Thanks for confirming this! It's really frustrating that the rollover counts against me even though I kept the money in retirement accounts. I wish TurboTax had explained WHY I didn't qualify instead of just saying I don't. Do you know if the distributions from previous years also reduce this year's eligible contributions? Like if I took a distribution in 2023, does that affect my 2024 Saver's Credit?

Yes, unfortunately distributions from previous years do affect your current year's Saver's Credit. Form 8880 looks at distributions from the current tax year AND the two previous tax years. So any distributions you took in 2022, 2023, and 2024 will all reduce your eligible contributions for the 2024 Saver's Credit. This "lookback period" is specifically designed to prevent people from taking money out and putting it back in to claim the credit repeatedly.

The timing absolutely matters! If you want to maximize your Saver's Credit eligibility for 2025, here's what you should consider: First, remember that Form 8880 counts distributions from the current tax year plus the two preceding years. So for your 2025 tax return, the IRS will look at distributions from 2023, 2024, and 2025. If you're planning to make contributions to retirement accounts in 2025 and want to claim the Saver's Credit, ideally you would avoid taking any distributions (including rollovers) during all three of those years. But since you need to roll over your old 401k, the timing of when you do it in 2025 doesn't matter for your 2025 Saver's Credit - any rollover during 2025 will count against your 2025 credit.

That makes sense! So basically once I do a rollover, I'm potentially affecting my Saver's Credit for that tax year regardless of which month I do it in. I think I'll try to make all my 2025 contributions before doing any rollovers, at least that way I'll know exactly how much I've contributed when calculating if the rollover wipes out my eligibility completely.

Does this affect whether the 10% early withdrawal penalty applies? I'm under 59.5 and concerned about getting hit with that on top of paying taxes on the earnings.

Great question. For the excess contribution amount itself, the 10% early withdrawal penalty doesn't apply when you're doing a return of excess contributions. However, the earnings portion of the excess contribution will be subject to the 10% penalty if you're under 59½, unless you qualify for another exception. The correct coding on the 1099-R helps ensure that only the earnings portion gets the penalty, not the entire distribution. That's why it's so important to specifically request a "return of excess contributions" and not just take a regular withdrawal.

I think they already did the recharacterization from Traditional to Roth, not the other way around. They found out their income was too high for deductible Traditional IRA contributions, so they moved it to Roth, but now they're a bit over the Roth limit.

8 Do you really need to use red ink specifically? I don't have a red pen handy and wondering if black would be fine?

3 The IRS prefers red ink because it stands out to the processing center, but they'll still process your return if you use black ink. The most important thing is making sure you clearly write "Dual-Status Return" at the top of the first page. If you're using tax software that prints your return, you might need to manually write this after printing since most programs don't have an option to add this text automatically.

15 The rules are basically the same - any return that's filed on paper needs to have W-2s and certain 1099s (like 1099-R or 1099-NEC) attached. The difference is that with Dual Status returns, you have no choice but to paper file, while regular returns can usually be e-filed. With Dual Status returns, you may have additional documents to attach beyond what's typical for regular returns, such as Form 1042-S for US-source income as a nonresident, or documentation supporting your residency start/end date.

If I had my roof replaced in December 2024 but don't pay the final invoice until January 2025, which tax year would any potential credits apply to? And is there a dollar limit on these credits?

For tax credits, what matters is when the installation was completed, not when you paid. If the work was finished in December 2024, that's when the qualifying expenses would count - for your 2024 tax return that you'll file in 2025. Yes, there are definitely limits. For the Energy Efficient Home Improvement Credit, the annual limit for qualifying improvements is $1,200 per year, with some specific subcategories having their own limits. Certain high-efficiency items like heat pumps have a separate higher limit. The rules and limits have changed several times in recent years, so always check the current year's guidelines when filing.

Metal roofs can qualify for the Energy Efficient Home Improvement Credit, but only if they have specific Energy Star certifications and appropriate pigmented coatings designed to reduce heat gain. Not every metal roof qualifies automatically. Ask your roofer for the specific Energy Star certification documentation. The current credit is 30% of costs up to the annual limit. So if the metal roof truly qualifies, you'd get 30% back in tax credits (subject to annual limits). If the metal roof is $5K more but you'd get around $1,500 back in tax credits, plus better durability and potential energy savings on cooling costs, it might be worth considering. Just make sure to get proper documentation proving it qualifies.

Does the mileage app distinguish between different types of business trips? Sometimes I'm visiting different locations for the same client project, and other times it's for separate clients. Would be great if I could categorize them.

Most mileage apps do let you categorize trips by client or project type. In MileIQ, you can create custom categories like "Client A research" or "Client B meetings." Some even let you add notes to each trip with specific details. The more detailed your records, the better position you'll be in if you ever get audited. The IRS loves to see that level of organization since it demonstrates your deductions are legitimate business expenses rather than personal trips you're trying to write off.

I thought they got rid of hobby expense deductions entirely with the Tax Cuts and Jobs Act? Can you still deduct ANY hobby expenses?