Quick question - does anyone use QuickBooks Self-Employed or similar software to track these kinds of business expenses? I'm just starting out and trying to figure out the best way to keep everything organized for tax time.

I've been through this exact situation when I started my consulting LLC! The books you're describing should definitely qualify as legitimate business deductions since they're directly related to building the knowledge base for services you plan to offer. One thing I learned that might help you - create a simple spreadsheet tracking each book purchase with columns for: date, title, cost, and which specific service it relates to. This documentation was super helpful when my accountant was preparing my taxes. Also, if any of the books cover multiple topics, note which chapters/sections are most relevant to your business services. The $500 you're planning to spend sounds very reasonable for professional development, especially since you're being strategic about it before launching those service offerings. Just make sure to keep all receipts and maybe write a brief business justification for each purchase - even a sentence or two explaining how it helps you provide better services to clients.

Great question! I've been through this exact transition myself. You're absolutely right that short-term capital gains are taxed as ordinary income at the same rates as your W2 wages. So from a federal income tax perspective, $72k in W2 income vs $72k in short-term trading gains will have the same tax liability. However, there are some important differences to consider: 1. **No FICA taxes on capital gains** - As others mentioned, you'll save about 7.65% on Social Security and Medicare taxes, which is roughly $5,355 on $70k income. 2. **Quarterly estimated payments** - This is crucial! You need to make payments by Jan 15, Apr 15, Jun 15, and Sep 15 to avoid underpayment penalties. Calculate 25% of your expected annual tax liability for each quarter. 3. **Record keeping** - Keep detailed records of all trades, including dates, amounts, and basis. Your broker will send you a 1099-B, but having your own records helps catch any errors. 4. **State taxes** - Check your state's rules as they can vary significantly from federal treatment. For planning purposes, I'd recommend setting aside about 25-30% of your trading profits for taxes (depending on your tax bracket), since you won't have automatic withholding like with W2 income.

Just wanted to add a practical tip that saved me a lot of headaches - consider opening a separate checking account specifically for your trading taxes. I transfer 25% of every profitable trade immediately into this account, treating it as "tax money that's already gone." This helps in two ways: first, you're not tempted to reinvest money you'll owe the IRS, and second, when quarterly payment deadlines come around, the money is already there and accounted for. I learned this the hard way after a great trading month where I reinvested all my profits, then scrambled to find cash for estimated taxes. Also, since you mentioned keeping documentation - screenshot or download your daily P&L statements from your broker throughout the year. Sometimes year-end 1099-B forms have errors, and having your own running records makes it much easier to catch and correct discrepancies with the IRS if needed. The tax treatment might be the same as W2 income, but the cash flow management is completely different when you're responsible for your own withholding!

I had almost the same situation but with a traditional IRA rather than a Roth. Does anyone know if the process is different? I'm guessing with a traditional IRA both the contribution and earnings would be taxable when returned since it was pre-tax money, unlike a Roth which is after-tax?

I appreciate everyone sharing their experiences and advice here. This is exactly the kind of situation where having multiple perspectives really helps clarify things. Based on what I'm reading, it sounds like the consensus is pretty clear: I need to amend my 2024 return to include the earnings portion from the 1099-R, even though the form is dated 2025. The "P" code specifically indicates this relates to the prior year contribution. One follow-up question - when I amend my 2024 return in TaxSlayer, should I expect to see an option specifically for reporting 1099-R income with code PJ? Or will I just need to enter it as "Other Income" like Natasha mentioned? I want to make sure I'm categorizing it correctly so the IRS systems match everything up properly. Also, for anyone else dealing with this situation - it's reassuring to know that as long as we corrected the excess contribution before the filing deadline (including extensions), we avoid the 6% penalty. That was my biggest concern when I first realized the mistake.

I'm currently going through the exact same situation! Got my 424 code 6 days ago after filing on February 19th, and like everyone else here, I've been obsessively checking my transcript hoping for updates. It's actually so comforting to read all these experiences - I was starting to think I was the only one dealing with this! I also claimed the Child Tax Credit and some education credits, which based on what everyone's sharing seems to be a common pattern for triggering these verification checks. The uncertainty is definitely the worst part, but reading that most people still get their full refunds within 2-4 weeks (even if delayed) is really reassuring. Has anyone noticed if the 424 code tends to disappear over the weekend or does it typically update on weekdays? I'm trying to figure out the best times to check for changes without driving myself completely crazy!

I'm currently dealing with this exact situation too! Filed on February 15th and my 424 code appeared 9 days ago - the timing couldn't be worse since I had planned expenses around getting my refund by now. Reading through everyone's experiences here has honestly been such a huge relief because I was convinced I'd somehow messed up my return completely! I claimed both the Child Tax Credit for my two kids and education credits from my community college courses, which based on what everyone's sharing seems to be a pretty common trigger combination. The hardest part is definitely the complete lack of communication from the IRS - you're just left wondering if it's going to be days, weeks, or months. But seeing that most people here got their full refunds within 2-4 weeks (even with delays) is really keeping me hopeful. Has anyone found any patterns in terms of what day of the week transcript updates typically happen? I've been checking daily but trying to figure out if there are better times to look for changes!

H&R Block user here - mine went through fine with 1099-NEC. Def call again and get a second opinion

This is frustrating but unfortunately pretty common. The IRS systems don't always sync properly with third-party software like H&R Block. A few things to try: 1) Get your tax transcript online to see exactly what the IRS has on file, 2) Contact H&R Block to confirm they successfully transmitted your return, and 3) If you do need to fax the 1099-NEC, send it to the processing center that handles your region (you can find this on IRS.gov). Keep records of everything you send. The processing delays this year have been brutal so you're definitely not alone in this mess.