Did your tax preparer explain why the 1095-A is treated differently than the B form? I'm trying to understand the difference between them.

The 1095-A is for Marketplace insurance and involves tax credits that need to be reconciled on your tax return. Those credits directly impact your tax liability, so the IRS needs that information. The 1095-B just proves you had coverage through a government program like Medicaid, which doesn't involve tax credits that need reconciliation. Since there's no direct tax impact from having Medicaid (no credits to calculate), there's nothing for the IRS to process from the form.

The federal penalty was removed, but some states still have their own individual mandates and penalties. Plus, the forms are still required to be sent out by insurance providers and government programs regardless.

Thanks for this advice! Should I attach copies of the notices and payment confirmations to my return? And would it be better to file electronically or mail a paper return in my situation?

You don't need to attach copies of the notices to your return, but do keep them for your records. Instead, include a brief statement referencing the notice numbers and payment amounts on a separate sheet if filing by paper, or in the comments section if filing electronically. For your situation, electronic filing is generally better because it processes faster and you'll get confirmation of receipt. However, if your return is very late (which 2021 would be in 2025), some tax software may not support e-filing for prior years, so you might have to mail it. If mailing, definitely use certified mail with return receipt so you have proof of filing.

Actually, the IRS does pay interest on refunds that are issued more than 45 days after the return is filed, even for late-filed returns. The interest rate changes quarterly. It's not a lot, but it's something. I filed my 2019 taxes super late and still got interest on my refund.

Do you know if this would be the same process in TurboTax? I have a similar situation but use different software.

Yes, the process is similar in TurboTax, though the screens look different. In TurboTax, you'll also enter code P first when asked for the distribution code. Then during the interview process, TurboTax will ask additional questions where you'll indicate it was a return of excess contributions. The underlying tax treatment is the same regardless of which software you use - the original contribution isn't taxable (since Roth contributions are after-tax), but the earnings are subject to income tax and potentially the 10% early withdrawal penalty depending on your age and situation.

Freetaxusa does have a section where you can add notes to your return. It's in the "Miscellaneous" section under "Notes" - you can add explanations there for your own records. However, these notes don't get transmitted to the IRS with your e-filed return. For your specific 1J code, you should use code 1 as the primary code, and then in the follow-up questions, indicate it was a hardship withdrawal if that option is available. The IRS receives the full 1099-R from your plan administrator with both codes, so they'll have the complete information.

Thanks! I'll check out that notes section. Good to know the IRS still gets the full code information from the plan administrator. That makes me feel better about only being able to enter one code in the software.

Can you share any other examples you use? I have a teen who's starting their first job and I want to teach them right from the start.

I use a tax bucket analogy with actual buckets in class. Each bucket represents a tax bracket with its rate written on it. We pour "income water" into the first bucket until it's full, then overflow into the next bucket with a higher rate, and so on. It's very visual and helps them see that only the dollars in each specific bucket get taxed at that rate. For a teen with their first job, I'd focus on explaining the W-4 form and how to calculate their likely tax burden based on their expected annual income. Also explain FICA taxes (Social Security and Medicare), which are flat taxes, versus income tax which is progressive. Most teens are surprised to learn they might not owe any federal income tax if they make under the standard deduction amount, but they'll still see FICA taxes taken out.

You're not alone! I refused a raise for the same reason when I was younger. Such a mistake. I wonder how many people are making career decisions based on tax misconceptions?

If I create an IRS online account now, can I see last year's transcripts immediately? Or is there a waiting period after creating the account?

Once you successfully create an IRS online account, you can immediately access any available transcripts from previous years. There's no waiting period between account creation and transcript access. However, creating the account itself can sometimes be challenging because of their strict identity verification. You'll need a credit card or loan account, mobile phone in your name, and either a driver's license, passport, or state ID. If you can't verify your identity online, you'd need to request transcripts by mail which takes 5-10 days.

This is super helpful - I do both W2 work and freelance. Do you just track everything in Excel or do you use some kind of accounting software?