Thank you for mentioning the exclusion ratio! I think that's what I need to calculate. Do you happen to know which specific form or worksheet I should be using? My MIL's annuity was purchased about 12 years ago, and I do have the original paperwork showing the purchase amount.

You'll want to use the Simplified Method Worksheet, which you can find in the instructions for Form 1040. If her annuity started payments when she was between 65-69 years old, you would divide her total investment by 260 to get the amount of each payment that's considered return of principal. For example, if she invested $130,000 in the annuity, then $130,000 ÷ 260 = $500 of each payment would be tax-free return of principal. If she receives $800 monthly, then only $300 would be taxable as earnings. Keep track of this calculation each year because once she's recovered her full investment amount, all future payments become fully taxable.

I used TurboTax last year for my mom's taxes with an annuity. It asks you for the 1099-R information, then it has a section where you can enter the exclusion amount or indicate that it was purchased with after-tax dollars. It then walks you through the simplified method calculation. Worked fine for us.

I actually did ask the dealer about this yesterday! They seemed open to the idea but weren't sure about the legal implications. Did you have any issues with the financing company or insurance when they delayed the official delivery date? What documentation did you end up using to prove the January delivery date to the IRS?

I didn't have any issues with financing or insurance. The dealer simply scheduled the "delivery appointment" for January 2nd, and all paperwork was dated that day - including the sale agreement, registration application, and delivery receipt. The loan wasn't finalized until that day either. For IRS documentation, I used the dated purchase agreement, the vehicle registration that showed the January date, and made sure the dealer noted "delivery date" specifically on the paperwork. I took pictures of me picking up the car on that date too, just to be safe. The key is having all official paperwork consistently show the January date.

That's not accurate advice and could potentially cause problems for the OP. The IRS is clear that "placed in service" is generally when you take possession and the vehicle is ready for use, not the registration date. Your situation may have worked out, but that doesn't mean it follows IRS guidelines. Registration timing doesn't determine the placed in service date.

Is there a good template for tracking this? My company has done RSUs, ISOs, and ESPPs over the years and I'm already losing track of which shares came from where and when each lot vested.

I don't have a specific template, but I created one in Google Sheets that works well. The key columns I use are: Grant Type (RSU/ISO/ESPP), Grant Date, Vest Date, Shares Granted, Shares Vested, FMV at Grant, FMV at Vest, Shares Sold for Taxes, Net Shares Received, and Cost Basis per Share. I also add notes for any corporate actions like splits or mergers that affected share counts. This has saved me countless hours at tax time. The most important thing is to update it immediately when new shares vest, because trying to reconstruct this later is a nightmare.

E*Trade is awful for this! I switched jobs and my new company uses Fidelity, which is SO much better. They provide a supplemental tax statement that shows your original W-2 income amount for RSUs and the corresponding cost basis adjustment. Made my taxes 100x easier this year.

How exactly do you calculate this "insurance amount"? I've tried to do this before but always end up way off, either getting much bigger refunds than I planned or owing a little.

I use what I call the "10% buffer rule." I calculate what my ideal withholding should be for zero refund/zero amount due, then I add 10% extra to that amount as my safety margin. For example, if my calculated correct withholding is $1,000 per month, I'll actually withhold $1,100 per month. This typically results in a refund of about $1,200 at year end, which I'm comfortable with. It's small enough that I'm not giving a huge interest-free loan to the government, but large enough to absorb unexpected tax changes or calculation errors.

I've done this for the past three years with no issues. Applied about $8K of my refund to the next year's taxes each time, then adjusted my withholding way down for Q1 and part of Q2. Never triggered any special review or audit flags. The IRS systems treat it as a perfectly normal transaction because it is - it's a built-in option on the tax forms for a reason.

Wait, self-employment tax is 15.3%?? That seems super high. Is that on top of regular income tax? I thought since I made less than $1,350 I might not even need to report it.

Yes, self-employment tax is 15.3% which covers Social Security and Medicare taxes. When you work for an employer, they pay half of this and you pay half, but as a self-employed person, you cover the entire amount. This is in addition to your regular income tax. However, there's good news - you only have to file and pay self-employment tax if your net earnings are $400 or more. So if your photography income after expenses is less than $400, you wouldn't owe self-employment tax. But you should still report the income on your tax return regardless of the amount. Those equipment deductions might actually bring your net profit below the $400 threshold, which would save you from owing the self-employment tax.

Can you write off education costs too? I took some online photography courses to improve my skills.