Thanks for breaking it down like this! I definitely don't have rental properties or a complex business - just regular W-2 income and some stocks. This makes me feel much better about trying it myself. Do you have a preferred tax software you'd recommend?

I've used both TurboTax and H&R Block over the years. TurboTax has a slightly better interface and is more user-friendly for beginners, but it's also more expensive. H&R Block is cheaper and gets the job done just as well once you get used to it. If your situation is relatively straightforward, I'd also look at FreeTaxUSA - it's much cheaper than the big names and handles all the basics plus investments really well. TaxSlayer is another good budget option. All of these will walk you through everything step-by-step, so you really can't mess it up too badly.

This isn't really accurate advice. Your experience sounds like you might have made mistakes in your self-filing, but that doesn't mean everyone will. I make over $100k and have been self-filing for years with no issues. Tax software is designed to find deductions through its questionnaire process.

This happened to me last year! The difference was because TurboTax was automatically taking the qualified business income deduction but FreeTaxUSA made me manually select it. Check if you're getting the same deductions and credits across all three. Also worth checking if you entered all your business expenses exactly the same way in each one.

Thanks for the tip! You were right - I went back and found that I hadn't entered my home office deduction in FreeTaxUSA, and H&R Block was calculating my mileage differently. After fixing those, the results are much closer. TurboTax is still giving me about $40 more somehow, but that's probably not worth the extra $120 they want to charge.

Yes, they do support multiple state returns but you pay separately for each one ($20ish per state). Still WAY cheaper than TurboTax though, which charged me $50 per state last year. FreeTaxUSA's interface for multiple states is actually pretty straightforward - it has you complete the federal return first, then walks you through each state sequentially.

Does anyone know if the transcripts also show if you've been assessed penalties for filing under the wrong business type? Or would those just appear as general penalties without specifying the reason?

The account transcripts generally don't specify the exact reason for penalties, they just show the penalty amount, code, and date assessed. However, you would see if there were any penalties at all, which might help you understand the full financial impact of the incorrect filings. If you need to know specifically why a penalty was assessed, you would need to request a call with the IRS (Claimyr mentioned above can help with this) or request a detailed explanation of penalties in writing, which takes much longer to receive.

Do these phase-out thresholds apply only to the year you claim the initial credit, or also to the carryover years? For example, if my income was below the threshold when I adopted but then I got a big promotion, would that affect my ability to use the carryover amounts?

Great question! The income limits only apply to the year you initially claim the credit. If you qualify for the Adoption Tax Credit in the year of adoption because your income was below the phase-out threshold, you can claim the carryover amounts in future years even if your income later exceeds those thresholds. So if you qualified for the full credit in 2023 but can only use a portion of it due to your tax liability, you can still use the carryover amounts in future years regardless of income increases. The IRS essentially "locks in" your eligibility based on the adoption year.

I used TurboTax last year and this year for my adoption credit carryover. If you used TurboTax last year, it should automatically import your carryover amount when you file this year. There's a screen specifically for "credit carryovers from previous years" where you can verify the amount is correct. Just make sure you're using the same TurboTax account as last year. I'd also recommend double-checking the carryover amount against your previous year's return (Form 8839) to make sure it imported correctly.

That's a really important point I hadn't considered! My part-time job pays about $25,000 per year, so I should be covered for both our contributions. Does alimony count as earned income too? I have a small amount of that coming in as well.

Alimony is actually a bit complicated. If your divorce agreement was finalized before 2019, then alimony you receive counts as earned income for IRA contribution purposes. If your divorce was finalized in 2019 or later, then alimony is no longer considered earned income for IRA contributions (or taxable income for you at all). But with $25,000 from your part-time job, you've definitely got enough earned income to max out both IRA contributions regardless of the alimony situation.

Which tax software are you using? I had the same issue with TurboTax but it was actually a false flag. When I continued through the process and indicated I wasn't eligible for my employer's plan (despite my employer having one), it eventually calculated the correct deduction. Some tax software gets confused by this scenario initially but sorts it out when you complete all the retirement questions. It's definitely worth double-checking your W-2 to make sure box 13 isn't checked.