Thank you all SO MUCH for the helpful responses! I definitely don't receive any Trade Adjustment Assistance or PBGC payments, so it sounds like I shouldn't have included Form 8885 at all. I'm going to file an amended return this weekend to remove it. Would it be better to use a different tax service than H&R Block for the amendment since they're the ones who confused me in the first place?

You don't necessarily need to switch tax services. H&R Block should be able to prepare an amended return for you. However, if you're not confident in them after this experience, you might consider using a different service or even consulting with a tax professional for the amendment. The most important thing is to file the amendment correctly to remove Form 8885 entirely. Make sure the amended return clearly shows you're no longer claiming the Health Coverage Tax Credit. Also keep in mind that amended returns can take 16+ weeks to process, so patience will be necessary after you submit it.

Not OP but sometimes tax software will ask general questions about health coverage and depending on how you answer, it might add forms you don't actually need. I've had H&R Block try to add a premium tax credit form for me even though I had employer coverage and wasn't eligible.

The software asked me some questions about healthcare coverage, and I think I must have answered something incorrectly. I definitely didn't manually add Form 8885 - I had never even heard of it before this whole mess! I just checked my health insurance documentation, and I had regular employer coverage all year. Clearly I clicked something wrong in the interview questions. Lesson learned to pay closer attention to those details in the future!

2 I've got a similar issue but with Fidelity. Do you know if all brokerages have the same March 15 deadline for these special cases? I can't find clear info anywhere.

5 Yes, all brokerages follow the same IRS deadlines. The standard deadline is February 15th for most 1099s, but there's an extended deadline of March 15th for accounts with specific types of investments that might need reclassification. This includes certain mutual funds, REITs, foreign investments, and instruments where income characterization might change. If you have these types of investments in your Fidelity account, they would also have until March 15th to provide your forms. I'd recommend calling them directly to confirm which deadline applies to your specific situation.

16 In my experience, their international funds and REITs are usually the culprits. I hold VTIAX (international) and VGSLX (REIT) and consistently get delayed 1099s every year. Their basic total market funds like VTI or VTSAX typically don't cause delays.

I've considered that option but there's a specific reason I'm sticking with the company plan. They have access to some institutional funds with extremely low expense ratios that aren't available in individual plans. Plus the plan administrator handles all the compliance testing and Form 5500 filing, which I'd otherwise need to manage myself once the solo 401k exceeds $250k. Also, there's a potential opportunity in the future for me to be brought on as a W-2 employee, so staying in their plan makes that transition smoother. I just need to figure out the proper tax treatment for now.

Those are excellent reasons to stick with the company plan. The institutional fund access alone can save you significant money over time with those lower expense ratios. And you're right about the Form 5500 requirements - that paperwork gets complex fast when you're handling it yourself. For the proper tax treatment, one additional document that might help your CPA get comfortable is IRS Notice 2012-8, which provides specific guidance on affiliated service group arrangements. It clarifies that contractors who qualify under 414(m) should treat their contributions similarly to self-employed individuals with their own plans, but within the structure of the larger company plan.

Form 8606 is specifically for IRAs and reporting nondeductible contributions to traditional IRAs or Roth conversions. It doesn't apply to 401(k) contributions, whether in an affiliated service group or otherwise. Using this form would actually create more confusion.

Is it really worth switching tax software at this point? I'm halfway through my return in TurboTax and have a similar K-1 issue. Will H&R Block let me import what I've already done or would I have to start over?

Unfortunately, you'd likely need to start over if you switch software at this point. The import functions between competing tax products aren't great and often miss details. If you're already halfway through your return in TurboTax, your best option is probably to upgrade to their live help version rather than switching entirely. The TurboTax live tax pros can walk you through entering the statement items correctly, and that would be less frustrating than starting over in a new system. Just make sure you specifically ask about entering K-1 statement items, as some of the more general support people might not be familiar with the nuances.

You report K-1 income in the tax year shown on the K-1 itself, not when you physically received the form. If the K-1 says "2023" at the top, it goes on your 2023 return, even if you received it recently in 2024. Estates can take time to process, which is why K-1s often arrive late. If the K-1 is for 2023 and you've already filed your 2023 return, you'll need to file an amended return to include this information.

Is there an income threshold where you have to pay back the entire premium tax credit? I heard something about 400% of the federal poverty level but not sure if that's still accurate.

Yes, there is a threshold, but the rules have changed recently. Previously, if your income exceeded 400% of the Federal Poverty Level (FPL), you would have to repay the entire Premium Tax Credit amount. This was often called the "subsidy cliff." However, the American Rescue Plan temporarily eliminated this cliff, and this provision has been extended through 2025. Now, regardless of income, no household is required to pay more than 8.5% of their income toward benchmark marketplace coverage. This means even if your income ends up higher than expected, you're still eligible for some amount of Premium Tax Credit if your insurance premiums exceed 8.5% of your household income.

This! My husband's employer insurance wanted $650/month to add me, but I got a marketplace plan with Premium Tax Credit for $175/month. Just make sure your dad's plan is considered "affordable" for him only - if it is, and it only covers him (not dependents), you and your sister can still qualify for PTCs.

Exactly! The "family glitch" fix that went into effect means that affordability for family members is now calculated separately. So if adding dependents to the employer plan is expensive (which it often is), the dependents may qualify for Premium Tax Credits even if the employee has affordable coverage through work.