One thing no one has mentioned - did you deduct your legal fees for getting this settlement? That can make a big impact on your taxes too!

I'm going through almost the exact same situation right now! My LTD insurer denied my claim after a car accident left me unable to work, and we're in settlement negotiations. Like you, I paid all my premiums with after-tax dollars through payroll deduction. From what I've researched and discussed with other people who've been through this, the general rule is that settlement money that replaces what would have been non-taxable disability benefits should maintain that same tax-free status. The tricky part is proving that allocation to the IRS if your settlement agreement doesn't specify it. I'd definitely recommend pushing your attorney harder on this - even if they don't provide "tax advice," they should be able to help you get a proper breakdown from the insurance company of what the settlement represents. You're paying them to advocate for you, and proper documentation is part of getting a complete settlement. Also, keep all your premium payment records showing you paid with after-tax dollars. That's going to be crucial documentation if the IRS ever questions the tax treatment. Good luck with everything - the whole process is so stressful even after you win!

Another option to consider is TaxAct - they charge around $25-30 for prior year returns and have a really clean interface for handling older tax years. I used them for my 2021 return that I filed late and was impressed with how they clearly separated the tax rules and forms that were in effect for that specific year. One thing I'd definitely recommend is gathering ALL your documents first before starting any software. Make sure you have your W-2s, 1099s, and any other tax documents from 2022. If you're missing anything, you can request wage and income transcripts from the IRS website which will show what was reported under your SSN for that year. Having everything ready upfront will save you from having to stop mid-process and hunt down missing paperwork. Also, since you mentioned moving across the country, don't forget to check if you need to file state returns for both your old and new states for 2022. Some states have different filing deadlines and requirements for part-year residents.

Just wanted to add that if you're worried about accuracy with a prior year return, consider using the IRS Free File Fillable Forms option. It's basically electronic versions of the actual tax forms that do basic math calculations for you, but don't guide you through like commercial software does. The advantage is that it's completely free for any tax year they support (including 2022), and you're working directly with the official forms so there's no question about whether the software is applying the right rules for that year. The downside is you need to be more comfortable navigating tax forms yourself. I used this method for my 2020 return that I filed late and it worked perfectly. Just make sure you're using the 2022 version of the forms and instructions, not current year. The IRS website has archived versions of all prior year forms and publications if you need to reference the rules that were in effect back then.

Thanks everyone for the helpful responses! This has been really confusing me since I got my EIN. Just to clarify my situation - I'm a solo LLC (no S-Corp election) and literally have zero employees, zero wages paid, zero payroll activity. Based on what everyone is saying, it sounds like I don't need to file Form 940 at all unless the IRS specifically mails me one, which they probably won't since I just got my EIN this year. I feel much better about this now. It's frustrating how the IRS instructions can be so confusing when the actual answer seems pretty straightforward!

I went through this exact same situation when I started my consulting business! The confusion comes from the IRS trying to cover all possible scenarios in their instructions. Here's what I learned after dealing with this: If you're a solo LLC with no employees and no wages paid, you absolutely do NOT need to file Form 940. The form is specifically for Federal Unemployment Tax (FUTA), which only applies when you have actual employees. The "check box C" instruction you mentioned only applies if the IRS physically mails you a Form 940 - which they sometimes do automatically to businesses with EINs because they don't know who has employees. Since you just got your EIN this year and have no payroll activity, it's very unlikely they'll send you one. Keep good records showing you had no employees this year, and you'll be fine. When you do eventually hire employees (if you plan to), that's when you'll need to start worrying about Form 940, along with Form 941 for quarterly payroll taxes. But for now, focus on the tax forms that actually apply to your solo business situation!

One thing nobody's mentioned yet - your son could also file Schedule C and take business deductions to offset some of the self-employment tax burden if he decides to just file as a contractor this year. Things like: portion of cell phone used for work, work clothes/boots, travel to job sites, tools purchased, etc. It won't completely solve the problem but might reduce the tax hit somewhat while you work on getting him properly classified for next year.

This is such a common problem with seasonal agricultural work! I've seen this happen repeatedly with local farms and orchards who classify teenage workers as contractors when they're clearly employees. The key test is really about control - if your son shows up at scheduled times, follows the orchard's instructions on how to do the work, and uses their equipment, he's an employee regardless of his age or the seasonal nature of the work. The IRS doesn't have a "seasonal worker exception" that automatically makes someone a contractor. What's particularly frustrating is that legitimate teenage employees earning under $12,550 wouldn't owe any federal income tax and would only pay the employee portion of FICA taxes (7.65%). But with the 1099-NEC, your son is getting hit with the full self-employment tax of 15.3% plus potentially owing income tax if he doesn't have enough deductions. I'd definitely start with a respectful conversation with the orchard owner. Bring documentation of the IRS worker classification tests and frame it as helping them avoid potential compliance issues. Many small agricultural businesses genuinely don't understand these rules and appreciate being educated rather than reported. If they refuse to correct it, you have solid grounds for filing Form SS-8 to get an official determination. The downside is it can take months and might strain the working relationship, but your son shouldn't have to pay extra taxes due to misclassification.

Has anyone mentioned the mortgage interest deduction limits? If you're filing separately, the limit for mortgage interest deduction drops from $750k to $375k of mortgage debt per person. If you have a larger mortgage in a high-cost area, this could be significant.

Great discussion everyone! As someone who's been through this exact scenario, I want to add one more consideration that saved us a lot of money: the Net Investment Income Tax (NIIT). At your income level ($410k), you're definitely subject to the 3.8% NIIT on investment income if filing jointly (kicks in at $250k for joint filers). But if you file separately, the threshold drops to $200k per person, which might actually work in your favor depending on how your investment income is distributed between you and your husband. If most of your investment income is in one spouse's name and that spouse makes significantly less than $200k, filing separately could help you avoid or reduce the NIIT. This is especially relevant if you have rental properties, dividends, or capital gains. Also, don't forget about the Additional Medicare Tax (0.9%) which has similar thresholds - $250k joint vs $200k separate. The interaction between these taxes and your local tax situation could be the deciding factor. I'd definitely recommend running the numbers with all these factors included, not just the basic income tax calculation. The savings from avoiding these additional taxes might outweigh the loss of other joint filing benefits.