14 Does Direct File work if you have multiple W-2s and some 1099 interest? I've got 3 jobs and a savings account.

16 Direct File should work just fine with multiple W-2s and 1099-INT forms for interest income. The 2025 version has been expanded to handle most common simple to moderate tax situations. What it still doesn't support well are things like self-employment income, rental properties, or extensive investment transactions. But for your situation with 3 jobs and a savings account, you should qualify without issues.

11 H&R Block's free version is slightly better than TurboTax's but they still upsell HARD once you have anything beyond basic W-2 income. I tried them last year thinking I'd save money but ended up paying almost the same as TurboTax would've charged when they forced me to upgrade for my stock sales. FreeTaxUSA or Cash App Taxes are genuinely free alternatives that don't pull the bait-and-switch.

Terrible advice. The IRS can look back several years if they decide to audit you. Better to do things right the first time than risk problems later. I learned this the hard way.

You're right that documentation is ideal, but I'm just sharing my real-world experience. The IRS audits less than 1% of tax returns for people making under $200k annually. I agree it's better to do things properly, especially for larger amounts or if you're concerned about potential audit flags in your situation. My point was simply that many family loans happen informally without issues. That said, if someone has the option to document things properly from the beginning, they absolutely should.

Promissory notes are definitely the way to go! I'm an accountant (not giving professional advice) and this is what I recommend to friends and family. It doesn't need to be complicated - just the amount, dates, payment terms, signatures. Keep it with your tax records.

Thank you for this list! The withdrawal was indeed for medical expenses for my mom, but I'm not sure if it would qualify since it wasn't for me or my husband directly. Do you know if medical expenses for parents would count toward this exception?

For the medical expense exception, it generally needs to be for you, your spouse, or your dependents. If your mother qualifies as your dependent for tax purposes (which has specific requirements about support provided and living situation), then her medical expenses could potentially qualify. If she's not your dependent, unfortunately those expenses likely wouldn't qualify for the exception. But it's worth checking with a tax professional to see if there are any other options based on your specific situation.

100% agree. The IRS is actually pretty decent to work with if you're proactive. I set up a payment plan for a similar situation and it was surprisingly easy. The interest rate is way better than credit cards too.

Thank you - I definitely won't ignore it. I'm looking at either a payment plan or possibly taking a low-interest personal loan from my credit union to pay it off. I'm just so frustrated that what I thought was a responsible withholding amount wasn't even close to enough.

But doesn't that defeat the purpose? If you're using personal funds anyway, then you're still out the same amount of money, just in a different form. Or am I missing something about how the math works out?

The key difference is the self-employment tax. When you don't claim legitimate business expenses, you pay an additional 15.3% in SE taxes on that amount. So in my example, by not claiming $3,000 in expenses, I paid an extra $459 in taxes. If I had claimed those expenses, I would have saved that $459 in taxes, and could have then contributed the full $3,000 from my personal funds to the Solo 401k if I wanted to. In effect, I would have had $459 more dollars total (either to contribute or keep). So mathematically, you're always better off claiming legitimate expenses and then making contributions from your after-tax personal funds if needed.

Tax preparer here (not a CPA). The IRS does use a system called the Discriminant Information Function (DIF) that scores returns based on averages for your industry. Extremely low expenses can potentially raise your DIF score, but it's just one of many factors. Generally, understating deductions is less likely to trigger an audit than overstating them, but significant deviations from industry norms in either direction can increase scrutiny.

This is really helpful! So I should create a Schedule C even with zero income just to properly handle the truck depreciation? Will this trigger any red flags with the IRS?

Yes, create the Schedule C with zero income. This won't trigger any red flags - it's actually the proper way to handle it and prevents problems. The IRS already knows about your truck from previous years' depreciation, so they're expecting to see what happened to it. When you mark it as converted to personal use, the software will calculate if there's any "recapture" of depreciation that might be taxable. Sometimes when you convert a business asset to personal use, a portion of the previous depreciation deductions might need to be recaptured as income, depending on the fair market value versus the depreciated value on your books.

Wouldn't that cause problems if they never plan to use the business again though? Seems like you're just kicking the can down the road.