I just went through this exact situation a few months ago - forgot to report about $10k in freelance photography income and didn't catch it until nearly a year later. The anxiety was overwhelming, but filing that amended return was absolutely the right call. Here's what I learned: The IRS distinguishes between honest mistakes and intentional tax evasion. Since you're voluntarily correcting this before they contacted you, that demonstrates good faith. When I called (using Claimyr after reading about it here - definitely worth it to avoid the hold times), the agent actually thanked me for being proactive. My total penalties came to about $850, which was painful but manageable. The key things that helped: I documented every business expense I could legitimately claim (software, equipment, portion of home internet, even some networking events), and I requested First Time Abate in my amendment letter since I had a clean compliance history. Don't forget to file Schedule C for your business income/expenses and Schedule SE for self-employment tax. The SE tax (15.3% for Social Security/Medicare) was actually a bigger hit than the penalties for me. One last tip - set up quarterly estimated payments for this year using the safe harbor method (100% of last year's total tax divided by 4). It'll save you from going through this stress again. You're going to be fine - this happens more than you think!

I'm reading through all these responses and feeling so much better about my situation! I completely forgot to report about $7k in freelance writing income from last year and have been absolutely panicking about what the IRS might do to me. The First Time Abate policy that several people mentioned is something I had never heard of before - definitely going to include that request in my amended return since I've never had any tax issues before. And the advice about documenting every possible business expense is spot on. I've been so focused on the penalties that I forgot I can actually deduct things like my writing software subscriptions, laptop upgrades, and home office expenses. One question for everyone who's been through this - how long did it take to hear back from the IRS after filing your amended return? I'm planning to file mine next week but wondering if I should expect weeks or months before I know exactly what I owe. Thanks to everyone sharing their experiences here. It's such a relief to know this happens to other people and that the IRS isn't going to destroy my life over an honest mistake!

I've been watching this thread with interest as someone who's been in a similar situation! Maya, based on all the excellent advice shared here, I'd suggest taking a multi-pronged approach. First, definitely check Costco this weekend for TurboTax Premier - the $75 price point Sophia and others mentioned is genuinely hard to beat. But don't stress if they're sold out. What really caught my attention were the alternative suggestions, especially TaxAct that Fatima mentioned. Half the cost of TurboTax Premier plus better customer support sounds compelling, particularly for someone new to handling freelance income. The fact that Dylan found it more educational and thorough with deduction prompts could be really valuable for your first year dealing with Schedule C. That said, the taxr.ai suggestion from Grant is intriguing too - an AI walking you through the process and potentially catching missed deductions could be perfect for someone transitioning from simple W-2 filing to more complex returns. Regardless of which software you choose, everyone's advice about organizing your freelance expenses first is spot-on. Home office deduction, equipment, supplies, mileage, business use of phone/internet - these really add up and can significantly impact your refund. You might also want to consider this as an opportunity to set up better systems for next year (separate business account, quarterly payment planning) while you're getting organized for this filing season. Good luck with whatever route you choose - sounds like you have some great options to explore!

Wow, this thread has been absolutely incredible to follow! Maya, you've really tapped into something here - what started as a simple question about where to find TurboTax has turned into the most comprehensive guide to freelance tax prep I've ever seen. I'm in a very similar situation (W-2 plus growing freelance income) and honestly felt pretty overwhelmed about tackling taxes this year. Reading through everyone's experiences and advice has been so reassuring. The variety of options people have shared - from the traditional Costco TurboTax hunt to alternatives like TaxAct, FreeTaxUSA, and even taxr.ai - shows there are really good solutions out there for every budget and comfort level. What really stands out to me is how many people emphasized getting organized with expenses first, regardless of which software you choose. The home office deduction, business equipment, mileage tracking - I definitely need to get my act together on documenting all of these before I even start filing. The separate business banking account tip from Tami is something I'm implementing immediately. That alone is going to save so much headache next year when I'm trying to sort through transactions. Thanks to everyone who shared their experiences - this community really delivered! Maya, whatever route you end up choosing, you're going to be way ahead of the game with all this knowledge.

This whole thread has been a lifesaver! I'm doing my first backdoor Roth this year and was getting completely overwhelmed by all the Form 8606 documentation requirements. One quick follow-up question: if I'm contributing $7,000 for 2025 but my income puts me right at the edge of the Roth IRA phase-out limits, should I still go the backdoor route? I'm worried about accidentally ending up in some weird partial-eligibility situation where I mess up the tax treatment. Also, for anyone else who's been struggling with the IRS phone system - I can confirm that Claimyr thing actually works. Used it last month for an unrelated issue and got through in about an hour. Definitely beats the endless busy signals! The key takeaway I'm getting from all these responses is: contribute to Traditional IRA (non-deductible), convert everything to Roth ASAP, file Form 8606 to document both steps, and your basis should be $0 at year-end. Rinse and repeat each year. Does that sound right to everyone?

Great thread everyone! I'm a tax preparer and see a lot of confusion around this exact issue every season. Just wanted to confirm what others have said - your Traditional IRA basis should indeed be $0 after doing complete backdoor Roth conversions. One thing I'd add: make sure you're keeping good records of your 1099-R forms from the conversions. The IRS will match these against your Form 8606, so you want everything to tie out properly. I've seen cases where people did everything right but had small discrepancies due to timing differences between when they initiated the conversion and when it actually processed. Also, if you're using a robo-advisor or online platform for your IRA accounts, double-check that they're coding the conversion correctly on the 1099-R. Some platforms default to showing the entire conversion as taxable income, which isn't right if you're converting non-deductible contributions. You may need to contact them to ensure the proper tax reporting. The basis tracking really is as simple as everyone's described - contribute (basis goes up), convert everything (basis goes back to zero), file Form 8606 to document both steps. Repeat annually!

This whole thread has been incredibly helpful! I had the exact same confusion with my E*Trade 1099-B and was leaning toward answer (b) before reading everyone's explanations. What really clicked for me was understanding that E*Trade is essentially doing the math for you behind the scenes. When they show that $839,230 cost basis, they've already factored in all the wash sale adjustments that happened throughout the year. So that $89,700 "Wash Sale Loss Disallowed" figure represents adjustments that are already reflected in your cost basis - it's not something you need to add separately. I think the confusion comes from the fact that this column exists at all. It feels like it should be part of the calculation somehow, but really it's just there for transparency so you can see how much in losses were disallowed during the tax year. Thanks to everyone who shared their experiences with E*Trade support, the IRS, and tax professionals. It's reassuring to see the same answer confirmed through multiple sources. I'm definitely going with the $37,220 realized gain amount when I file!

This has been such a valuable thread! I'm dealing with the exact same E*Trade 1099-B situation and was completely lost until reading everyone's explanations. What really helped me understand this was the analogy about the receipt - the "Wash Sale Loss Disallowed" column is like documentation showing what adjustments were made, but those adjustments are already incorporated into the cost basis figure. E*Trade has done all the heavy lifting by automatically adjusting the cost basis upward to account for disallowed wash sale losses. I was initially leaning toward answer (b) and adding the $89,700 to the realized gain, but now I clearly see that would be double-counting. The $37,220 realized gain is already the correct taxable amount because it's calculated using the wash-sale-adjusted cost basis. Thanks to everyone who called E*Trade support, used the IRS callback services, and shared their experiences with tax professionals. Having multiple independent confirmations of the same answer gives me confidence to file correctly. This community really came through with practical, actionable advice!

I'm going through this exact same situation right now! Filed my 2021 taxes about 6 months late due to a job loss and subsequent move, and I'm staring at about $580 in penalties that I've already paid off. This entire thread has been like finding gold - so much practical advice that you just can't get from reading the IRS instructions alone. The systematic approach everyone has developed here makes so much sense: get the account transcript for specific penalty codes, use both FTA and reasonable cause as backup options, create a detailed timeline with supporting docs, and do the dual fax/certified mail submission. I had no idea about tools like the IRS where-to-file lookup or that transcript phone number (1-800-908-9946). What really stands out to me is how organized and thorough everyone who got approved was in their submissions. It's clear that making the IRS reviewer's job easier by providing everything they need in a logical format makes a huge difference in both approval chances and processing time. I'm feeling much more confident about tackling this now. My job loss situation led to a cross-country move for new employment, so I have documentation showing the timeline of events and why I couldn't handle tax filing during that period. Plus I have a clean filing history for the past 6 years, which several people mentioned helps with the case. Thanks to everyone who shared their experiences and specific tips. This community approach to helping each other navigate these stressful IRS situations is exactly what people need when they're feeling overwhelmed by the process!

This thread has been absolutely invaluable! I'm dealing with a very similar situation - filed my 2022 taxes about 4 months late due to a divorce and relocation, and ended up with around $420 in penalties that I've already paid. Reading through everyone's detailed experiences and seeing the actual success stories has completely changed my approach. I was initially just going to write a brief explanation and hope for the best, but it's clear that being systematic and thorough is what gets results. My plan based on all the excellent advice here: 1. Call 1-800-908-9946 to get my account transcript with specific penalty codes 2. Use the IRS where-to-file tool to get the exact mailing address for my state 3. Structure my request with both FTA and reasonable cause as alternative grounds 4. Create a detailed timeline showing how the divorce proceedings and custody issues prevented timely filing 5. Include my 7+ year clean filing history as supporting evidence 6. Use the dual fax/certified mail strategy for optimal processing I have court documents, attorney correspondence, and moving records that clearly establish the timeline of events. The "but for" test mentioned by Miguel's tax preparer really helped me understand how to frame the causal relationship between my circumstances and the late filing. One question for those who've been through this - did anyone include information about estimated processing times in their cover letter, or is it better to just focus on the facts of your case? I'm trying to balance being thorough without making the submission unnecessarily long. Thank you all for sharing such practical, detailed guidance. This community support makes navigating IRS procedures so much less intimidating!