Thank you for the specific TurboTax guidance! I found the override option exactly where you described. After adjusting it, my tax calculation looks much more reasonable now. One more question - did you have to file any additional forms to explain the override, or did TurboTax handle that automatically?

TurboTax handled the override automatically without requiring additional forms. The software does add a note to your return that explains the override, which is actually helpful in case of an audit. Just make sure to keep copies of both 1099-Rs and any documentation that came with the distribution explaining the excess contribution correction. That paperwork is your proof if the IRS ever questions the override.

Does FreeTaxUSA handle state returns well too? I've been considering switching from TurboTax due to their constant price increases.

Yes, FreeTaxUSA handles state returns quite well! They charge a small fee for state filing (much less than TurboTax), but federal filing is completely free regardless of complexity. I switched three years ago and haven't looked back. For retirement distribution issues like this, their interface explicitly asks about each distribution code and automatically applies the correct tax treatment. For something like a BP code, it immediately marks it as non-taxable without requiring manual overrides.

Thank you for this breakdown! Would you recommend getting a consultation just for the first year of marriage to understand any new strategies, or is this something we should plan to do annually going forward?

I'd recommend a consultation for the first year of marriage to understand the new strategies and options available to you as a married couple. After that initial consultation, you can assess whether the accountant provided enough value to continue annually. Many clients find that an every-other-year check-in with an accountant is a good compromise - they get periodic professional review while handling the more straightforward years themselves. Given both your high incomes, there may be ongoing tax planning opportunities that make annual meetings worthwhile, but this is something you can determine after that first consultation.

This is such an underrated comment. I spent 8 hours doing my taxes last year with similar income to OP, and all to save maybe $400 on an accountant? That's a terrible hourly rate for my weekend time!

It depends on your tax bracket. The forgiven debt gets added to your other income for the year. So if you're in the 22% federal tax bracket, you'd pay about $2,200 on $10,000 of forgiven debt (plus any state taxes). But definitely check if you qualify for insolvency first!

This happened to me too! The credit card company sent me a 1099-C in 2023 for debt they actually cancelled in 2022. I had to file an amended return and it was such a hassle. Check the "Date of Identifiable Event" box on your 1099-C form - that's the date that matters for tax purposes, not when they sent the form.

Thanks for pointing this out! I just double-checked my 1099-C and the date listed is from this year, so I think I'm okay. But good to know for everyone else that the date on the form matters!

Can you explain more about the S-Corp thing? I'm in a similar situation to OP and keep hearing about S-Corps but don't really understand the benefit.

Sure! With an S-Corp, you pay yourself a "reasonable salary" that's subject to self-employment tax (the 15.3% for Social Security and Medicare). Then you can take the rest of your profit as distributions, which aren't subject to self-employment tax. For example, if your business makes $105k, you might pay yourself a salary of $65k (which would be subject to self-employment tax) and take $40k as distributions (which would only be subject to income tax, not self-employment tax). This could save you about $6,120 in self-employment taxes (15.3% of $40k). The key is that your salary must be "reasonable" for your industry and role - you can't just pay yourself $20k and take $85k as distributions. There are also additional costs like increased accounting fees and payroll processing. Generally makes sense once you're earning over $80-100k consistently.

But doesn't the QBI deduction phase out at higher income levels? Im not sure OP would qualify with $105k income.

Really? I thought Free File was only for super simple returns. Can it handle things like stock sales and early retirement distributions? I'm not confident in doing all those calculations myself.

Free File through partner companies (like TurboTax, H&R Block, etc.) can absolutely handle stock sales and retirement distributions if you qualify by income. The software is the same as their paid versions, just offered free through the IRS partnership. If you use Free File Fillable Forms (the direct IRS option), it's basically just electronic versions of paper forms with basic calculations. That option requires more tax knowledge since you need to know which forms to fill out, but it's still free and available to everyone regardless of income. For your situation, I'd recommend using one of the Free File partner software options to file your extension now. Then when you return, you can use the same service to complete your full return with all your investment documents. Much better than paying hundreds to a storefront preparer!

I second this. The IRS is much more accommodating than people expect when you're upfront about your situation. I've been on payment plans twice and it was simple to set up. The interest rates are usually better than credit cards too.