I just double-checked my 1099-R and box 2a shows the entire amount as taxable! That's definitely wrong since this was a direct rollover (the money went straight from my 401k provider to the new IRA custodian without me touching it). There was no 60-day window concern since I never received the funds. And looking at box 7 again, it has code "1" which I think means early distribution. That's completely incorrect for a direct rollover. This explains why TurboTax is calculating taxes owed. I'm definitely going to have to contact the plan administrator for a corrected form.

Yep, that confirms the problem. Code "1" means early distribution (generally subject to taxes plus a 10% penalty if you're under 59.5 years old), and having the full amount in box 2a as taxable is definitely incorrect for a direct rollover. You need a corrected 1099-R with code "G" in box 7 and ideally "$0" in box 2a. When you contact the administrator, be very specific about these corrections. Sometimes the customer service reps don't understand the tax implications, so you might need to escalate to their tax department.

How long did it take to get the corrected 1099-R? I'm in the same boat but getting close to the filing deadline.

That's really interesting, I hadn't even thought about changing my business structure. How much does it cost to set up and maintain an S-Corp compared to a partnership? And is there a certain income threshold where it makes sense?

Setting up an S-Corp typically costs between $500-1500 depending on if you do it yourself or hire someone. There are ongoing costs too - you'll need to run payroll (even if just for yourself), which might cost $40-50/month with a service like Gusto, and tax preparation is more expensive (usually $800-1200 for an S-Corp return vs. $300-500 for Schedule C). Generally, the breakeven point is around $30-40k in profit. Below that, the extra costs might outweigh the SE tax savings. Above that, you usually come out ahead. At $24k you're close, but might want to wait until your business income is a bit higher unless you expect significant growth soon.

Do you mind sharing what percentage of those bills the CPA was able to deduct? I'm trying to figure out if I can deduct part of my internet and phone for my side business, but I'm not sure how to calculate what's reasonable.

Thanks for mentioning this, but no, it was just empty desert land that nobody lived on. No structures at all. It literally sat empty for decades until someone decided it was valuable because of the highway exit nearby.

Good to confirm. One other thing to consider - check if your state has different rules for inherited property taxes. Some states have their own tax treatment that might be more favorable than federal. For example, some states might use their own version of stepped-up basis or have special provisions for long-held family property.

This wouldn't trigger gift tax because it's a sale at fair market value, not a gift. The inheritance portion already happened when OP's mother passed away, and that would fall under estate tax rules (though with only a 15% interest in land worth $800K, it would be well below the estate tax threshold). The sale itself is just converting an asset to cash at market value - no gifting involved. OP and their sister would just each report their portion of capital gains based on their stepped-up basis.

3 I did this last year. You can request it online through the IRS website or by calling. No setup fee, but you still pay interest and the failure-to-pay penalty during those 120 days. It was straightforward - I just needed to specify how much I owed and that I'd pay within 120 days. No financial statements needed.

Does it handle tips well? My dog walking clients sometimes tip in cash and sometimes in the app, and I'm worried about mixing them up. Also, is there a way to mark certain expenses as "office supplies" vs "pet supplies" so I can track which deductions are for what?

It handles tips perfectly! You can create separate income categories for "service income" and "tips" and then further categorize as "cash tips" vs "app tips" if you want that level of detail. This makes it easy to reconcile against what shows on your 1099 vs. what you received in cash. For expenses, yes, you can create custom categories beyond the standard ones. I have categories for "cleaning supplies" and "office supplies" since they're different types of business expenses. For your situation, "pet supplies" would be a great custom category to track those specific deductions separately.

You should consider making quarterly estimated tax payments if you expect to owe $1,000 or more in taxes. For self-employment income, you need to pay both income tax and self-employment tax (15.3% for Social Security and Medicare). At $3,200 since October, you're looking at around $490 just in self-employment tax, plus whatever income tax applies based on your total annual income. If you have other income with tax withholding (like a regular job), that withholding might cover your tax obligation from pet sitting.