What's the difference in how these are taxed? Would it be better for OP if it's reported as 1099-MISC vs. W2 income?

The tax implications differ significantly between W-2 wages and 1099-MISC income. With W-2 income, the employer already withheld income tax, Social Security, and Medicare taxes. With 1099-MISC income, you'd be responsible for paying self-employment tax (which is both the employer and employee portions of Social Security and Medicare, totaling about 15.3%) on top of regular income tax. For class action settlements specifically, the correct tax treatment depends on what the settlement is compensating you for. If it's for back wages or lost income, it should typically be on a W-2. If it's for punitive damages or interest, it often belongs on a 1099. Some settlements have portions that belong on each form, but the total should never be duplicated across both forms.

Did filing the extension cause any problems? I'm in a similar situation but worried about delaying my refund.

Can you explain more about how this might affect Social Security? I'm planning to sell a rental property next year and I'm already receiving Social Security benefits.

For Social Security, if your combined income (your adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds certain thresholds, more of your Social Security benefits become taxable. For 2025, if you're filing single and this combined income exceeds $25,000, up to 50% of your benefits may be taxable. Above $34,000, up to 85% can be taxable. For married filing jointly, those thresholds are $32,000 and $44,000 respectively. So a large capital gain could definitely push you over these thresholds, causing more of your Social Security to be taxed.

The tax rate would be the same whether you sell one property or multiple properties in the same year. However, selling multiple properties might give you more flexibility with timing - you could spread the sales across different tax years to potentially keep yourself in a lower capital gains bracket each year.

That's exactly what's confusing me! The $11,250 in scholarships (Box 5) was disbursed in January 2025 for my final semester, but it's showing up on my 2024 1098-T. The expenses those scholarships covered were also from January 2025. So both the scholarships and expenses are for the same semester, but the scholarships are on my 2024 form while the expenses aren't showing up anywhere.

If your scholarship was disbursed in January 2025 but showing on your 2024 1098-T, something's definitely not right. Generally, schools report transactions in the calendar year they occur. If both the scholarship disbursement and the expenses were from January 2025, they should both be reported on your 2025 1098-T next year, not your 2024 form. I'd recommend contacting your school's financial aid or bursar's office to ask why the January 2025 scholarship is appearing on your 2024 form. There could be a reporting error, or they might have actually disbursed it in December 2024 even though it wasn't applied to your account until January.

This is actually backwards - Box 8 being checked means they're reporting based on amounts BILLED during the calendar year, not amounts paid. It's super confusing because schools can choose either reporting method.

You're absolutely right - I had it backwards! Box 8 checked means they're reporting based on amounts billed during the calendar year, not when payment was received. Thanks for the correction.

I didn't know that was an option! Most of the ones I looked at wanted the full payment upfront before even starting. Do you have specific ones you'd recommend that let you pay just for the filing part? I've already filled out all my forms so I'm really just looking for the electronic submission part.

FreeTaxUSA is pretty good for this approach. You can complete your federal return for free, then it's just $15 for the state portion. Some others like TaxAct and TaxSlayer have similar options where the federal basic filing is free and you just pay for state. If you've literally already completed the physical forms with a pen, then using the IRS Free File Fillable Forms mentioned above is your best bet. You'll just need to transfer the information from your paper forms to the electronic versions. There's a bit of duplicate work, but it's free and gives you the e-file benefits.

Certified mail with return receipt is essential too. It's a few extra dollars at the post office but gives you proof of when they received it. I file on paper every year and always use certified mail after having a return "lost" in 2018.

Thanks so much for sharing your experience! That's really helpful. Did you guys use any specific software to compare both options? I'm worried about making a mistake if I try to calculate everything manually.

We used TurboTax and just ran through the process twice - once for joint and once for separate. It was tedious but worth it. I'd definitely recommend using some kind of tax software that lets you save different scenarios. The student loan part was trickier - had to use the loan servicer's calculator separately to figure out how much payments would change under each filing status.

This is such an important point! We got hit with this last year and had to file an amendment. Cost us extra in prep fees and delayed our refund by months.

Yep, it's one of those weird tax rules that nobody tells you about until you make the mistake! The other thing that surprised us was that if you file separately, you often can't contribute to a Roth IRA if your income is over a certain threshold, which is much lower for separate filers than joint.