In TurboTax, you should be able to search for "1099-C" in the search bar at the top. It'll take you to the income section where you can enter the form. After entering the basic 1099-C info, it should ask if you qualify for any exclusions. Select "insolvency" and it will walk you through the worksheet. If you're using the desktop version, it's under Federal > Income > Less Common Income > Cancellation of Debt. Make sure you're in the full interview mode, not the quick mode, or it might skip some options.

That's a really good point I hadn't thought about. My mom is on Medicare with the extra help subsidy for her prescriptions. Do you know if canceled debt that's excluded due to insolvency still affects the MAGI calculation for Medicare subsidies?

For Medicare subsidies, if you properly exclude the canceled debt from income using the insolvency exception (Form 982), then it shouldn't affect the MAGI calculation for Medicare's Extra Help or Medicare Savings Programs. The key is making sure you complete Form 982 correctly to exclude it from your gross income in the first place. However, if only part of the debt is excluded due to partial insolvency, the remaining taxable portion could potentially impact your MAGI. I'd recommend contacting your local SHIP (State Health Insurance Assistance Program) - they provide free counseling on Medicare issues and can give you specific guidance for your mom's situation.

Do you know if those reports are automatically generated or do employees need to request them specifically? I've been at my company for 3 years and have never received anything like this.

It varies by company. At mine, employees need to request them specifically - they're not automatically distributed. Most people don't know to ask for them! Try contacting your stock administration team (not general HR) and ask for a "tax basis report" or "supplemental tax information for equity compensation." The team that handles your equity grants should know what you're talking about. If you use an equity management platform like E*TRADE, Schwab, or Fidelity for your company equity, you can sometimes download these reports directly from the platform. Look for sections labeled "Tax Documents" or "Tax Resources" within your equity account.

HUGE difference! If you don't report the correct cost basis on RSUs, you're essentially paying double tax. Example: Let's say you got $10,000 worth of RSUs that vested. You already paid income tax on that $10,000 (it's on your W-2). If you then report a $0 cost basis when you sell, you're paying capital gains tax on the ENTIRE $10,000 again! In my case, I had about $65,000 in RSUs last year. Using the correct cost basis vs. what was on my 1099-B saved me over $13,000 in taxes. Definitely worth figuring out!

I didn't even know tax court mediation was an option! How do you request it? Is there a specific form or process? And does it delay your actual court date if you try mediation first?

You can request mediation by contacting the IRS attorney assigned to your case. There's a form (can't remember the number offhand) that you submit to formally request it. Usually, they're pretty open to mediation because it saves them time and resources too. It typically doesn't delay your court date significantly because they'll schedule mediation well before your hearing. If mediation fails, your court case proceeds as planned. In my experience, the IRS attorney will reach out to you before your court date anyway to discuss possible settlement, so you might as well be proactive and suggest mediation yourself.

This is such good advice. My friend lost her case not because she was wrong, but because she couldn't find the right documents during the hearing and came across as unprepared. The judge even commented on it in his ruling.

Yeah, presentation makes a huge difference. Another tip: practice explaining your case out loud beforehand. My brother said he froze up initially because it's intimidating, but he'd practiced his explanations so much that he was able to get back on track. Also, be respectful and never interrupt the judge or IRS attorney. My brother said the judge was actually quite helpful in guiding him through the process, but he saw another self-represented person get on the judge's bad side by being argumentative and disorganized. That case did not end well for them.

I tried that but I'm confused about which numbers to enter exactly. The form has so many different sections and I'm worried about double-reporting income or missing something. Does anyone have a simple guide for which boxes from the TD Ameritrade form correspond to which fields in TurboTax?

Look for the summary section on your TD Ameritrade 1099 that specifically mentions Section 1256 contracts. You'll need the "Profit or (Loss)" amount, which will be further divided into the 60% long-term and 40% short-term split. In TurboTax desktop, go to Federal → Income → Investment Income → Futures and 1256 Contracts. There will be fields specifically for entering these amounts. Make sure you're looking at the right tax year's form, and don't include any amounts that might have been reported elsewhere (like regular capital gains). TD Ameritrade usually provides good summaries at the beginning of each section that make it clear what goes where.

100% agree! I've used TurboTax for 7 years and every year it's like learning a new software. The desktop version is even worse - completely different workflow than the online version. I switched to FreeTaxUSA this year and it was way more straightforward with investment reporting, including Section 1256 contracts.

Thanks for the FreeTaxUSA suggestion, I might check that out next year. Did it handle the 60/40 split for Section 1256 contracts correctly? That's always been the trickiest part for me, making sure the long-term/short-term treatment is applied properly.

Thank you so much for all this helpful info! Quick question - if I file and get a refund this year, will that affect my parents' ability to claim me as a dependent on their taxes?

You filing your own tax return won't affect your parents' ability to claim you as a dependent at all! These are completely separate issues. Your parents' ability to claim you depends on whether you meet the dependency tests (like if they provide more than half your support, if you're a full-time student under 24, etc.), not whether you file your own return. So go ahead and file to get that refund - it won't impact your parents' taxes in any way.

Absolutely do NOT pay H&R Block for a simple return! I used to work there - they charge like $150+ for returns that literally take 15 minutes to file. If you only made $8k and have a W-2, use the IRS Free File options or even the free version of TurboTax/FreeTaxUSA. Save your money!

Thanks for the advice! That's what I was worried about. I just heard the free versions try to trick you into upgrading halfway through. I'll check out the IRS Free File program that people mentioned.