If I file now but can only pay like $500 upfront, will the IRS automatically put me on a payment plan or do I have to apply for that separately? I'm in a similar situation with 2022 taxes.

You need to specifically request a payment plan - it's not automatic. You can do this when you file by submitting Form 9465 (Installment Agreement Request) with your tax return. Alternatively, you can file first and then apply online for a payment plan through the IRS website if you owe less than $50,000. For amounts under $50,000, the online application is pretty straightforward and you can choose your monthly payment amount (as long as it would pay off the balance within 72 months). There's a setup fee that varies based on how you apply and pay - it's cheapest if you apply online and set up direct debit ($31 setup fee vs. $149 for applying by mail/phone with other payment methods).

How much did u end up owing if u don't mind me asking? And did u get any penalties reduced?

Did you find any deductions or credits you were missing when you switched? My biggest fear is leaving money on the table by doing it myself.

I actually discovered I qualified for the Saver's Credit that my tax preparer had missed the previous two years! It's for retirement contributions if you're under certain income limits. FreeTaxUSA has a good review system that checks for credits you might qualify for based on your inputs. It asks questions throughout that help identify potential deductions. In my experience, it was actually more thorough than my preparer who was rushing through multiple clients' returns during tax season.

I've used both. TurboTax has a slicker interface but FreeTaxUSA is MUCH cheaper and does everything you need. TurboTax charges extra for homeowner stuff and childcare credits (they put it in their "Deluxe" tier). With FreeTaxUSA all those forms are included in the free federal filing. For your situation, you'd probably end up paying $120+ with TurboTax vs. about $25 total with FreeTaxUSA (free federal + state fee). The questions and guidance are very similar between them.

Thank you for the clear explanation! If I receive a 1099-K, is there a specific form I need to file with my taxes to explain that this was gift money for medical expenses? Or do I just not include it as income when I file?

There's no specific form you need to file to explain gift money. You simply don't include the amount as income on your tax return. If you're using tax software, when you enter the 1099-K information, there will typically be a section asking about the type of income, and you can select "not income" or sometimes "personal gift" depending on the software. Some programs also have a text field where you can provide a brief explanation like "GoFundMe medical expense gifts from multiple donors." If filing on paper, you can include a brief statement explaining the funds were gifts for medical expenses.

Business fundraisers are treated differently from personal medical or hardship campaigns. Funds raised to start a business are generally considered taxable income since they're for a commercial purpose rather than a personal gift. You should probably report the $17k as income on your Schedule C if you're a sole proprietor. The good news is you can offset this with legitimate business startup expenses. I'd recommend talking to a tax professional who specializes in small businesses to make sure you're maximizing your deductions.

How did you handle the transition to CCH Engagement? Did you have to convert a lot of existing documents? We're currently using a hodgepodge of Excel workpapers and I'm worried about the time investment to switch.

The transition did take significant effort, but we did it gradually over about a year. We didn't try to convert historical workpapers - instead, we started using the new system with new clients first, then gradually transitioned existing clients as they came in for the next tax season. We created a core set of templates and standard workpapers before we rolled it out to the team. This upfront investment paid off tremendously as it ensured consistency from the beginning. We did need training from CCH to get everyone up to speed, but that was worth the investment.

We used Canopy for about a year but ultimately switched to SmartVault. Canopy has some nice features for client communication and task management, but we found the document management aspects to be less robust than we needed for complex business returns. The interface is clean and user-friendly, but it was missing some advanced referencing features that we wanted. If your practice is primarily individual returns with some simple business returns, it might be sufficient. For a practice with complex business clients, you might find it limiting.

That's a good point! I did notice the 1099-R amounts were slightly higher than my contribution amounts. So if I understand correctly, I need to: 1. File Form 8606 for 2022 to establish non-deductible basis 2. On my 2023 return, report both 1099-Rs 3. Make sure Form 8606 for 2023 shows my total non-deductible basis 4. Pay tax only on the earnings portion (the difference between contributions and distribution amounts) Does that sound right?

That's exactly right! You've got the process down perfectly. Just to emphasize: make sure your non-deductible basis on Form 8606 for 2023 includes BOTH years' contribution amounts, not just 2023's contribution. The only taxable portion should be those earnings (the difference between your total contributions and the total distribution amounts on the 1099-Rs). TurboTax should calculate this correctly once you have all the non-deductible basis entered properly.

This is such an important detail! I got caught by this exact issue with H&R Block software. It kept trying to treat my recharacterization/conversion as a distribution I was cashing out. I had to go through some special screens to mark it properly as a conversion.