9 I had exactly this issue! The solution is actually pretty simple. Since it's a Roth IRA and Box 2b is checked, you need to determine what portion of the distribution is earnings vs contributions. In TurboTax, there should be a question asking "Do you know your basis in this Roth IRA?" For a Roth that's only been open a few years with a small amount, it's likely very little is actually taxable. Just make sure to enter the total contributions your daughter made to the account (her basis).

This is a really common issue that trips up a lot of people! When Box 2a is blank and Box 2b is checked on a 1099-R for a Roth IRA, it means the financial institution is leaving it up to you to determine what's taxable. The key thing to remember is that with Roth IRAs, you get your contributions back first, tax-free. Since your daughter is 24 and only had the account for 3 years, and it was a small distribution of $650, there's a good chance most or all of it was just her original contributions coming back out. Here's what you need to do: Figure out how much she contributed to the Roth IRA over the years vs. how much it grew. If she put in $600 and it grew to $650, then only $50 would be taxable earnings. If she put in the full $650 or more, then nothing is taxable. Check with the financial institution for her contribution history, or look at old tax documents if she claimed the Saver's Credit for Roth contributions. Once you have that number, TurboTax should be able to handle the rest and generate Form 8606 automatically.

Don't panic! Form 1462 usually means there's a discrepancy or missing information in your filing. Since you have your confirmation number, that's great evidence you did file. I'd recommend calling the IRS practitioner priority line if you can get through - sometimes it's just a processing delay on their end. Also make sure to respond within the timeframe they give you (usually 30 days) with copies of your return and that confirmation number. Keep everything organized and document all your communications with them!

I went through something similar last year! The key thing is not to panic - Form 1462 is actually pretty common and usually just means there was a processing issue on their end. Since you have your confirmation number, you're in good shape. Make sure to respond promptly with a copy of your original return, that confirmation number, and a cover letter explaining you already filed. I'd also suggest getting your account transcripts from the IRS website to see what they have on file - sometimes that gives you clues about what went wrong. The whole process took about 6-8 weeks for me to resolve, but it worked out fine in the end!

Has anyone used TurboTax to report home sales? I'm wondering if it handles all the calculations correctly or if I should go to a CPA this year.

Just wanted to add one important detail that hasn't been mentioned yet - make sure you keep excellent records of ALL improvements you've made to the home, not just major ones. Even smaller improvements like new appliances, flooring, landscaping, or exterior painting can add up and increase your basis significantly. I learned this the hard way when I sold my first home and couldn't find receipts for about $15,000 worth of improvements we'd made over the years. Those would have further reduced my capital gain, but without proper documentation, I couldn't claim them. For your situation with a $290,000 gain that's already under the $500,000 exclusion, this might not matter for federal taxes, but it's still good practice and could help with state taxes or future property sales. Start gathering those receipts now while you're preparing to list!

One thing I learned the hard way - don't forget about state taxes! Depending on your state, they might not follow the same rules as federal for foreign property transactions. I sold a vacation home in Costa Rica and properly reported everything on my federal return, but California had different rules for how they wanted the currency gain/loss reported. Ended up having to amend my state return and pay penalties.

Great thread everyone! I'm dealing with a similar situation but with a twist - I owned the UK property jointly with my spouse (50/50). We're filing married filing jointly in the US. Do we need to split all the calculations 50/50 for reporting purposes, or can we report the full amounts since we're filing jointly? Also, if one spouse is a US citizen and the other is a permanent resident like the OP, does that change anything for the reporting requirements? The foreign asset reporting forms mentioned by @MidnightRider have me particularly concerned since I'm not sure if joint ownership affects the thresholds or if we each need to report separately even when filing a joint return.

This is such a helpful resource! As someone who's been doing freelance work alongside my regular job, I've been dreading tax season because I wasn't sure how to handle all my 1099-NEC income without paying hundreds for professional help. I'm definitely going to try Cash App Taxes based on the recommendations here. The fact that it's completely free for both federal and state filing, even with self-employment income, is amazing. One question - for those who've used multiple services, do you find significant differences in refund timing? I know the post mentioned Cash App Taxes might take slightly longer, but is it a matter of days or weeks compared to other free options? Also really appreciate the mention of organizing documents beforehand. I learned that lesson the hard way last year when I tried to file at the last minute and couldn't find half my receipts!

This is incredibly thorough - thank you for putting this together! I've been putting off filing because I wasn't sure how to handle my mix of W-2 income plus freelance writing work (multiple 1099-NECs). Quick question about the IRS Free File program - when you say it includes state filing, does that apply to all states? I'm in California and know they sometimes have different requirements than the federal system. Also, has anyone had experience using these services if you moved states mid-year? I relocated from Texas to California in July and I'm not sure if that complicates things for the free options. The organization tips are spot on too. I started using a simple spreadsheet to track all my freelance expenses monthly instead of scrambling at tax time - makes such a huge difference!