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.

This happened at my company too. HR gave everyone the new forms but provided zero guidance. Half our accounting department had withholding problems. The new form is way more confusing than the old one.

Thanks for the heads up about H&R Block. Do you know if there's a way to find CPAs who specialize in retirement accounts specifically? Should I be looking for any particular certifications or experience?

I'd recommend searching for a CPA who specializes in "individual tax planning" or "retirement tax planning" specifically. There's no special certification just for retirement accounts, but you want someone who regularly handles them. When you contact them, ask these specific questions: 1) How many backdoor Roth conversions do you handle annually? 2) Are you familiar with filling out Form 8606 for both non-deductible contributions and Roth conversions? Any CPA who hesitates on those questions probably isn't the right fit. The American Institute of CPAs (AICPA) website has a "Find a CPA" feature that lets you search by specialty, which could be a good starting point.

Exactly this! The IRS systems will assume the entire conversion is taxable if you don't have a properly filed 8606 showing your non-deductible basis. They have no way of knowing you already paid tax on that money otherwise.

Thanks for mentioning this. I had no idea about quarterly payments. How do you actually make these payments? Do you just guess how much you'll make each quarter?

You make quarterly estimated tax payments using Form 1040-ES. You can pay online through the IRS website, by mail with a payment voucher, or through the IRS2Go app. As for how much to pay, you essentially estimate your annual income, calculate the tax on it, and divide by four for equal quarterly payments. If your income fluctuates throughout the year, you can make adjustments to each quarterly payment. Many self-employed people set aside about 25-30% of their cash income for taxes (including both income tax and self-employment tax) as a general rule of thumb, though your exact rate will depend on your total income and deductions.

Yes it could raise questions, but the alternative is worse. If you've received a 1099, the IRS already knows about that income. Not filing when they're expecting a return is a bigger red flag than filing for the first time. The audit risk is honestly pretty low for average income individuals. The IRS audits less than 0.5% of individual returns, and they're typically focused on high-income earners, people claiming unusual deductions, or returns with obvious errors. Just filing accurately now is your best protection.

Thanks for this explanation! I do track inventory since I need to know how many pieces I have available to sell through my online shop. So if I understand correctly, since the seamstress is literally creating my inventory items, it would be more accurate to put this under Cost of Labor in Part III? Would this change anything about needing to issue a 1099-NEC to her at the end of the year?

Yes, since she's creating your inventory items and you're tracking inventory, Cost of Labor in Part III is the more accurate classification. This properly ties the expense to your product creation rather than treating it as a general business expense. Regarding the 1099-NEC requirement, that doesn't change at all. You still need to issue a 1099-NEC to any contractor you paid $600+ during the year, regardless of where you classify the expense on your Schedule C. The 1099 requirement is about who received the money, not how you categorize the expense on your tax return.

Speaking from experience, definitely get that W-9! I didn't get one from my contractor and then couldn't issue a 1099 properly, which flagged my return. Ended up paying penalties because of it. Such a simple thing but caused so much headache.