Do you know if the 110% rule applies to state taxes too? I've been using it for federal but never thought about state requirements.

The safe harbor rules vary by state. Many states follow the federal 110% rule, but some have their own requirements. California, for example, has a similar safe harbor rule but with some differences. New York follows the federal rules pretty closely. Check your specific state's tax department website for their safe harbor rules. Generally speaking though, most states have some form of safe harbor protection, and many do follow the federal 110% guideline for higher income taxpayers.

Which tax software did you switch to? I'm getting tired of all the unnecessary warnings in TurboTax too.

How would you even check if federal withholding was done correctly? I'm looking at my W-2 and box 2 has federal income tax withheld, but I have no idea if it's the right amount.

You can do a quick check by comparing what was withheld to roughly 12-22% of your income (depending on your tax bracket). But the more accurate way is to run your numbers through a tax calculator or software. Just input your total income, filing status, and deductions - then compare the "federal tax liability" it calculates against what was actually withheld on your W-2. If they're roughly in the same ballpark (within a few hundred dollars), then your federal withholding was probably done correctly. If the withholding is significantly less than your expected liability, then you've got problems on both federal and state levels, which is a much bigger issue.

I looked into this when it happened to me. You probably can sue, but you'd need to prove they were negligent rather than it being a misunderstanding or paperwork error. Did your cousin explicitly fill out state tax withholding forms that were ignored?

He says he definitely filled out all the standard new hire paperwork including state tax forms. He even has copies that he saved. The company apparently just... didn't process them correctly? Or ignored them? Either way they admitted it was their mistake but are refusing to cover any of the penalties.

What happens if the other parent also tries to claim EITC even though they make too much? Will the IRS automatically reject the higher income person's claim or will both returns get flagged?

If a parent attempts to claim EITC while exceeding the income threshold, their tax software or the IRS systems will automatically calculate that they're ineligible and they won't receive the credit. The system is designed to check income against the EITC thresholds. Even if they somehow managed to claim it incorrectly, the IRS would not penalize you for correctly claiming EITC when you're eligible. They would address the incorrect claim with the higher-income parent. The key is making sure all your information is accurate and consistent, especially the child's SSN, which the IRS uses to track who's claiming which benefits for each dependent.

I used TurboTax last year for this exact scenario. It asks separate questions about who claims the child as a dependent versus who can claim them for EITC. Just make sure to answer carefully - when it asks if you're claiming the child as a dependent, say no for the one your ex claims. Later when it asks about qualifying children for EITC, you can include both children if you meet all the EITC requirements.

Where would I find these centers? Is there a website or something to locate the one nearest to me? This sounds perfect for my budget right now.

You can find your local Small Business Development Center through the SBA website - just search "SBDC near me" and it should pop up. They're usually connected to local colleges or economic development agencies. Most offer free initial consultations where they'll assess your specific needs and then connect you with the right resources. Ask specifically about their accounting workshops - many run monthly QuickBooks or general bookkeeping classes designed for absolute beginners. The SCORE program (also through SBA) can match you with a retired accountant or financial professional who volunteers as a mentor.

$275 monthly seems steep for a startup though... how many transactions do you have? And did you find someone local or use an online service?

Thanks for pointing this out! So if I understand correctly, my 2023 contribution ($6,500) plus my 2024 contribution ($7,000) gives me a total basis of $13,500, which matches lines 3 and 5 on my Form 8606. But I only converted $7,204, leaving $6,296 as my remaining basis (line 14). Does that mean none of my conversion should be taxable? That doesn't seem right if I had earnings.

Your understanding is partially correct, but there's a key distinction. When you convert from traditional to Roth, the IRS looks at the proportion of your basis to the total value across ALL your traditional IRAs, not just the one you're converting from. If you converted $7,204, and your total basis across all traditional IRAs was $13,500, then the taxable portion would be calculated using the ratio of non-deductible contributions to total IRA balances. However, if the $7,204 includes $704 of earnings on the original $6,500 contribution, those earnings should be taxable. The fact that line 4b on your 1040 is showing "rollover" but no amount suggests the software isn't calculating this correctly. You may need to manually enter the taxable amount there.

I use TurboTax every year for my backdoor Roth. The trick is to enter the 1099-R first, THEN enter Form 8606 information. If you do it the other way around, it sometimes miscalculates the taxable amount. Also, make sure you're entering your prior year non-deductible contributions correctly on line 2 of Form 8606.