Thank you for the insider perspective! Our company is pretty small (only about 25 employees) so I'm dealing directly with the owner's wife who handles all the payroll stuff. She seemed annoyed when I brought it up, which is probably why she claimed there was a "window" that closed. Do you know if there are any potential consequences for me if I just file without mentioning the HSA contributions since I don't actually have an HSA?

The main concern would be that the IRS's systems might flag a mismatch between what your employer reported and what you're reporting. However, for a small amount like $65, it's unlikely to trigger any serious issues. If you file without claiming any HSA (which is correct since you don't have one), you're being honest about your actual tax situation. If the IRS does question it, simply explain that your employer made an error and refused to correct it despite your requests. The fact that you've tried to get it fixed works in your favor.

Most tax software including TurboTax has a section for HSA contributions. Just don't enter anything in that section even though your W-2 shows the code W amount. If the software asks about it specifically, there's usually an option to indicate it's incorrect or doesn't apply to you.

Thanks for mentioning this! I should have included this detail in my original post - I don't have any other traditional IRA accounts, so thankfully the pro-rata rule won't be an issue for me. It's just this one contribution that I need to handle correctly. But that's a really important point for others considering the backdoor Roth method. The pro-rata rule can definitely complicate things if you have existing IRA balances.

Glad to hear you don't have other IRA balances! That makes your situation much simpler. Just proceed with the conversion now, and be sure to file Form 8606 for both tax years as others have mentioned. Since this is your only IRA, you'll only pay tax on the earnings portion ($380). Make sure to keep good records of this conversion for future reference, as you'll need to track your basis if you do more backdoor Roth conversions in the future.

Is there a penalty for filing Form 8606 late? I just realized I should have filed it last year for a non-deductible contribution but didn't.

5 What exactly makes a reimbursement plan "accountable"? My company is pretty small and informal about expense reimbursements.

11 An accountable plan needs to meet three IRS requirements: 1) Expenses must have a business connection, 2) You must adequately account for these expenses to your employer within a reasonable period of time, and 3) You must return any excess reimbursement within a reasonable period of time. In practical terms, this means you need to submit documentation (receipts, etc.), the expenses need to be legitimate business expenses, and if you get paid more than you spent, you return the difference. Without these elements, reimbursements could be considered taxable wages. Small companies sometimes miss this formality, but it's important from a tax perspective.

1 That's exactly what I've been doing! I get about 2% back on everything so that's like $80-100 free money every month. Almost makes it worth the hassle of fronting the cash. Do you have any issues with your credit score though? Sometimes my utilization gets pretty high before the reimbursement comes through.

18 Great question about the credit score impact. I definitely saw my utilization rate spike at times, which temporarily lowered my score by about 15-20 points some months. But as soon as the reimbursement came through and I paid off the card, my score bounced right back up. If you're applying for a mortgage or other major loan, you might want to be careful about timing and pay the card off before the statement closes. Otherwise, it's usually just a temporary dip that corrects itself after reimbursement.

I didn't know about the qualifying widow(er) status! That's really helpful information. In this case though, they didn't have dependent children living with them. It sounds like for the 2020 return, they should file jointly without the deceased designation, then for 2021 file jointly with deceased designation, and then for 2022 she would have to file as single. Is that right?

Yes, you've got it exactly right! For 2020, file jointly with no deceased designation since he was alive all year. For 2021, file jointly with deceased designation since that's the year he passed away. Then for 2022 forward, she'll file as single (or head of household if she has qualifying dependents, but it sounds like she doesn't). One thing to note - when filing that 2021 return with deceased status, make sure to write "DECEASED" and the date of death across the top of the return to ensure proper processing. Some tax software handles this automatically, but it's good to double-check.

Those contribution limits are way higher than I realized! Is it difficult to set up a Solo 401k? I've heard they have more paperwork and requirements than IRAs.

Setting up a Solo 401k is slightly more involved than an IRA, but not as complicated as many people fear. I set mine up with Fidelity in about 30 minutes online plus maybe 15 minutes on the phone. The main additional requirement is filing Form 5500-EZ once your balance exceeds $250,000. The biggest consideration is timing - for 2024 tax deductions, a Solo 401k needed to be established by December 31, 2024 (though you can still contribute until your tax filing deadline). SEP IRAs can be established and funded up until your tax filing deadline including extensions. So if you're looking to reduce 2024 taxes now in 2025, a SEP IRA is probably your best bet since the Solo 401k deadline has passed.

I set up a Traditional IRA when I first started freelancing and definitely regret not going with a SEP IRA from the beginning. I left so much tax savings on the table for years by limiting myself to the smaller contribution amounts. Now I have both, but wish I'd maxed out the SEP options sooner.