Just an FYI - I worked at a bank for years in operations. If you added the child as a joint owner, the bank is required to get your child's SSN for the account and report a portion of the interest under that SSN. Usually it's split 50/50 for joint accounts unless you specified different ownership percentages when opening the account.

Great question! You're dealing with a common banking vs. tax law confusion. While banks typically issue 1099-INTs based on whose SSN is on the account (often splitting 50/50 for joint accounts as Dmitry mentioned), the tax reporting responsibility depends on who legally owns the income. For minor children, parents are indeed responsible for reporting the child's income, but they have options on HOW to report it - either on the child's separate return or on the parent's return using Form 8814, as Mei Wong explained earlier. The key issue here is determining the true legal ownership. If you added your child as joint owner purely for estate planning convenience (so the account passes to them automatically), but you're still the one funding the account and controlling it, then you might have grounds to ask the bank to issue corrected 1099s in your name only. However, if the account was intended as a gift to your child or set up for their benefit, then the current 1099 reporting might be correct, and you'd need to handle it on the tax side using one of the methods already discussed. I'd recommend talking to both the bank about the account setup AND possibly consulting a tax professional to make sure you're handling this correctly going forward.

One thing nobody has mentioned yet is that the form 8962 repayment limitation is income-based, so it varies depending on your household income as a % of the federal poverty level. If your income is just slightly above one of these thresholds, you might be able to reduce your income enough to qualify for a lower repayment limit. For 2024 returns (filed in 2025), I believe the limits are: - Under 200% FPL: $350 single/$700 family - 200-300% FPL: $950 single/$1,900 family - 300-400% FPL: $1,500 single/$3,000 family - Over 400% FPL: No limitation, full repayment

I've been dealing with Form 8962 repayment limitations for a while now, and one thing that really helped me was understanding the timing of when to report income changes to the marketplace. If you know your income is going to be higher than expected (like getting a bonus or new contract), you can actually report this change during the year and reduce your advance premium tax credit payments. This prevents you from having to pay back as much at tax time, even with the repayment limitation protection. The key is to report changes within 30 days if possible. I learned this the hard way after two years of hitting the repayment cap. Now I check my projected annual income every quarter and update the marketplace if there's a significant change. It's made my tax filing much smoother and reduced the amount I have to repay each year.

Has anyone else successfully charged between their own business entities like OP is considering? I'm in a somewhat similar situation with a consulting business and a rental property, and I sometimes do consulting work that benefits the rental. Never thought about actually charging between them.

This is a really nuanced situation that requires careful handling. Based on what you've described, you're actually in a decent position to maintain business classification despite the recent losses. For your first question about the vacation rental paying your advertising business - this is absolutely legitimate as long as you treat it like any other business transaction. Create proper invoices, document the services provided, and charge fair market rates. This can actually help your Schedule C business show some income while providing a legitimate deduction for your rental property. Regarding the hobby classification concern - don't artificially inflate profits by not reporting expenses. Instead, focus on documenting your profit motive. Since you've had profits for most of the 20 years, that's strong evidence in your favor. Make sure you're documenting: - Your business plans and efforts to return to profitability - Marketing activities to drum up new clients - Any changes you've made to improve operations - Your expertise and time invested in the businesses The IRS looks at the totality of circumstances, not just recent losses. Your long history of profitability combined with documented efforts to improve the struggling business should support your business classification. The fact that you're actively trying to get new clients for the low-revenue business is particularly important to document. Consider keeping detailed records of your business development activities, client outreach efforts, and any strategic changes you're implementing. This demonstrates the businesslike manner and profit motive the IRS looks for.

Just to add another perspective on the IRS contribution limits - it's worth noting that while your employee deferrals are capped at $22,500 total across all plans, if you end up with excess contributions due to payroll timing issues (like if Job 1's payroll doesn't know about Job 2), you'll need to request a return of excess contributions before the tax deadline to avoid penalties. I'd also suggest looking into SEP-IRA or SIMPLE IRA options if Job 2 is flexible about retirement benefits - sometimes smaller employers find these easier to administer than traditional 401k plans, and they might be willing to set something up if you approach them about it. While you still couldn't contribute more employee deferrals, they could potentially make employer contributions that don't count against your $22,500 limit. One more thing on the backdoor Roth strategy - given your $160k MAGI, make sure you're not missing out on any other tax-advantaged accounts first. If you have dependents, a 529 plan might make sense. Also, if either employer offers a dependent care FSA, that's another $5,000 of tax savings you could capture before moving to taxable accounts.

This thread has covered the main points really well, but I wanted to add one practical tip that saved me a lot of headache when I was in a similar situation with multiple W2 jobs. Since you're already maxing out at Job 1, I'd recommend reaching out to Job 1's payroll/HR and letting them know you have a second job where you might want to make 401k contributions. Some payroll systems can actually track your year-to-date contributions across multiple employers if you provide them with your other job's contribution information. This helps prevent the over-contribution issue that @ebd0c4c51e33 mentioned. Also, even though Job 2 doesn't offer matching now, I'd still enroll in their 401k plan if available and set contributions to $0. This way you're already in the system if they add matching later or if your income situation changes and you need to rebalance contributions between jobs. One last thing on the backdoor Roth - with your $160k MAGI, you're in that sweet spot where it definitely makes sense. Just make sure to do it early in the year after cleaning up any existing Traditional IRA balances, and consider doing it as a single large contribution rather than monthly to minimize the time your money sits in the Traditional IRA earning gains (which would complicate the conversion taxes).

I wanted to add my perspective as someone who works at a financial institution and sees these types of questions frequently. The advice you're getting here is absolutely correct - Roth IRA contributions can always be withdrawn penalty-free and tax-free regardless of your age or how long the account has been open. Given that your $2,000 has been sitting uninvested for 6 years, you're in an ideal situation for a penalty-free withdrawal. When money sits in a default settlement fund or money market account, it typically earns very minimal interest - often just a few dollars per year. Here's exactly what I'd recommend: Call E-trade and ask them to provide you with two specific numbers: (1) your total lifetime contributions to the account, and (2) your current total account balance. If the difference is small (likely under $50 for uninvested funds over 6 years), you can withdraw up to the contribution amount completely penalty-free. The 10% penalty the rep mentioned is real, but it only applies to earnings/growth withdrawn before age 59½. Since your money hasn't been invested and growing, this penalty almost certainly doesn't apply to your situation. Don't let generic penalty warnings prevent you from accessing your own contributions when you need them!

I just wanted to share my own experience since I was in almost exactly the same boat as you about 8 months ago. I had a Roth IRA with Schwab that my dad opened for me in 2018 with $2,500, and like yours, the money had just been sitting in their default cash position earning practically nothing. When I needed to access the funds for a medical emergency, I was initially panicked about penalties. But after calling Schwab and asking specifically for my "contribution basis" versus current account value (thanks to advice I found online similar to what you're getting here), I learned that my $2,500 had only grown to about $2,518 over 5+ years. I was able to withdraw the full $2,500 contribution amount with zero penalties and zero taxes. The $18 in earnings I left in the account to avoid any complications, though technically I could have withdrawn some of that too and just paid regular income tax on it (no penalty since there was a medical exception). The key insight that really helped me was understanding that with Roth IRAs, your contributions always come out first before any earnings. So even if there had been significant growth, I could still access my original $2,500 penalty-free. In your case, with uninvested funds, you're looking at an even simpler situation. Don't let the generic penalty warnings scare you - call E-trade tomorrow and ask for those two magic numbers everyone's mentioned. You'll almost certainly find that you can access most or all of your $2,000 without any penalties at all.