Has anyone actually had their return audited over this issue? I'm in a similar situation (though smaller settlement) and wondering how risky it is to override the 1099-NEC categorization without getting the company to issue a corrected form.

I'm dealing with a very similar situation right now! Got a $30k discrimination settlement and the company also sent me a 1099-NEC. My tax preparer told me the same thing - discrimination settlements should NOT be treated as self-employment income. What worked for me was contacting the company's payroll department directly and asking them to issue a corrected 1099-MISC instead of the 1099-NEC. They were surprisingly cooperative once I explained that discrimination settlements aren't business income. It took about 2 weeks to get the corrected form, but it made everything much cleaner for filing. If you can't get a corrected form in time, definitely follow the advice about overriding in your software. Just keep really good documentation - I saved emails with the company about the settlement nature and printed out IRS guidance on discrimination settlement reporting. Better safe than sorry if questions come up later!

Last year I had the same issue with SBTPG and Credit Karma. The message changed to "in queue" on a Thursday, and I was checking my bank account literally every hour. Nothing Friday, nothing Saturday, nothing Sunday... finally got it Monday morning. I called SBTPG twice and got different answers each time. One rep said it was "processing normally" and another said there was a "batch delay." Now I just file directly with the IRS and get my refund sent straight to my bank. Yes, I have to pay the preparation fee upfront, but I get my full refund 3-5 days faster. Is it worth the extra waiting time to have the fee taken out of your refund instead of paying upfront?

I'm dealing with the exact same situation right now! Got the "direct deposit in queue" message from SBTPG yesterday around 1 PM and still nothing in my account. What's frustrating is that my IRS transcript shows my refund was already sent to them on Monday, so they've had my money for 3 days now. I understand they need time to process fees, but the lack of transparency is what gets me. Their automated system just keeps saying the same thing with no actual timeline. Next year I'm definitely paying the prep fees upfront and having my refund go directly to my bank - this middleman situation is way too stressful when you're counting on that money for bills.

Have u already entered the business as inactive or closed in TurboTax? Sometimes thats all u need to do and it will stop asking for forms. I had this issue last yr with schedule C stuff from my etsy shop that i closed in 2021.

This is a really common issue with TurboTax! Since you haven't had any business income since 2019 and the business is essentially closed, you shouldn't need Form 8895. The problem is that TurboTax is probably still treating your business as "active" in its system. Here's what I'd recommend trying first: Go to the Business section in TurboTax, find your business entity, and look for an option to mark it as "closed" or "inactive." This should stop TurboTax from requiring forms related to ongoing business operations. If that doesn't work, you have a few other options that people have mentioned here - the taxr.ai tool seems to help people figure out exactly what's triggering these form requirements, or you could try calling the IRS directly (though Claimyr might save you the hold time). The good news is you definitely don't need to wait until January 19th to file your return if your business has been inactive for years. There's just a setting somewhere that needs to be updated to reflect your current situation.

Quick question about the timing - if I operate as an LLC now but want to switch to S-Corp, can I do that midyear or do I need to wait until January to make the change? I just learned about this strategy and don't want to wait 6 months if I don't have to...

I made this exact transition from LLC to S-Corp election about 18 months ago when my consulting business hit similar revenue levels. The strategy absolutely still works, but you need to be strategic about it. For your $135K revenue, you'll likely want to pay yourself somewhere in the $70-85K range as W-2 salary (this varies by industry and location). The key is documenting WHY that's reasonable - look up comparable positions on salary websites, consider your education/experience, hours worked, etc. The tax savings can be significant - you'll save about 15.3% in self-employment taxes on the distribution portion. But factor in the additional costs: payroll processing (~$100/month), S-Corp tax return preparation (~$800-1500), and your time for compliance. One tip that saved me headaches: set up your payroll to pay yourself the same amount each month rather than trying to optimize it quarterly. Makes bookkeeping much cleaner and looks more legitimate to the IRS. Also, make sure you're actually taking those distributions regularly throughout the year, not just on paper at year-end. The paperwork isn't terrible once you get systems in place, and the tax savings usually justify the extra complexity at your income level.

Has anyone done calculations on the breakeven point for Roth conversions when considering Social Security taxation? I'm 58 and wondering if it makes sense to pay higher taxes now for the conversion if I'll only collect SS for maybe 15-20 years?

One thing I haven't seen mentioned yet is the impact of Medicare premiums (IRMAA) when planning Roth conversions. While qualified Roth distributions won't affect your Social Security taxation, the conversion amounts in the years you do them can push you into higher Medicare premium brackets. I learned this the hard way when I did a large conversion in 2022 that bumped me into a higher IRMAA bracket for 2024-2025. The extra Medicare premiums ate into some of the long-term tax savings I was expecting. Now I'm being more strategic about spreading conversions over multiple years to stay under the IRMAA thresholds. It's another factor to consider alongside the Social Security taxation benefits - you want to optimize for both Medicare costs and SS tax efficiency. The sweet spot seems to be converting enough to get the SS benefits but not so much that you trigger higher Medicare premiums down the road.