If you're tracking all those small transit expenses, just get a dedicated credit card for your business! Makes life SO much easier come tax time. I have one card I only use for business expenses, and my accountant loves me for it. Also, pro tip: most transit systems now have apps or online accounts where you can see your trip history. I set up an account with my city's transit system, and I can download a monthly report of all my trips. I add notes to each business-related trip right away in a spreadsheet. My accountant said this is perfect documentation.

Great question about home office transportation deductions! I've been dealing with similar issues for my consulting business. One thing I'd add is about the timing of when you can start claiming these deductions - make sure your home office has been established as your principal place of business BEFORE you start claiming the transportation expenses. The IRS looks at the facts and circumstances, so if you just set up the home office recently, keep good records showing it's truly your main business location. Also, for those subway trips, I've found it helpful to take a quick photo of the client's building or entrance when I arrive - gives you visual proof of the business purpose and location. Some auditors like to see that kind of corroborating evidence beyond just logs and credit card statements. One more tip: if you do multiple client visits in one day, you can deduct transportation between all the business locations, not just from home to the first client and back. So if you go Home → Client A → Client B → Home, the entire trip is deductible as long as each stop has a business purpose.

Has anyone used a tax advocate service for something like this? I'm also dealing with a CARES Act issue and wondering if that might help me navigate it.

I'm dealing with a similar CARES Act situation and want to add some clarity here. The key thing to understand is that you have until the tax filing deadline (including extensions) of the third year after your distribution to make repayments. So if you took your distribution in July 2020, you likely had until October 15, 2023 (with extensions) to repay. If that deadline has passed, you'll need to amend your 2020 return using Form 1040-X and include Form 8915-E to report the full $27k distribution. The good news is that CARES Act repayments are indeed treated as rollovers, not contributions, so they don't count against IRA contribution limits. One important point I haven't seen mentioned - even if you can only make a partial repayment now, it's still worth doing. Any amount you repay reduces your taxable income. And yes, you can repay to your current IRA even though it's different from the original 401k. My advice: First determine if you're still within the repayment window. If so, make whatever repayment you can afford and file the amended return showing both the distribution and repayment. If the window has closed, just amend to report the full distribution and pay the taxes owed. Don't let this stress you out further - the IRS has seen plenty of these situations and they're generally straightforward to resolve once properly documented.

When my dad passed away, we had a similar issue with the IRS claiming unreported income. In our case, it was because a retirement account distribution had been reported under the estate's EIN (Employer Identification Number) rather than my dad's SSN. The financial institution had filed the 1099-R incorrectly. Check if any financial institutions might have filed information returns using an EIN instead of your dad's social security number. This creates a mismatch in the IRS system and can trigger these kinds of notices.

I'm so sorry you're dealing with this during an already difficult time. Estate tax issues can be really overwhelming, especially when you're still grieving. One thing that might help is to look through any mail your father received in the months before and after he passed away. Sometimes financial institutions send year-end statements or tax documents to a different address, or they might have been mixed in with other mail. Even small accounts like CDs that auto-renewed or savings accounts with accumulated interest could generate 1099 forms that you weren't aware of. Also, if your dad had any employer benefits or pensions, there might have been a final distribution or rollover that generated taxable income. Sometimes these get reported to the IRS but the paperwork doesn't make it to the family right away. The good news is that the IRS is usually pretty reasonable about working with families to resolve these kinds of discrepancies, especially when there's clearly no intent to hide income. Document everything you find (or don't find) and keep copies of all your communications with them. You've got this - just take it one step at a time!

For anyone facing a Section 1341 situation, make sure you're keeping ALL documentation related to both the original payment and the repayment. I got audited on my claim of right deduction and the IRS wanted to see: 1) Original pay stubs/documentation showing I received the income 2) Evidence I included it in my prior year taxable income 3) Documentation proving I repaid it 4) Calculation worksheets showing how I determined which method was better Also worth noting that the repayment has to be involuntary or due to legal obligation - you can't just voluntarily return money and claim Section 1341.

This is such a helpful thread! I'm dealing with a similar situation where I have to repay $18,500 in commission income that was incorrectly calculated by my employer in 2023. One thing I wanted to add that might help others - when you're doing the calculations for both methods, make sure you consider any state tax implications too. In my case (I'm in Oregon), the state follows federal Section 1341 treatment, but I had to dig into their specific guidance to confirm this. Also, @Evelyn Martinez - since your repayment is $28,000 (well over the $3,000 threshold), you definitely qualify for the Section 1341 calculations. Based on what others have shared here, it sounds like you'll want to calculate both methods and see which gives you the better result. If your tax situation changed significantly between 2023 and 2024 (different income levels, filing status, etc.), one method could save you substantially more than the other. Has your employer provided you with any documentation about the repayment? You'll need that for your records as @Vanessa Chang mentioned.

Just a heads up - I went through this exact situation in 2023 and chose to carry forward my excess contribution. I can confirm that the earnings DO stay in the account. I called Vanguard (my Roth IRA provider) to double-check, and they said they don't even track which earnings came from which contributions - once money is in the account, it's all treated the same. They just report the total contributions for the year to the IRS. I paid the 6% tax on Form 5329 for 2023, and then in 2024 I contributed less to "use up" that carried-forward amount. It was actually pretty straightforward once I understood the process.

This is really helpful information! I've been dealing with a similar excess contribution situation and was worried I'd have to withdraw everything including the earnings. One question I have - when you carry forward the excess contribution, do you need to file Form 5329 every year until the excess is "absorbed," or just for the first year? And is there any limit to how many years you can carry it forward? I'm also curious about the practical side - how do you track this on your own records? Do you just make a note that part of next year's contribution is actually the carried-forward excess from this year?