This is great info! Does anyone know if there's a way to tell from the K-1 whether the trust is a grantor trust? I think mine might be because my grandfather is still alive and the letter mentions something about him being the "grantor" but I'm not sure if that changes how I report it.

A grantor trust is actually quite different for tax purposes. If you see your grandfather referred to as the "grantor" and he's still alive, it might indeed be a grantor trust. In that case, the income is actually taxable to the grantor (your grandfather), not to you as the beneficiary. However, some trusts can be partially grantor trusts. The key indicator on your K-1 would be in the top section - it should specifically identify if it's a grantor type trust by checking a box. If you received a K-1 with your name as the beneficiary, you likely still need to report something, but possibly not all items. The cover letter should clarify this, as grantor trusts have special reporting requirements.

Ugh that's what I was afraid of. Do you know if there's a minimum amount that requires amending? Mine is only showing like $800 in dividend income. Would the IRS even notice if I don't bother with an amendment for such a small amount?

Thanks everyone for all the helpful answers! I'm going to make sure I report everything correctly from my K-1. Seems like the consensus is that I need to include the information on my tax return but don't physically send in the K-1 form itself. I'll keep the original documents with my tax records just in case. I'll probably check out that tax document analyzer tool too since this is my first time dealing with trust income. Better to understand what I'm looking at rather than just blindly entering numbers into tax software!

Thanks for this perspective. They're not a CPA from what I know, just a local tax preparation business. Would it be appropriate to directly ask them about their PTIN status, or would that likely just cause them to get defensive?

I think it's completely reasonable to ask them directly. A professional should be able to answer questions about their credentials without getting defensive. You might say something like, "I was researching tax preparers and learned about PTINs. Could you tell me about your credentials and PTIN status?" If they get extremely defensive or evasive, that's actually useful information for you in making decisions about continuing with them. A simple oversight in renewal would typically be met with "Oh, thanks for bringing that to my attention, I'll get that updated right away.

Good catch. This is a huge red flag to me. If they're bypassing systems or misrepresenting themselves to the software, what else are they being dishonest about?

I actually did fill out a W-9 when I first started the project. That's part of why I'm annoyed they haven't sent the 1099-NEC. Do you think I should resend the W-9 as a reminder?

No need to resend the W-9 if you already provided one. That means they have your information and are just dropping the ball on their responsibility to send the 1099-NEC. At this point, I'd send one final email that politely but firmly states that you provided a W-9, the January 31st deadline has passed, and you need the document for your tax records. Maybe mention that you'll be proceeding with filing your taxes based on your own records of payment.

I use TurboTax every year and it's fine for this situation. When you go through the self-employment section, it'll ask if you received any 1099s, but you can just enter the income manually without entering any 1099 information. Just select "I'll enter my income without a 1099" when prompted.

Thanks for breaking it down! So if I understand correctly, my $86k W2 would allow for: $23k employee contribution, then 25% of $86k = $21.5k employer contribution, which leaves $24.5k that I could contribute as after-tax dollars for immediate Roth conversion. So I could do the full MBDR, just not the full $69k as after-tax contributions. Is that right?

You've got it exactly right. With your $86k W2 salary, you can make the $23k employee deferral and about $21.5k as the employer contribution. That leaves approximately $24.5k that you can contribute as after-tax dollars for the Mega Backdoor Roth conversion. So while you can reach the full $69k overall limit, only a portion of that would be after-tax contributions eligible for the Roth conversion. This is still a fantastic strategy for building tax-free growth in your retirement savings, and your income level is absolutely sufficient to take advantage of it.

Did you have any issues with timing? I'm worried about setting up the solo 401k, making contributions, AND doing the Roth conversion all before the tax year ends. How tight is that timeline?

That's really helpful advice about documentation. I'll definitely gather all my pay stubs and benefits enrollment forms. Did you have any issues after filing the 4852, like getting audited or questioned by the IRS?

I didn't have any issues after filing the 4852. The IRS never questioned it or followed up about it. I was prepared for an audit, but nothing ever happened. I think as long as you're making a legitimate correction and have the documentation to back it up, they're not concerned. The only minor hiccup was the following year - I made sure to double-check my W-2 immediately when I received it, and found they had fixed the miscategorization issue but had a small error in my state withholding. At least I caught it early that time!

I wouldn't recommend that approach. An explanation letter doesn't have any official status with the IRS. Form 4852 is specifically designed for correcting W-2 errors and is the proper way to handle this situation. If you file with an incorrect W-2 and just attach a letter, your tax return will still be processed based on the incorrect information. This could potentially cause problems later, especially if the amounts affect other calculations on your return.