This is super helpful, thanks! Just to clarify - when FreeTaxUSA shows that $6,000 basis, I should let it import that value rather than changing it, right? And do I need to report the conversion separately somewhere else too, or does Form 8606 handle all of it?

Yes, let FreeTaxUSA import the $6,000 basis since that's correct - it represents your non-deductible contribution that you've already paid taxes on. You do need to report the conversion separately as well. You should have received a Form 1099-R from your IRA custodian showing the distribution (conversion) amount. FreeTaxUSA will ask for this 1099-R information in a different section. Form 8606 ties these two events together - your non-deductible contribution and the conversion - to calculate how much of the conversion is taxable (which should be $0 if you had no earnings before converting).

I'm confused about the 1099-R part. My broker only sent me a 5498 form showing my IRA contribution, but no 1099-R even though I did a backdoor Roth last year. Should I have received both forms? Could this mean my conversion wasn't processed correctly?

You should have received both forms for a backdoor Roth conversion! Form 5498 shows your IRA contribution, but you also need a 1099-R for the distribution/conversion from your traditional IRA to the Roth IRA. If you didn't receive a 1099-R, contact your broker immediately - this could indicate the conversion wasn't properly processed or reported. The 1099-R is crucial because it reports the distribution amount to the IRS, and without it, your Form 8606 won't tie together correctly. Your broker should have issued it by January 31st for the prior tax year. Don't file without it!

If your net self-employment income (after deducting all legitimate business expenses) is negative, then you don't owe any self-employment tax for that year. SE tax only applies to positive net earnings. That said, be careful with equipment purchases - larger items may need to be depreciated over several years rather than deducted all at once in the year of purchase. There are exceptions like Section 179 deduction or bonus depreciation that might allow you to deduct the full amount immediately, but it depends on your specific situation.

I used TurboTax Self-Employed for my Poshmark business and it handled everything really well. It specifically asks about 1099-K forms and walks you through reporting the gross amount and then all your deductions. It even has specific categories for platform commissions, shipping, packaging supplies, etc.

Thanks! Did you find it asked enough questions to cover all the deductions? I'm worried about missing something important.

This is really reassuring to hear from someone with experience! I'm definitely overthinking this. Quick question though - when you say platform fees go under "Commissions and fees," does that include things like payment processing fees that some platforms charge separately, or just the main selling fee? I want to make sure I'm categorizing everything correctly.

Thanks for the tip about account setup timing! I was thinking of using Fidelity - has anyone had experience with how long their SEP setup process takes? I definitely don't want to miss the deadline because of administrative delays.

I haven't used Fidelity specifically for a SEP, but my buddy set one up with them last year and I believe it took about 3-4 business days to complete. Still, I'd recommend giving yourself at least two weeks before the deadline just to be safe. The other thing to consider is that even after the account is set up, transfers from your bank can take a few additional days to clear. Electronic transfers are typically faster than mailing a check, but even those can take 1-3 business days depending on your bank and the brokerage.

This is an important point. Are you saying if I'm an LLC taxed as an S-Corp and I pay myself $60,000 in salary but the business makes $120,000 in profit, my SEP contribution would be limited to 25% of the $60,000 salary, not the full $120,000?

Exactly right! With an S-Corp election, your SEP contribution is limited to 25% of your W-2 wages, not the business profits. So in your example with $60,000 salary, your max SEP contribution would be around $15,000 (25% of $60k), even though the business made $120,000 total. This is why many S-Corp owners also consider Solo 401(k)s instead of SEPs - with a Solo 401(k), you can contribute as both employee and employer, potentially allowing for higher total contributions. The employee portion can be up to $22,500 (for 2023) plus 25% of your W-2 wages as the employer contribution. Make sure to discuss this with your accountant since the optimal salary vs. distribution split for S-Corps involves balancing self-employment tax savings against retirement contribution opportunities.

Yes, you should generally make quarterly estimated tax payments if you expect to owe $1,000 or more in taxes from your LLC income (including investment income from the brokerage account). Since a single-member LLC is a pass-through entity, all that investment income flows to your personal tax return. If those dividends and capital gains are substantial, you'll want to make quarterly payments to avoid an underpayment penalty. The safe harbor is generally paying either 90% of current year tax or 100% of prior year tax (110% if your AGI was over $150,000).

This is really helpful advice! I'm just getting started with my single-member LLC and haven't opened a brokerage account yet, but this thread has been incredibly informative. The distinction between entity selection and tax treatment makes so much more sense now. Quick question - when you mention selecting "LLC" as the entity type, did you have to provide any additional documentation beyond the EIN letter and Operating Agreement? I'm wondering if there are any other forms or certificates I should prepare in advance. Also, did your brokerage require you to have a separate business bank account before opening the investment account, or could you set up the brokerage account first?