Just a heads up - make sure the financial institution that issued the 1099-R has your correct address and personal info. I had a similar inherited IRA situation last year but never received the 1099-R because it went to my dad's old address. Ended up with a CP2000 notice from the IRS and had to sort it out after the fact. Also, keep records of when you closed the account and withdrew the funds. The IRS sometimes gets confused with inherited IRAs when the distribution code doesn't match what they expect to see.

I went through something very similar when I inherited my father's 401(k) that was rolled into an IRA. A few additional things to keep in mind: First, make sure you have documentation showing you were the proper beneficiary. Sometimes the IRS will ask for proof of your relationship to the deceased and confirmation that you were designated as the beneficiary on the account. Second, if your grandmother had already started taking Required Minimum Distributions (RMDs) before she passed, there might have been a remaining RMD for that year that needed to be satisfied. Since you withdrew the entire amount, this shouldn't be an issue, but it's worth knowing for future reference. Finally, consider the timing of when you report this income if you're planning to get married next year. Since you're filing as single this year, your tax brackets will be different than if you were married filing jointly. The $7,200 might actually be taxed at a lower rate this year depending on your other income sources. The distribution code 4 is definitely correct and will save you from the early withdrawal penalty. Just double-check that TurboTax is calculating your tax correctly - the software should automatically recognize the code and not apply the 10% penalty.

One thing to be really careful about with C Corp wind-downs is the accumulated earnings tax (Section 531). If the IRS determines that you've been accumulating earnings beyond the reasonable needs of the business just to avoid dividend distributions, they can hit you with a penalty tax on top of everything else. This is especially relevant for single-shareholder C Corps that have been inactive but sitting on retained earnings. For your specific situation with $25K in loan repayments and $10K in E&P, document everything meticulously. The IRS will want to see that the loans were legitimate business transactions with proper terms from the start. If you're planning to wind down completely, consider doing it in phases over multiple tax years to spread out the tax impact rather than taking everything in one year and potentially pushing yourself into higher tax brackets. Also, don't forget about state tax implications - some states have their own rules about C Corp distributions and dissolutions that might differ from federal treatment.

One thing I'd add to this excellent discussion is to consider the timing of when you actually receive the loan repayment funds versus when you take the dividend distribution. The IRS looks closely at the substance over form, so if you're taking both transactions simultaneously or very close together, they might view it as one large distribution rather than separate transactions. I'd recommend clearly documenting the loan repayment first, wait a reasonable period (maybe a quarter or two), then handle the dividend distribution separately. This creates a cleaner paper trail and reduces the risk of the IRS challenging the characterization of your transactions. Also, since you mentioned this is essentially a wound-down operation, make sure you're not triggering any personal holding company tax issues if you have significant passive income. With inactive C Corps, sometimes rental income or investment income can create unexpected tax complications that are separate from your distribution planning.

If you only have a few contractors, the IRS actually has a free online filing system called the FIRE system (Filing Information Returns Electronically). You can create an account and file your 1099s there without having to pay a third-party service. The downside is the interface is pretty clunky and not very user-friendly. But if you're tech-savvy and looking to save money, it's an option. You'll still need to provide copies to your contractors though, which you can print from the system or send electronically if they consent.

Don't forget to check if you need to issue 1099s to LLCs! This tripped me up. If an LLC is taxed as a sole proprietorship or partnership, you DO need to issue a 1099. If they're taxed as a corporation, you DON'T. That's why the W-9 is important - it should indicate their tax classification. If they checked "Individual/sole proprietor" or "LLC" (with no corporation selection), you need to issue the 1099. If they checked "C Corporation" or "S Corporation," you typically don't.

I've been wrestling with this same decision for months! Reading through everyone's experiences has been incredibly eye-opening. I think the key takeaway is that while the Apple Watch through UHC isn't truly "free," it can still be a solid deal if you go in with realistic expectations. What really resonates with me is the point about already being active versus using this as motivation to become active. I'm definitely in the first category - I already track my workouts and do annual physicals, so this feels like getting rewarded for existing habits rather than committing to major lifestyle changes. The tax complexity is definitely annoying though. Between federal income tax, state tax, and FICA taxes, we're looking at potentially 30%+ of the watch value in additional taxes. For a $429 Apple Watch, that could mean $125-150 in total tax liability, making the real cost around $125-150 rather than "free." Still, compared to buying outright, that's a decent discount. I think I'm going to move forward but with a clear plan: confirm withholding with HR, set up all the calendar reminders people mentioned, and budget for the tax hit upfront so there are no surprises. Has anyone found that having the Apple Watch actually helped them stay more consistent with the UHC wellness requirements, or is it pretty much the same as using any other fitness tracker for their program?

This thread has been incredibly helpful! As someone who's been on the fence about UHC's Apple Watch program, seeing all these real-world experiences has given me a much clearer picture of what to expect. A few things that really stood out to me: 1. The tax hit is significant but predictable if you plan for it 2. Documentation and staying on top of deadlines seems crucial for success 3. The program works best for people who are already active rather than those hoping it will motivate lifestyle changes One question I haven't seen addressed - has anyone used the Apple Watch's health data for anything beyond the UHC program requirements? I'm wondering if the detailed heart rate, sleep, and activity data might be useful for discussions with my doctor or for other health-related purposes that could add value beyond just meeting the wellness program goals. Also, for those who completed the program successfully, did you find that the health insights from the Apple Watch were genuinely helpful, or was it mainly just a way to get a discounted device? I'm trying to weigh whether the health benefits justify the complexity of the program versus just buying a watch outright. Thanks everyone for sharing such detailed experiences - this is exactly the kind of real-world perspective you can't get from UHC's marketing materials!

I'm a software developer who switched from 1099 to LLC with S-Corp election last year. Here's what I've learned: 1. The tax savings are real but so are the costs. I save about $4,800/year in SE taxes but pay about $1,200 in additional expenses (payroll service, registered agent fee, additional tax prep fees). 2. The paperwork is a pain. Quarterly payroll filings, annual reports to the state, separate business bank account, more complex tax returns. 3. For me it was worth it financially, but the time cost is significant too. I spend about 5-6 hours per month on additional paperwork I didn't have as a 1099 contractor. 4. One unexpected benefit: clients take me more seriously as an LLC and I've been able to raise my rates by about 15%.

Great discussion everyone! As someone who made the switch from 1099 to LLC with S-Corp election about 18 months ago, I can confirm most of what's been shared here is accurate. My net savings ended up being around $3,200 annually after all additional costs. One thing I'd add that hasn't been mentioned much - timing matters a lot. If you're going to make the switch, it's usually best to do it at the beginning of a tax year rather than mid-year. The pro-ration of salary vs distributions gets messy when you switch partway through. Also, don't underestimate the importance of keeping meticulous records once you go S-Corp. The IRS scrutinizes these entities more closely, especially around reasonable compensation. I keep a detailed log of my hours, responsibilities, and comparable salary data for my industry just in case. For what it's worth, at your $78K income level, you're right at the sweet spot where it starts making sense financially. Just make sure you factor in your state's requirements too - some states have additional fees or taxes for LLCs that can eat into the federal savings.