This is a really helpful thread! I'm dealing with a similar situation but with a twist - I made excess contributions to both traditional AND Roth IRAs for 2023. Do I need to file separate Form 5329s for each type of account, or can I report both on the same form? Also, I'm seeing conflicting information about whether I can recharacterize the traditional IRA excess contribution to a Roth IRA to avoid the penalty, or if that would just create another excess contribution issue since my income was too high for direct Roth contributions anyway. Has anyone dealt with this double excess contribution scenario before? My tax software (H&R Block) is giving me error messages when I try to enter both types of excess contributions, so I'm wondering if I need to handle this manually or switch to different software.

This thread has been incredibly helpful! I'm dealing with a similar situation but wanted to clarify something about the timing. You mentioned withdrawing the excess contributions "as of a few days ago" - the key deadline here is the tax filing deadline for the year the contribution was made (including extensions). For 2023 contributions, that deadline was October 15, 2024 (with extension). If you withdrew after this date, you'll still owe the 6% penalty for 2023 even though you removed the excess. The penalty applies because the excess was still in the account on December 31, 2023. Regarding TaxAct showing this on your 2024 Form 5329 - that's incorrect. You need the 2023 Form 5329 to report excess contributions made for tax year 2023. Most tax software struggles with this cross-year reporting. You may need to manually prepare and mail the 2023 Form 5329 separately from your main return. And yes, you're correct about the timing for the earnings tax - you'll report that on your 2024 return next year when you receive the 1099-R from Fidelity. The 10% early withdrawal penalty will apply to just the earnings portion, not the original contribution amount.

Great discussion here! I'm dealing with this exact situation right now. Just started a consulting business and bought a laptop that I use for both work and personal stuff. From what I'm gathering, it sounds like the key is being reasonable and having some basic documentation to back up whatever percentage you claim. I think I'll go with the simple tracking method @QuantumQuasar mentioned - just documenting a typical week to establish my usage pattern. One thing I'm still wondering about - if I upgrade my laptop mid-year, can I deduct the business portion of both laptops? Or does that look suspicious since most people don't need two laptops for business?

I've been following this thread closely since I'm in a similar situation with my new consulting business. Based on everyone's advice, I started keeping a simple usage log and it's actually been really eye-opening. What I discovered is that my actual business usage was lower than I initially thought - around 55% instead of the 70% I was planning to claim. I'm glad I tracked it before filing because claiming an inflated percentage would have made me nervous about potential audits. One tip I'd add: consider your personal usage patterns realistically. I initially forgot to account for weekend personal browsing, streaming, and online shopping. When I factored in ALL my usage over a full week, the business percentage dropped significantly. The peace of mind from having actual data to back up my claim is worth the small effort of tracking for a few weeks. Thanks everyone for the great advice - this community has been incredibly helpful for a new business owner!

Just wanted to add my experience as someone who went through this exact same situation two years ago. The stress you're feeling is totally understandable - that 1099-S form can be really intimidating when you see the full sale price listed! The good news is that since you lived in the house as your primary residence for over 2 years (you mentioned 7 years), you almost certainly qualify for the capital gains exclusion. With your gain around $85K, you're well under the $250K limit for single filers. One thing that really helped me was organizing all my documents beforehand. Make sure you have: - Your original purchase contract/closing statement - Records of any major improvements (new roof, kitchen renovation, etc.) - Your recent sale closing statement - The 1099-S form When I used the VITA program, I created a simple one-page summary showing: "Purchase price: $X, Sale price: $Y, Major improvements: $Z, Estimated gain: $A (under exclusion limit)." The volunteer preparer really appreciated having everything laid out clearly. Don't worry about the mortgage payoff amount shown on the 1099-S - that's totally normal and expected. The tax preparer will use your closing statement to calculate your actual proceeds and basis correctly. You're going to be fine!

I completely understand your stress about the 1099-S - I had the exact same panic when I sold my condo last year! The form showing the full gross proceeds is standard and doesn't mean you'll be taxed on that entire amount. Since you've lived there as your primary residence for 7 years and your actual gain is around $85K, you're definitely eligible for the capital gains exclusion (up to $250K for single filers, $500K for married filing jointly). The key is making sure your tax preparer understands this. Here's what I'd recommend for your VITA appointment: 1. Bring your original purchase closing statement to establish your cost basis 2. Include documentation of any major home improvements you made (these increase your basis and reduce taxable gain) 3. Your recent sale closing statement showing the mortgage payoff 4. Write a brief note explaining: "Primary residence for 7+ years, eligible for capital gains exclusion, actual gain approximately $85K" The volunteer preparers are trained to handle home sales, but that summary note will help ensure nothing gets missed. You're well under the exclusion threshold, so you shouldn't owe any tax on the sale. The 1099-S is just the IRS's way of tracking the transaction - your actual tax liability will be calculated correctly on Forms 8949 and Schedule D. You're going to be fine! This is a very common situation and the tax code is designed to protect homeowners in exactly your circumstances.

Has anyone actually gotten FreeTaxUSA to correctly calculate the tax credit for income tax withheld on 1042-S? I tried reporting it as suggested here but my refund calculation seems off.

I went through this exact same situation two years ago! As a tax resident filing jointly, FreeTaxUSA definitely works for 1042-S reporting, but you need to be careful about a few things that haven't been mentioned yet. First, double-check that your 1042-S shows the correct tax treaty benefits applied (if any). Sometimes universities mess this up even for tax residents. If you see treaty benefits applied when you shouldn't have them as a resident, you'll need to contact your university's payroll office to get a corrected 1042-S. Second, when entering the fellowship income as "Other Income" on Schedule 1 Line 8z as Chloe mentioned, make sure to also check if any of it qualifies for the American Opportunity Tax Credit or Lifetime Learning Credit. Fellowship money used for qualified education expenses can sometimes still allow you to claim these credits for other educational expenses you paid out of pocket. Also, since you mentioned HSA contributions - fellowship income actually counts as earned income for HSA contribution purposes, which is great news if you're trying to maximize your HSA contributions for the year. The combination of FreeTaxUSA plus getting official IRS guidance through something like Claimyr (as Sophie mentioned) is honestly your best bet for peace of mind on a complex situation like this.

Just wanted to add my experience here - I had this exact same issue last year and was totally confused at first. Turns out my employer switched from ADP to Workday mid-year, which caused the split reporting. What helped me was looking at the dates on my last few paystubs to see when the switch happened. The first state line covered January through June, and the second line covered July through December. Once I realized that, it made perfect sense why the amounts were different. Added both box 16 amounts together and both box 17 amounts together in FreeTaxUSA and everything worked perfectly. The state accepted my return with no issues. Don't overthink it - the software is designed to handle the totals, not the individual reporting reasons behind them.

This thread has been incredibly helpful! I'm a tax preparer and see this question come up every tax season. You all have given excellent advice - the key takeaway is definitely to add the amounts from both state lines together. One additional tip I'd share: if you're still unsure after combining the amounts, you can verify your total state wages make sense by comparing them to your federal wages in Box 1. Some states exclude certain types of income (like some retirement contributions), so state wages might be slightly lower than federal, but they should generally be close. Also, keep your W-2 handy when you file - some states require you to attach a copy, and if there's any question about the multiple lines, having the original document shows exactly what your employer reported. The bottom line is FreeTaxUSA and other tax software are designed to handle these totals, regardless of how your employer had to split the reporting for their internal systems.