8 I used FreeTaxUSA last year when I had a similar 1099-K issue. They do give you more control, but they still directed me to Form 8949 rather than Schedule 1 line 24z. The interface was pretty straightforward for entering each item, though.

14 Thanks for sharing your experience! I'm starting to accept that Form 8949 is just the way I'll have to go, regardless of which software I use. At least FreeTaxUSA is more affordable than some of the other options I was looking at.

11 The threshold is supposed to be $5,000 for tax year 2024 (filing in 2025). The IRS announced this change after delaying the $600 threshold implementation multiple times. That should give occasional sellers some breathing room.

That's actually brilliant - I never thought about finding potential business opportunities in Albuquerque! I work in software development consulting and there might actually be some tech companies there I could connect with. How detailed do my records need to be for this to count? Would emails setting up meetings be sufficient documentation?

Emails setting up meetings would be excellent documentation. You want to establish both your intention to conduct business and that actual business activities took place. Save those emails, take notes during the meetings, keep any business cards you collect, and record all mileage specifically related to these business activities. If you end up gaining any clients or doing future work based on these connections, that strengthens your case even more. Just remember that the primary purpose of the Albuquerque portion still needs to be business for those miles to count, so make sure you're spending more time on business activities than personal ones while there.

The 30-mile detour to see a tourist attraction would be personal miles and not deductible. However, the direct business route from Sacramento to San Diego would still be fully deductible. Think of it as drawing a line on the map - the most direct reasonable route for business is deductible, any detours for personal reasons are not. Stopping for meals during business travel doesn't disqualify your miles though - that's considered a necessary part of business travel.

That makes so much more sense. The way they broke it down made it sound like they were just passing along IRS charges to me, which seemed really high. I'll definitely be switching back to online filing next year...or maybe even trying the IRS Free File options. Do you know if those work well for simple tax situations like mine?

For a simple tax situation like yours with just a couple of W-2s and education credits, the IRS Free File options would work perfectly. Most of the major tax software companies participate in the Free File program if your income is below certain thresholds (usually around $73,000). I'd recommend checking out the IRS Free File site directly rather than going through a tax prep company's website, as sometimes the companies hide their free options. With your straightforward tax situation, you should be able to file completely free of charge.

Yep same here! I had 2 W-2s, student loan interest, and a 1099-INT from my bank and paid $49 with TaxAct. These big tax prep chains are really taking advantage of people who don't know any better.

Thanks for that advice! My settlement papers do actually specify that the entire amount is for "emotional distress damages" and not for lost wages or punitive damages, so that's helpful. I hadn't thought about keeping extra documentation from my attorney though. Would it be helpful to get a specific letter about the tax treatment, or is the settlement agreement itself sufficient?

The settlement agreement should be sufficient if it clearly states the damages are for emotional distress. However, having a supplementary letter from your attorney that specifically addresses the tax treatment can be helpful if you're ever audited. I'd recommend asking your attorney for a brief letter confirming that the settlement represents compensation for emotional distress and not for lost wages or punitive damages. If possible, have them reference any relevant tax code sections that apply to your situation. Keep this letter with your tax records for at least seven years (the typical IRS audit window for most situations).

This is bad advice. Different types of settlements have very different tax treatments. Personal physical injury settlements are tax-free. Emotional distress settlements are taxable but not subject to self-employment tax. Lost wages are taxable as regular income. Punitive damages are taxable as ordinary income. Just putting it on "other income" without properly documenting and reporting each component could lead to paying too much in taxes or, worse, an audit. The specific instructions from the expert in Comment 1 are much more accurate.

You're right that different settlements have different tax treatments. I should have been clearer - I meant the OP should report it as "other income" and specifically label it as "emotional distress settlement" as the expert suggested, not just lump it in with random miscellaneous income. My main point was that tax software can be helpful for situations like this. TurboTax Premium, for example, has specific sections for reporting legal settlements and will guide you through the correct forms and line items based on the type of settlement. It also helps you properly deduct attorney fees in these situations. I didn't mean to suggest taking a casual approach to the documentation - keeping all records is absolutely essential.

Did the community college course cover things like estimated quarterly taxes? That's the part I always struggle with.

Yes, the course definitely covered quarterly estimated taxes! The instructor spent an entire session on how to calculate them properly and how to avoid penalties. They even provided spreadsheet templates that made the math much easier. The course also covered when you actually need to make quarterly payments (since not everyone does) and how to adjust them if your income fluctuates throughout the year. It was honestly the most practical and helpful part of the entire course for me.

I've been watching their videos for about a year now. The information is solid - the channel is run by a CPA with small business experience. The playlist on "Small Business Basics" is especially good for beginners. Just be aware that some older videos might not reflect the latest tax law changes, so always check the upload date.