Does anyone know if I need to sell my investments in the traditional IRA before converting to Roth? Or can I just transfer the shares directly?

Madison, I went through this exact same situation last year! The key thing to understand is that you can't just convert the $7,000 you contributed this year due to the pro-rata rule that Julian explained perfectly. Since you have $55k in pre-tax funds plus your $7k contribution (total ~$62k), any conversion will be mostly taxable. If you convert $7,000, roughly $6,113 would be taxable income based on the pro-rata calculation ($55k ÷ $62k × $7,000). My advice: if your employer's 401(k) accepts IRA rollovers, consider rolling your existing $55k pre-tax balance into your 401(k) first. This would leave only your non-deductible $7k contribution in the IRA, which you could then convert to Roth with minimal tax consequences (only on any gains since contribution). Also, don't forget to file Form 8606 to report your non-deductible contribution - this is crucial for establishing your basis. For future years, consider making the non-deductible contribution and converting immediately to minimize gains and keep the process clean.

My accountant told me to track the gift card spending separately. If I use the gift card for more business expenses, those are still deductible. If I use it for personal stuff, then it's basically taxable income. So the real question is how you use the gift card afterward!

As someone who works in tax preparation, I've seen this exact situation come up frequently with clients. The consensus from tax professionals is clear: you can only deduct the net amount you actually paid for the education itself. The IRS Publication 529 (Miscellaneous Deductions) specifically addresses this type of situation. When you receive a rebate, refund, or other recovery for an expense you deducted in a prior year, it generally reduces the amount you can deduct. In this case, since you're receiving the gift card immediately with the purchase, you should treat it as a purchase price reduction from the start. What's particularly concerning about these arrangements is that they seem designed to exploit the employer reimbursement system. Your employer reimburses the full $1,295 tax-free, but you're effectively receiving $650+ in personal benefits. This could potentially trigger additional tax consequences if the IRS determines that portion of the reimbursement should be treated as taxable income to you. My advice: document everything carefully, only deduct the net educational cost, and be prepared to explain the arrangement if questioned. The "substance over form" doctrine will definitely apply here if audited.

One more thing to consider - if you trade in the vehicle instead of selling it outright, you may be able to defer the recapture tax. Section 1031 like-kind exchanges no longer apply to personal property like vehicles (changed with 2017 tax law), but there might be other strategies worth exploring with a tax professional.

This is a great discussion! One key point I'd add is about documentation. Since you mentioned this is for your consulting business, make sure you're keeping detailed records of not just mileage but also how the vehicle is being used for business purposes. The IRS can be pretty strict about heavy vehicle Section 179 deductions, especially for vehicles that could be considered "luxury" like the Hummer EV. They want to see that it's genuinely necessary for your business operations, not just chosen because of the tax benefits. Also, consider the timing of any potential sale carefully. If your business income fluctuates year to year, you might want to time the sale for a year when you're in a lower tax bracket, since that recapture income will be taxed at ordinary rates. The recapture hits all at once in the year of sale, so it could potentially push you into a higher bracket that year. Have you considered whether keeping it as a business asset and taking regular depreciation going forward might make more sense than selling? Sometimes the simplest path is the best one tax-wise.

For anyone confused about all these transcript dates - the "cycle date" (which includes that Feb 13 processing date everyone's seeing) is literally just the date when the IRS computer system processed that batch of returns. It has almost nothing to do with your individual return status. Think of it like this: IRS computers run weekly cycles to update their systems. If your return was in that batch, you get that cycle's date. It means very little for predicting your refund timing. What DOES matter: - Code 150: Return filed and entered into system - Code 570: Processing paused for review (temporary) - Code 971: Notice issued (they're sending you a letter) - Code 846: REFUND ISSUED (this is the one you want!) The date next to your 846 code is your actual refund date. Add 1-5 business days for bank processing.

Thank you all for the detailed explanations! This is exactly what I needed to hear. I was getting really anxious about that Feb 13 date thinking it meant something was wrong with my return. I just checked my transcript again after reading these comments and I do see code 150 (return filed) but no 846 code yet. Since I filed on Jan 30th and we're still within that 21-day processing window, I guess I just need to be patient and wait for that 846 code to appear. Really appreciate everyone breaking down what these codes actually mean - the IRS website is so confusing! I'll stop obsessing over that Feb 13 processing date now that I know it's just a batch processing marker. Will keep checking for that magical 846 code instead.

Has anyone dealt with 1099-R forms from multiple years where the Box 5 amounts suddenly changed? My mom's pension had $0 in Box 5 for years then suddenly showed $8,200 this year with no explanation, but the taxable amount barely changed.

I work in retirement plan administration and see this confusion constantly! The key thing to understand is that Box 5 insurance premiums don't always reduce Box 2a because of how qualified plans handle different types of contributions and costs. In your sister's case, that $15,675.50 in Box 5 likely represents premiums for life insurance coverage that was purchased as part of her pension plan. If these premiums were paid with pre-tax dollars from the plan (which is common), then they're already included in the taxable calculation - they don't get subtracted. The small difference between Box 1 ($52,410) and Box 2a ($51,728.80) is probably from a completely different source - maybe after-tax contributions she made to the plan years ago that are now being returned tax-free. I'd strongly recommend having her contact Nationwide directly to request a detailed breakdown of how they calculated Box 2a. They should be able to explain exactly what portion of the distribution represents taxable income vs. return of basis vs. insurance costs. Don't guess on this - pension taxation can be really complex and getting it wrong could trigger an audit or penalties.