Has anyone here done the math on whether it's better to max 401k or do some in 401k and some in a Roth for this income level? I'm trying to figure out the best split now that my income is higher.

Congratulations on your promotion! I went through a similar situation a couple years ago when my income jumped significantly. One thing that really helped me was calculating my estimated effective tax rate vs marginal rate - the effective rate increase isn't as scary as it first seems. With your combined income of $215k, you're right that some will hit the 32% bracket, but your effective rate will still be much lower. At your income level, definitely consider maxing the 401k ($23,000 for 2024) - every dollar you put in saves you 32 cents in taxes on the portion above $182,100. Also worth noting: make sure to update your W-4 with HR soon. The withholding tables might not automatically adjust properly for such a big jump mid-year, and you don't want to be surprised with a big bill next April. The IRS withholding calculator someone mentioned earlier is really helpful for this. One more tip - if you have an HSA option through your health plan, definitely max that out too ($4,300 individual/$8,550 family for 2024). It's the only triple tax advantage account we have!

I'm using H&R Block instead of FreeTaxUSA and don't see this exact question. Is there something similar I should be looking for? Getting my first 1099-NEC this year and don't want to miss anything important.

As someone who's been doing contract work for a few years, I can confirm what others have said - the answer is "Yes" for your situation. This question trips up so many people because it sounds way more complicated than it actually is for most US-based contractors. The "effectively connected" language comes from international tax law, but tax software has to ask everyone. Since you're physically in the US, working for a US company, and receiving a 1099-NEC, your business activity is definitely effectively connected with US trade or business. I remember being terrified of this same question my first year filing as a contractor. The IRS isn't trying to trick you - they just need to know if your business income should be subject to US taxation, which it absolutely should be in your case. You're not going to trigger an audit by answering "Yes" to this question when you're clearly a domestic contractor.

My brother-in-law went through an audit last year and it was like trying to fill a swimming pool with a teaspoon - endless requests for more documents. They questioned his rental property expenses and asked for everything from repair invoices to tenant communications. He thought he was prepared with a shoebox of receipts, but they wanted digital copies of bank statements showing the exact transactions. By the end, he spent more on the accountant helping him than the tax difference in question! The moral of the story: keep EVERYTHING, and organize it like your financial life depends on it.

This is such valuable insight for your research paper! I went through a correspondence audit in 2022 after claiming the Child Tax Credit. They specifically requested: - Birth certificates for both kids - School enrollment records - Medical records showing the kids lived with me (pediatrician visits, etc.) - Proof of address (utility bills, lease agreement) - My ex-wife had to sign a Form 8332 releasing her claim to the exemption What struck me most was how the IRS letter made it sound like I was being investigated for fraud, when really they just needed to verify my kids qualified. The whole process took about 5 months, but once I provided everything they asked for, they accepted my return as filed. One thing that might be interesting for your paper - the audit seemed triggered by the fact that my income increased significantly from the previous year (job promotion), but I was still claiming the same credits. The IRS computers probably flagged it as unusual. Makes you wonder how many legitimate taxpayers get audited just because their circumstances changed!

I can totally relate to that anxiety of waiting for mystery mail! I'm in a similar boat - filed on January 28th and got flagged for verification about 3 weeks ago. From everything I've read here and experienced myself, IRS letters almost never show up with images in Informed Delivery, so that's actually a good sign that it could be your verification letter! The waiting game is brutal, but it sounds like you're right on track timeline-wise. Most people seem to get their letters within 2-4 weeks of being told they need to verify. Once you do get it, make sure to verify as soon as possible - I've seen people here say they got their refunds much faster than the 9-week estimate once they completed verification. Fingers crossed that today's mystery mail is exactly what you're hoping for! The IRS really needs to work on their communication and transparency with this whole process.

I'm going through this exact same situation right now! Filed on February 20th and have been stuck in verification limbo for about 3 weeks now. The mystery mail in Informed Delivery is so nerve-wracking - I literally run to my mailbox every day hoping it's finally THE letter. From reading all the responses here, it's really reassuring to know that IRS letters typically don't show images in Informed Delivery. I had no idea that was normal! I've been getting my hopes up every time I see mail without a preview image, thinking "this has to be it." The waiting game is absolutely brutal, especially when you're counting on that refund. I've been checking Where's My Refund obsessively every morning, but it just keeps saying the same thing. At least now I know from everyone's experiences here that once you actually get the letter and verify, things seem to move much faster than the 9-week estimate they give you. Really hoping your mystery mail today is your verification letter! Please update us when you find out - I think there are a lot of us in the same boat right now just waiting and hoping. This whole process really makes you appreciate how much we rely on that refund money for bills and expenses.

Wait I'm confused about something here. Doesn't the original mortgage create complications? If the bank released the frontage lot from the mortgage, wouldn't that be considered debt relief and potentially taxable? Or does the 1031 exchange override that somehow?

This is a really helpful discussion! I'm dealing with a somewhat similar situation where I subdivided investment property for a 1031 exchange, though mine was commercial land rather than residential. One thing I learned from my tax attorney is that you should also consider whether any of your closing costs from the original purchase can be added to your basis. Things like title insurance, legal fees, and survey costs from when you bought the 26-acre parcel can often be included in your adjusted basis calculation, which would reduce your taxable gain. Also, since you mentioned fighting a tax levy - if those legal fees were related to defending your title to the property or protecting your investment, they might also be added to basis rather than treated as a current deduction. The FMV allocation method you're using sounds correct, but definitely document everything thoroughly. The IRS tends to scrutinize subdivided land transactions more closely, especially when there are significant value differences between parcels like highway frontage vs. wetlands. Good luck with Form 8824 - it's definitely one of the more complex forms to navigate!