS making sure they know money changed hands - it doesn't necessarily mean you owe taxes on it. But definitely report it properly on Schedule D and Form 8949 as others have mentioned. When in doubt, it's worth consulting with a tax professional who deals with estate issues regularly.