Thanks for pointing out the actual tax difference! I was thinking about the $5 of income, not the actual tax amount which would be even smaller. That makes me feel better about the situation. Did you send your late 8606 forms with an amended return or just on their own with the cover letter? I'm debating both approaches and trying to figure out the easiest way to handle this without triggering unnecessary scrutiny.

I sent the late 8606 forms on their own with just the cover letter since they didn't actually change my tax liability for those years. The 8606 forms were just establishing basis for future use. In your case, since you do have a small change to your actual tax liability for 2019, I'd probably file an amended return for that specific year along with all the 8606 forms and a comprehensive cover letter explaining both issues. The reality is that the IRS isn't going to launch an audit over a dollar and change, but it's still technically the correct way to handle it. And having everything documented properly will save headaches down the road if you ever need to reference your IRA basis.

First Time Abatement is for failure-to-file and failure-to-pay penalties on returns, not specifically for the $50 penalty for late 8606 forms. Those are two different types of penalties. Are you sure that's what you received?

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.

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.

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.

Thank you! This makes so much more sense than what TurboTax was saying. One question though - if I made multiple payments for a single quarter (like I paid half of Q3 in August and half in September), do I list those as separate entries?

Thank you all SO MUCH for your help! I feel much better about this now. I'll list my payments chronologically with exact dates. And I'll definitely check out that Schedule AI option since most of my income was in the last quarter. Turns out I was overthinking this whole thing!