Thanks for mentioning the state reporting requirements - I hadn't considered that. Do you recommend any particular approach for the catch-up adjustment if we find the depletion has been incorrect in prior years?

For catch-up adjustments, I typically use a cumulative approach rather than amending prior returns. Calculate what the correct cumulative depletion should have been through the current year based on actual harvests using the corrected depletion rates. Then adjust the current year depletion to reach that cumulative total. Include a disclosure statement explaining the methodology and calculations. As long as you're not changing the total basis, just reallocating between timber types, this approach has been accepted in my experience. The key is thorough documentation of volumes, rates, and calculations to show the trail from old to new reporting.

I've used TimberTax Pro for the last 3 years and it's been worth every penny for our timber clients. It handles the Form T complexity much better than regular tax software, especially for tracking multiple timber accounts and different measurement units.

Thanks for the recommendation! I'll look into TimberTax Pro. Does it integrate with any of the mainstream tax preparation packages or is it standalone?

Thanks for bringing that up. Unfortunately my credit is already trashed from falling behind on payments before the settlement. How long did it take for your score to recover after the settlement was completed?

My score started recovering after about a year of on-time payments on my remaining accounts. The settled accounts showed as "settled for less than full amount" on my credit report, which isn't great, but much better than having active delinquent accounts. I saw about a 50 point increase after that first year, then another 70-80 points over the next year as the negative impact started to diminish. Opening a secured credit card and using it responsibly also helped rebuild my score faster. It's a slow process but definitely recoverable!

This is true but definitely keep documentation of all your assets and liabilities at the time the debt was forgiven! When I went through this, I created a spreadsheet with everything I owned (car, bank accounts, etc) and everything I owed (other credit cards, student loans, etc). I had to use it when filling out Form 982 and I kept it in case of audit.

Isn't the home office deduction really complicated though? I heard it's a big audit trigger and not worth the hassle for most people. And I thought you had to itemize to deduct donations now?

You're right that the home office deduction itself can be tricky - you need a space used exclusively for work. What I was referring to is more for self-employed people who can deduct business expenses without needing a dedicated home office. For charitable donations, you're correct that you typically need to itemize to deduct them. However, for 2021 there was a special provision allowing a small deduction even with standard deduction, but that expired. So for most young people, the standard deduction is still better than itemizing for small donations.

What tax software do you recommend? There are so many options and I'm confused about which one would be best for a first-timer.

I second this about withholdings! I was so excited about my $3,000 refund until my friend pointed out that's just my own money I could have had in my paycheck all year. Adjusted my W-4 and now I get about $115 more in each biweekly paycheck which helps a lot with bills.

Thanks for the suggestion! I just dug up my final paystub and compared it to my W-2. The reimbursements don't appear to be included in my W-2 Box 1 amount, which I guess means they were handled correctly as non-taxable. That's a huge relief! Do you think I should still try to get some kind of documentation from the employer stating it was an Accountable Plan for my records? I'm always nervous about potential audits.

That's great news! If the reimbursements weren't included in your W-2 Box 1 wages, then your employer definitely treated them as non-taxable reimbursements under an Accountable Plan. While it's not strictly necessary, it never hurts to have additional documentation. If you can get a simple statement from your former employer confirming their reimbursement system meets the Accountable Plan requirements, it would be good to keep with your tax records. However, the fact that they didn't include these amounts in your taxable income already indicates they considered their plan to be an Accountable Plan. For extra peace of mind, keep any emails or documents you have related to their reimbursement policy, even if they're just instructions on how to use the system. These can help demonstrate the business purpose and accountability requirements if questions ever arise.

This is a really important point! When I worked as a healthcare contractor, my agency just lumped all my reimbursements into my 1099-NEC, which meant I had to pay taxes on them initially. I had to file Schedule C and deduct the business expenses myself. Cost me a bunch in self-employment taxes I shouldn't have had to pay.

Thanks for bringing this up about the distribution code! Do you know which specific codes I should expect to see for an ADP test correction? And should I be concerned if the 1099-R doesn't specifically mention it was due to a failed test?

For ADP test corrections, you'll typically see Code "8" (Excess Contributions) or sometimes Code "E" depending on exactly how your plan administrator handles it. What's most important is that Code "1" (Early distribution, no known exception) should NOT appear, as that would incorrectly subject you to the 10% early withdrawal penalty. If the 1099-R doesn't specifically mention the failed test, don't worry too much. The distribution code is what determines the tax treatment, not the description. But keep all your correspondence from your former employer about the failed test in your tax records, just in case you're ever questioned about it.

This is really helpful! Quick question - does the corrective distribution also get hit with the 10% early withdrawal penalty if you're under 59.5?