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.

Wait, I didn't know rental income could qualify for QBI. Does my rental automatically count as a business, or do I need to do something specific to qualify? Is there a minimum number of hours I need to spend managing it?

Rental property doesn't automatically qualify for QBI. The IRS has a "safe harbor" rule that requires you to maintain separate books and records for each property, spend at least 250 hours per year on rental activities (property management time counts), and keep contemporaneous records of time, dates, and services performed. If you use a property management company, you'll need to carefully document any additional time you spend on rental activities. Another option is to qualify as a "real estate professional" for tax purposes, but that requires 750+ hours annually in real estate activities. If your property doesn't meet the safe harbor requirements, you might still qualify under general business principles, but that gets more complicated.

Would repairs done before renting out the property count as startup expenses or improvements? I'm about to rent my house and need to fix some things first.

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.

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.

Thanks for mentioning this! I had no idea about the self-employment tax being that high. Do I get any credit for the social security/medicare taxes I'm already paying through my W2 job? And for the mileage deduction, does driving to client meetings count?

There's a cap on Social Security tax (not Medicare) - if your W2 job already withholds the max Social Security tax ($9,932 for 2023, which happens at $160,200 of income), then you won't owe additional Social Security tax on your freelance income, just the Medicare portion. Driving to client meetings absolutely counts as deductible business mileage! Keep a log with dates, starting/ending mileage, and purpose of each trip. Commuting to a regular workplace isn't deductible, but since your freelance clients aren't a regular workplace, those trips qualify. You can also deduct trips to buy business supplies, attend work-related conferences, etc.

This is the best advice! I started doing this last year and it's been amazing for keeping things organized. I also set up a separate checking account for all my freelance income. My accountant was super impressed with how clean my books were.