Do you know if these exceptions apply automatically, or do you have to fill out a special form? I used some of my withdrawal for medical expenses but I'm not sure how to claim that exception.

The exceptions don't apply automatically - you need to report them correctly on your tax return. For medical expenses, you'll need to file Form 5329 along with your tax return. On that form, you'll enter the early distribution amount, then enter the portion that qualifies for the medical expense exception using the appropriate exception code. Keep in mind that only unreimbursed medical expenses exceeding 7.5% of your adjusted gross income qualify. So if your AGI is $50,000, only medical expenses above $3,750 would potentially qualify for the exception. Make sure to keep all documentation of your medical expenses in case of an audit - receipts, insurance statements, anything showing these were legitimate medical costs.

I got mine from Fidelity in late January, but Vanguard didn't send mine until February 10th. They're required to mail them by January 31st, but that doesn't mean they'll arrive right away. You could check if yours is available electronically - might be faster than waiting for mail.

How do you manually adjust cost basis? I think I might be in this exact situation but I have no idea how to fix it. My broker's website is confusing and when I called customer service they weren't helpful at all.

Most brokerages have a section where you can adjust or enter cost basis information for your holdings. Look for something like "Update Cost Basis" or "Adjusted Cost Basis" in your account settings or portfolio section. You'll typically need to enter the acquisition date and price per share from your vesting documentation. If you can't find it online, call your broker again but specifically ask for their "cost basis department" - regular customer service reps often don't know how to handle these adjustments. Have your vesting statements ready showing the FMV (fair market value) on your vesting dates. If they're still not helpful, you can report the correct basis directly on your tax return using Schedule D and Form 8949, making sure to check the box indicating that the basis reported to the IRS was incorrect.

Exactly right. I recommend people make estimated tax payments each quarter after significant vestings to avoid penalties too. I messed this up one year and got hit with underpayment penalties on top of the extra tax!

Does this education exclusion work if the bonds were originally purchased by my parents but in my name? I just cashed some to pay for my masters program.

Yes, it can work in your situation! What matters is who the owner of the bond is (whose name is on it) when it's redeemed, not who purchased it. If the bonds are in your name and you're using them for your qualified education expenses, you can claim the exclusion. Just make sure you're meeting all the requirements: the bonds must have been issued after 1989, you must be at least 24 years old when the bonds were issued, and the bonds must be redeemed in the same tax year you pay the education expenses. Also, your income needs to be below certain thresholds to get the full benefit. Form 8815 will walk you through all of this.

You can definitely set up an installment plan with the IRS using Form 9465. They're pretty reasonable about it as long as you file your return on time. I did this last year when I cashed out some old bonds. Just be aware there's a small setup fee and you'll pay interest on the unpaid balance.

I had no idea this was even an option! Do you just set these up yourself or do you need an employer to do it? And is there a deadline to open one?

You set it up yourself! Since you're self-employed, you're both the employer and employee for retirement purposes. For a SEP IRA, you can open one online through places like Vanguard, Fidelity, or Schwab in about 15 minutes. For the deadline, you can actually open and fund a SEP IRA up until your tax filing deadline - including extensions. So for 2024 taxes, you have until April 15, 2025, or if you file an extension, all the way until October 15, 2025. This is super helpful because you can calculate your exact tax situation before deciding how much to contribute. The Solo 401k has slightly different rules and deadlines, but the SEP is probably simplest for your situation.

I use QuickBooks Self-Employed and it's been a lifesaver. It connects to your bank accounts and PayPal, automatically categorizes expenses, tracks mileage, and calculates quarterly taxes. Costs like $15/month but worth every penny for the headache it saves at tax time.

Thanks for mentioning this! Just checked my 1099-B and you're right - the cost basis is completely missing for two of the transactions. Do I need to contact my brokerage to get this corrected or can I just fill in the correct amounts on Form 8949?

You can fill in the correct cost basis directly on Form 8949 yourself - you don't need to wait for a corrected 1099-B. Just use code "B" in column (f) to indicate that you're reporting a cost basis different from what's on your 1099-B. Keep all your records showing the actual purchase price in case you're ever audited. Even a printout of your transaction history from your brokerage account can work as documentation. The IRS understands that cost basis issues are common, especially with older investments or when securities transfer between brokerages.

Free File Fillable Forms don't support amended returns (1040-X) unfortunately. I tried going that route last year. You either have to print and mail a paper amendment or use commercial software. Some tax software has free amendment options if you filed your original return with them, might be worth checking.