Thank you for mentioning this! I've actually had my Roth since 2018, so it's been over 5 years. And I've never done any conversions - all of my contributions were direct to the Roth IRA. Based on what everyone is saying, it really sounds like Fidelity just coded the 1099-R incorrectly. I'll contact them tomorrow to request a corrected form with the right distribution code. In the meantime, I'll fill out Form 8606 Part III to document that these were contribution withdrawals and therefore not taxable. This has been super helpful!

Glad to hear your account meets the 5-year requirement! That definitely makes things simpler. When you call Fidelity, specifically ask them to issue a corrected 1099-R with distribution code J in Box 7, which indicates an early distribution from a Roth IRA with no known exception. This is the correct code for withdrawal of contributions. Even if they take a while to issue the correction, go ahead and file with Form 8606 as you mentioned. If the IRS questions it, you'll have documentation showing these were return of contributions. Good luck!

Is there any penalty to the financial institution for issuing incorrect 1099s? Seems like they should be more careful since this directly impacts people's taxes!

There's no direct penalty to financial institutions for most 1099 errors unless they're systemic or intentional. The IRS recognizes that mistakes happen, which is why there's a process for issuing corrected forms. However, firms can face penalties for late filing or intentional misreporting. The bigger issue is that most large institutions use automated systems to generate these forms, and special situations like Roth contribution withdrawals often require manual intervention to code correctly. While annoying for customers, it's generally viewed as an administrative error rather than something that would trigger penalties.

Do you need a specific reason for hardship? My business is struggling mainly because I made some bad inventory decisions, not because of any external factors. Would that still qualify?

You don't necessarily need a specific external reason like a natural disaster. The SBA recognizes that small businesses face various challenges. Poor business performance itself can qualify as hardship, regardless of the cause. What matters is demonstrating that your current financial situation makes the original loan terms unmanageable. You'll need to provide financial statements showing reduced revenue or increased expenses that impact your ability to make payments. Your inventory decision issue would likely qualify as long as you can document its impact on your business finances.

Thanks for bringing this up! I actually didn't know about SCORE. Just looked into it and there's a chapter near me. Did you meet with your mentor in person or virtually? How long did it take to get matched with someone?

That's a good point about the payment plans. I hadn't considered that they might be filing but just paying over time. About talking to my neighbor who runs the business, I'm honestly not sure how to bring it up without making it awkward. He's not a close friend, more of an acquaintance, and I don't want him to think I'm poking around in his business affairs.

If you're not comfortable talking to the business owner, that's understandable. These situations are definitely awkward. Maybe the best approach is to simply stay out of it then. The IRS has matching systems that will eventually catch up with them if they are indeed not filing or paying. If it really bothers you on a moral level, you could file that Form 3949-A that was mentioned earlier and let the IRS handle the investigation. That way you're not directly involving yourself or your neighbor in an uncomfortable conversation.

This is so true! I had a similar experience. I was a contractor for the first time in 2023 and had NO IDEA I needed to make quarterly estimated payments. Got hit with a huge tax bill plus penalties. The IRS payment plan interest rates are no joke either.

It's a painful lesson to learn! The tax system really isn't designed for people to easily understand, especially when transitioning from W-2 to 1099 work. The quarterly estimated payments catch so many people off guard. What's worse is that the longer someone goes without filing, the more intimidating it becomes to start. The fear of what you might owe can be paralyzing. I hope these women get proper tax advice before they dig themselves into a deeper hole.

Thanks! Is there a way to attach the CSV file directly or do I have to manually type each transaction? I have about 74 trades to report from last year.

Unfortunately FreeTaxUSA doesn't have a direct CSV import feature for crypto transactions. You'll need to enter them manually if you're not using a third-party tool like some others mentioned. If you have a lot of transactions, you might want to consolidate them by date if they're similar (like multiple small trades on the same day with the same cryptocurrency). FreeTaxUSA has a "Form 8949" checkbox that lets you indicate you're reporting summary information rather than each individual trade. Just make sure your totals are accurate.

What information did the exchange send if they didn't give you a 1099-B? I thought smaller exchanges weren't required to report?

How do you even verify which type was paid? My financial service just says "tax payment" on the statement, and my company's equity admin isn't helpful.

You need to get documentation from the financial service that specifically shows the payment type and ideally the form used to make the payment. For estimated taxes, it would typically be Form 1040-ES. For AMT specifically, there's no separate payment form, but the payment should be designated for Form 6251. Ask the financial service for the exact copies of what was submitted to the IRS. Sometimes they use a payment voucher with specific codes that indicates what the payment was for. You can also request your IRS transcript which will show all payments received and how they were coded in the system. This is where services like Claimyr can help because you can ask the IRS agent directly how a specific payment was coded.

Very risky to dispute 409A valuations. The company sets those based on independent assessments, and challenging them can flag you for audit. Better to focus on properly tracking AMT credits for future years.