Yikes, that's exactly what I'm afraid of! Did they hit you with a big penalty? I'm definitely not trying to do anything that would trigger an audit... Thanks for the warning!

The penalty wasn't huge - about 20% on top of what I owed back - but I also had to pay interest on the unpaid amount. The bigger headache was going through the entire audit process, which was stressful and time-consuming. The agent actually wasn't mean about it since it's such a common misunderstanding. He explained that even though my employee handbook required me to wear Buckle clothes, they're still considered regular street clothes suitable for everyday wear. The test isn't whether they're required, but whether they could reasonably be worn outside work.

I work at a high-end jewelry store, and we can deduct our required black suits because we're specifically prohibited from wearing them outside work (it's in our contract). But that's different from regular retail clothes that you'd wear anyway.

Is Cash App Taxes really completely free? No hidden fees for filing state returns or anything? Seems too good to be true compared to paying $70+ with H&R Block.

Yes, it's actually completely free for both federal and state returns. No hidden fees or surprise charges. They make their money from the Cash App ecosystem and other financial services they offer, not from the tax preparation. The catch (if you want to call it that) is that it doesn't support some more complex tax situations like multiple state filings or foreign income. But for a basic married filing jointly return with W-2 income, it handles everything perfectly. I've used it for two years now with no issues and got my refunds quickly both times.

I used TaxSlayer last year after switching from H&R Block. It was about $30 cheaper for my situation (married filing jointly with a mortgage). The interface is decent but not as polished as H&R Block. It got the job done though and my refund amount matched what I was expecting.

Does FreeTaxUSA import your info from previous years if you're switching from TurboTax? And can it handle self-employment income without charging extra like TurboTax does?

FreeTaxUSA can't directly import your data from TurboTax, but you can upload a PDF of last year's return and it will pull some of the basic info. You'll need to enter some things manually the first year, but after that, it remembers your info for future years. Yes, it handles self-employment income without charging extra! That's actually one of the main reasons I switched. TurboTax wanted to charge me an extra $120 just because I had a small side business, but FreeTaxUSA includes Schedule C in their free version. The only thing they charge for is state filing (about $15) and audit assistance if you want it.

I've used both H&R Block and TurboTax. H&R Block's interface isn't as slick but I actually found it more straightforward. They also have fewer upsells in my experience. Never had any data issues like what you're describing with TurboTax.

Thank you so much for this warning about not rolling it into our own accounts! I honestly might have tried to do that thinking it would simplify things. Do you happen to know if we can just start taking the correct distributions now, or do we need to "catch up" on all the ones we missed over the past years?

You don't need to "catch up" by withdrawing all the missed distributions at once. You should calculate what you should have taken each year, but going forward you just need to start taking the correct annual distributions based on the appropriate life expectancy table. What you DO need to do is file Form 5329 for each year you missed a distribution, request the penalty waiver on each form, and include a letter explaining that you didn't understand the RMD requirements. Then start taking the correct annual distribution this year. Most financial institutions that hold IRAs can help calculate your required distribution amount.

I used H&R Block software (not the in-person service) last year to handle my missed RMDs on an inherited IRA. It worked fine for generating the 5329 forms, but it didn't help with the waiver request letter or calculating what my distributions should have been. I ended up having to research those parts separately.

Thanks for sharing your experience! Sounds like I might need some additional help beyond just the tax software to get the calculations right. I'll look into what supplemental services might help with those calculations while still using the software for the actual filing.

Does the Roth option for Solo 401k have income limitations like the regular Roth IRA? I've been avoiding looking into this because I thought I'd be over the income limits.

There are no income limitations for Roth contributions to a Solo 401k! This is one of the biggest advantages compared to Roth IRAs. You can make Roth contributions to the employee portion regardless of your income level. This is actually a great "backdoor" way for high-income earners to get money into a Roth account. Even if your S Corp starts doing really well and your income increases substantially in the future, you can still contribute to the Roth portion of your Solo 401k.

This is a really important point. The "reasonable compensation" requirement for S Corps needs to be balanced against maximizing the Section 199A deduction. With the pass-through deduction, you get a 20% deduction on your qualified business income (QBI), which is essentially your profit MINUS your salary. So there's a tradeoff - higher salary means more retirement contributions but less QBI deduction.

Yeh exactly! My accountant had me model different scenarios. If I paid myself $65k instead of $50k, I could put more in retirement but lost like $3k in QBI deduction. Gotta run the numbers both ways.