12 Do you know if I need to file any additional forms besides just entering this in TurboTax? I'm worried about doing it wrong and getting a surprise tax bill or audit.

3 You don't typically need to file any additional forms if you're using software like TurboTax - it will generate all required forms when you complete the interview questions correctly. The key form is Form 8606 Part III, which TurboTax will create once you indicate it's a return of Roth contributions. Just make sure you keep good records of your total Roth contributions over time. I recommend creating a simple spreadsheet tracking all your contributions by year, so if you're ever audited, you can prove that your withdrawal didn't exceed your total contribution basis.

14 Good point. Mine shows $0 in Box 2a but has the distribution code J which seemed contradictory to me. That's why I got confused.

Does this still apply if you're a w2 employee but work remote? My company is based in another state but I work from home 100% of the time.

Unfortunately, if you're a W2 employee working remotely, you currently can't take the home office deduction, even if you work from home 100% of the time. The Tax Cuts and Jobs Act suspended home office deductions for employees through 2025. This deduction now only applies to self-employed individuals, independent contractors, or other business owners. If you get a W2 from your employer, you can't claim it regardless of your remote work status. Some companies offer stipends for home office expenses instead, so it might be worth asking your HR department if that's an option.

But wouldn't I save more using the regular method with my specific expenses? The simplified method seems like it would give me a much smaller deduction given the high housing costs in my area.

Thanks for mentioning the QBI deduction! I hadn't even thought about that possibility. The project was definitely a one-time thing where I was basically a research subject/participant for about 3 months. I didn't have any real business expenses except maybe using my home internet a bit more than usual for uploading responses and attending a few zoom sessions. Based on everyone's advice, I'm leaning toward filing it as "Other Income" since I wasn't running a business. Does that seem right for my situation?

Based on what you've described, classifying it as "Other Income" on Schedule 1 rather than self-employment income on Schedule C seems appropriate. The key factors are: it was a one-time project, you were more of a participant/subject than a service provider, and you didn't have the intention of creating an ongoing business activity. For future reference, keep documentation about the nature of the project in case there are any questions. The university likely issued a 1099-NEC simply because that's the form they use for any non-employee payment, but that doesn't automatically make you self-employed for tax purposes. The substance of the relationship matters more than the form used to report it.

FreeTaxUSA actually handled my research stipend correctly. You need to go to the Income section, select "Miscellaneous Income" and then choose "Other Income not reported on W-2/1099" instead of selecting the 1099-NEC option. Then you can manually enter the payer info and amount from your 1099-NEC. This puts it on Schedule 1 as Other Income rather than Schedule C.

OMG thank you for mentioning this! I just checked my pay stubs and they ARE withholding state taxes, but I hadn't even thought to check. That's at least one relief in this mess.

This is terrible advice for this situation. Offers in Compromise are extremely difficult to qualify for and usually only apply when someone has no hope of ever paying the full amount due to permanent financial hardship. With an $85k salary, OP almost certainly wouldn't qualify. An installment plan is much more appropriate.

If I do go to a CPA, what documents should I bring with me? I want to be prepared so I don't have to keep going back with more paperwork.

Bring the deed showing when you were added to the title, the closing documents from the sale, any documentation showing improvements made to the home that might affect basis, and anything showing the original purchase price when your father bought it. For the retirement accounts, bring all 1099-R forms, statements showing the withdrawals and deposits, and documentation from both the old and new retirement plan administrators. Also bring your last year's tax return and any correspondence you've had with the IRS. If you have documentation of any hardship that led to the withdrawals, that could be helpful too as it might qualify you for penalty exceptions.

Do they also need to worry about the Section 121 exclusion for primary residence? If they lived in the house for 2 of the last 5 years, couldn't they exclude some of the gain?