This is a good point I hadn't considered! My last US address was in Florida before moving to Germany. I still have my Florida driver's license though it's expired now. Would I still need to worry about state tax issues even though Florida doesn't have state income tax?

You're in a good position having your last residence in Florida since they don't have state income tax. States without income tax (like Florida, Texas, Nevada, etc.) don't generally pursue former residents for tax purposes. The bigger concern is for people from high-tax states like California or New York, where state tax authorities sometimes argue that you never truly "left" if you maintain certain connections. In your case with Florida, as long as you're filing your federal returns properly, you shouldn't have to worry about state tax complications.

This is so true! I got absolutely destroyed on taxes because I had UK investment funds that were classified as PFICs. The forms are ridiculously complicated (Form 8621) and the taxation is punitive compared to US-based investments. I ended up selling all my foreign funds and only investing through US brokerages now.

I didn't know that was an option! Most of the ones I looked at wanted the full payment upfront before even starting. Do you have specific ones you'd recommend that let you pay just for the filing part? I've already filled out all my forms so I'm really just looking for the electronic submission part.

FreeTaxUSA is pretty good for this approach. You can complete your federal return for free, then it's just $15 for the state portion. Some others like TaxAct and TaxSlayer have similar options where the federal basic filing is free and you just pay for state. If you've literally already completed the physical forms with a pen, then using the IRS Free File Fillable Forms mentioned above is your best bet. You'll just need to transfer the information from your paper forms to the electronic versions. There's a bit of duplicate work, but it's free and gives you the e-file benefits.

Certified mail with return receipt is essential too. It's a few extra dollars at the post office but gives you proof of when they received it. I file on paper every year and always use certified mail after having a return "lost" in 2018.

Thanks for the tip about FreeTaxUSA! Did it handle the scholarship question well? That's my biggest concern - making sure we properly categorize what's taxable vs. non-taxable.

FreeTaxUSA handled the scholarship situation really well. It specifically asks whether scholarship money was used for qualified expenses (tuition, books, required fees) versus non-qualified expenses (room and board, living expenses). It also provided clear explanations about which portions of scholarships are taxable and which aren't, something TurboTax didn't explain as clearly in my experience. The program walks you through it step by step and even has a help section specifically addressing graduate student scholarships and fellowships.

What about tax credits that weren't available before? I heard the income thresholds change when filing jointly and you might qualify for different credits?

If there were literally no earnings between the contribution and conversion (like if the market was down those few days), would the taxable amount be zero? And does the 1099-R differentiate this or do you have to calculate it yourself?

If there were no earnings (or even if there was a loss), the taxable amount would indeed be zero. The 1099-R unfortunately doesn't differentiate this for you - it typically shows the full distribution amount in Box 1 and often shows the full amount as taxable in Box 2a as well, even when it's not. You have to calculate the non-taxable portion yourself using Form 8606. This is why it's so important to file this form - it's your documentation that establishes which portion of the conversion was after-tax money that shouldn't be taxed again.

Thanks for the sequence tips! I think that's exactly what I did wrong - I just entered the 1099-R directly without establishing the non-deductible contribution first. I'm using TaxAct, not TurboTax, but I bet the principle is the same. I'll try re-doing it in that order and see if it fixes the calculation. Appreciate everyone's help on this!

Thanks for pointing that out! I didn't know they were different forms now. Is there a penalty if you use the wrong form? Also, do you know if there's a minimum payment threshold before I need to file the 1099-NEC?

Yes, using the wrong form can cause issues and potentially delay your contractors from filing their taxes correctly. The IRS might flag the inconsistency which could trigger correspondence or even an audit in some cases. The threshold for filing a 1099-NEC is $600 in payments to a US contractor during the tax year. If you paid someone less than that, you don't need to file a 1099 for them, though you can still deduct the expense on your Schedule C.

Is this true for every state? I'm in Texas and I've never had to file 1099s with the state.