How much did it end up costing to fix the mistakes? I'm trying to weigh the cost of hiring a pro versus doing it myself.

The direct cost to fix the mistakes wasn't huge - about $350 for a tax professional to prepare and file the amended returns. However, the real cost was the time and stress. It took almost 6 months to get everything sorted out with the IRS, including several follow-up letters and clarifications. The bigger issue was that I had to explain to family members why we received unexpected IRS notices, which was uncomfortable and made me look incompetent. Looking back, I would have gladly paid the $800-1200 that a professional would have charged originally to avoid all that hassle. Trust taxation has some unique rules that most DIY software doesn't explain well, even if it technically supports the forms.

Huge difference! A revocable living trust typically doesn't require a separate tax return at all - the income is usually just reported on the grantor's personal return (Schedule E). The trust you're describing is likely what's called a "grantor trust" for tax purposes. What OP is describing sounds like irrevocable trusts that are separate taxpaying entities requiring Form 1041 returns. Those are much more complex.

Would moonlighting at an urgent care for even just a few shifts count for this? I'm in a similar situation (different professional liability insurance though) and wondering if even just a few thousand in 1099 income would help establish the business intent.

Yes, moonlighting at an urgent care as a 1099 contractor would absolutely help establish business intent. Even just a few shifts generating a couple thousand dollars would create a much stronger case that you were genuinely engaged in business activity related to the insurance expense. The key is making sure you're actually classified as an independent contractor (receiving a 1099) rather than a part-time employee (W-2). As long as you have some legitimate 1099 income from medical work, you'll be in a much better position to justify the large deduction on Schedule C.

Thank you so much for this insight! I hadn't even considered the self-employment tax angle. The more I think about it, the more I'm leaning toward filing Schedule C with the full expense. I actually do have some very minimal income (around $3K) from chart reviews I did while transitioning between jobs. That should help establish business intent, right? I'm thinking I'll use some combination of the advice here - documenting everything thoroughly, including my correspondence with the locums company about credentialing, and making sure I'm prepared in case of an audit. The tax savings between Schedule C vs. effectively no deduction on Schedule A is just too significant to ignore.

What if your contract says you're a contractor but the company treats you more like an employee (making you work specific hours, etc)? Does the contract override how they actually treat you?

The contract doesn't override reality. The IRS looks at the actual working relationship, not just what the paperwork says. This is called the "economic reality test." If a company is controlling when, where, and how you work, requiring you to work certain hours, closely supervising you, providing equipment, and treating you like an employee in practice, the IRS will consider you an employee regardless of what your contract says. Many companies try to save money by misclassifying employees as contractors, but the actual working relationship is what matters.

I filed SS-8 last year. Takes FOREVER (like 6-8 months) to get a determination, but when I finally did, the company had to reclassify me and pay all the back employment taxes. They weren't happy lol but it solved the problem permanently.

The Donor Advised Fund sounds interesting! If I bunch several years of donations together, would that help me stay under the IRMAA threshold for multiple years, or just give me one good year and then potentially push me over in subsequent years? Also, do you know if medical premiums count toward that 7.5% threshold? I have some pretty hefty supplemental insurance costs.

Bunching donations can give you one year with a lower MAGI, which helps with IRMAA for just that determining year. You're right that you'd need to plan for the subsequent years too - that's where QCDs become helpful since they can reduce your taxable income each year without needing to itemize. Yes, your premiums for Medicare Part B, Part D, Medicare Advantage, and supplemental policies all count toward the 7.5% medical expense threshold! Many retirees don't realize this. Track all your out-of-pocket medical costs including dental, vision, hearing aids, and long-term care insurance premiums too. With the higher healthcare costs in retirement, you might be surprised how often you can clear that 7.5% threshold.

That's really interesting! How much did you have to invest to make it worthwhile from a tax perspective? I've been thinking about helping my son with his landscaping business but wasn't sure if it would make a meaningful impact on my taxes.

Pro tip: if you want less tax withheld from your bonus, increase your 401k contribution just for that paycheck if your company allows it. I put 50% of my bonus straight into 401k last year and it lowered my taxable income. Double win!

This is actually a really important point! My bonus pushed me into a higher tax bracket last year because it came in December. If it had come in January, my tax situation would have been completely different. Timing matters!