Thanks for this explanation! I didn't roll it over, I cashed it out completely (I know, probably not the smartest financial move, but I needed the money for some home repairs). So it sounds like I should definitely be reporting this on my 2024 taxes regardless of what TurboTax is saying? I'm wondering if I somehow answered one of their questions wrong during the interview process.

Yes, you absolutely need to report it on your 2024 taxes (filed in 2025). Since you cashed it out completely and didn't roll it over, it's a taxable distribution in the year it was distributed. I suspect you might have accidentally indicated it was a rollover when answering TurboTax's questions, or there might be some other confusion in how you're navigating the software. I'd recommend starting over with entering that 1099-R and carefully reading each question. If TurboTax still gives you the same guidance, you should contact their support because that would definitely be incorrect advice for your situation.

This is a really good point! I've made this exact mistake before. The tax software naming conventions can be super confusing because they're labeled with the tax year, not the year you're using them in.

The problem with checking that box is it often withholds too much if your incomes aren't exactly equal. I found it better to use the irs withholding calculator online and follow its recommendations instead of the worksheet.

That's a fair point. The checkbox method is definitely a rough estimate. The calculator is more precise, especially if one spouse makes significantly more than the other. I've found the worksheet reasonable when our incomes are within about 20% of each other, but anything beyond that and the calculator is definitely the way to go.

This is good advice. I target about $500 refund as a buffer. Also remember that if you owe more than $1000 at tax time AND didn't have at least 90% of your tax liability withheld throughout the year (or 100% of last year's tax), you could face underpayment penalties.

Is the "Total Tax" on Line 24 the same as the "Total Payments" on Line 33? I always get confused about which number TurboTax wants when it asks these questions.

No, they're definitely different numbers. The "Total Tax" on Line 24 is your actual tax liability - the amount you owed based on your income, deductions, and credits. This is what TurboTax is asking for when it requests your tax liability. The "Total Payments" on Line 33 is the sum of all the payments you made toward that tax liability through withholding, estimated payments, and other credits. If your payments exceeded your liability, you got a refund. If your liability exceeded your payments, you owed additional tax when you filed.

Tax software really should explain these terms better! I work in finance and even I sometimes get tripped up by their wording. They assume everyone understands tax jargon.

But wouldn't it be better to just sell everything now if you think the stock will keep dropping? I'm in a similar situation and worried about losing even more money while trying to optimize for taxes.

You're absolutely right that investment considerations should come before tax planning. If you believe the stock will continue dropping, then selling everything immediately makes sense regardless of the tax implications. My advice is more applicable if you're on the fence about the stock's future or if you believe it's already bottomed out. In that scenario, tax planning can become a more significant factor in your decision-making process. Everyone's investment outlook is different, so you need to weigh both the market risk and tax efficiency together.

AMT credits don't expire! That's one of the few good things about this whole mess. You can carry them forward indefinitely until you use them up completely. I've been carrying mine for almost 7 years now.

How would you determine if it's royalty income vs. other types of payments? The 1099-NEC doesn't really specify the nature of the payment, just the amount.

You'd need to look at supporting documentation from the union explaining the nature of the payments. Ask your client for any letters, statements, or the original agreement with the union that established these payments. The description might use terms like "residuals," "royalties," or "use of intellectual property." Also check Box 1 of the 1099-NEC to see if there's any description near the amount. Some payers will include a brief memo there. If there's nothing there, your client should contact the union's benefits office directly and ask for a written explanation of what these payments represent.

That's why I stopped going to those tax prep chains. They charged my mom $350 to file a return that literally only had Social Security income on it. Total scam.