Another strategy to consider is the "grandparent loophole" if you have parents who might be willing to help. If grandparents gift money directly to the educational institution (not to you or your children), it doesn't count as reportable income for FAFSA purposes and won't affect future financial aid eligibility for your younger kids. Also, don't overlook state-specific education tax benefits. Some states offer tax deductions or credits for college expenses that can help offset the tax burden from IRA withdrawals. You might also want to check if any of your children's schools offer payment plans that could help spread the cash flow impact across multiple months rather than requiring large lump sums. One more consideration: if you do go the IRA withdrawal route, be strategic about timing. Making withdrawals in December versus January can affect which tax year the income hits, potentially helping you manage tax brackets more effectively across multiple years of college expenses.

As someone who went through a similar situation with multiple kids in college, I'd strongly recommend exploring a combination approach rather than relying solely on IRA withdrawals. Here's what worked for us: First, definitely check those employer tuition benefits - many people miss these! Also look into whether your kids' schools offer sibling discounts or multi-year payment plans that can help with cash flow. For the IRA withdrawal strategy, consider this timing approach: withdraw just enough each year to stay within your current tax bracket, then supplement with other funding sources. This prevents pushing yourself into higher tax brackets on large withdrawals. One option you didn't mention is having your kids take federal student loans for part of the costs, then you can help pay them off after graduation when your income situation might be different. The interest rates on federal loans are often reasonable, and it preserves more of your retirement funds for longer growth. Also, document everything meticulously if you do withdraw from IRAs. The IRS can be very particular about what qualifies as educational expenses, and having detailed records from day one will save you headaches later. Keep receipts for everything - tuition, required fees, books, supplies, even required technology like laptops if the school specifies them as necessary. The key is flexibility - don't put all your eggs in one funding basket. Mix and match strategies based on what works best for your tax situation each year.

Went thru this exact thing and ended up calling the IRS. They said to report my percentage on Schedule D, include a statement with the trust's EIN info, and keep copies of everything the trust gave me. Btw the basis is the value on the date of death, not original purchase price. That's why no gain usually.

I'm dealing with a very similar situation right now with my dad's house that we sold through a trust last month. My siblings and I are all confused about the same thing - the 1099-S went to the trust, not us individually. From what I've learned talking to our estate attorney, you definitely need to report your 50% beneficial interest on your personal return, not just what you've received so far. The IRS expects you to report based on your ownership percentage in the trust, regardless of distribution timing. One thing that helped us was getting a letter from our attorney explaining the trust distribution and our individual percentages. We're including copies of this with our tax returns along with a brief statement referencing the trust's 1099-S. Our attorney said this creates a clear paper trail for the IRS if they have any questions about why we're reporting income that doesn't directly match a 1099 in our names. The stepped-up basis rule that others mentioned is huge - make sure you get documentation of the property's value when it was inherited, not what it was originally purchased for. That's probably why you don't have much in capital gains to worry about.

Quick question for anyone with experience - if my side gig is seasonal (I make handcrafted items that sell mostly around holidays), can I still do the solo 401k thing? Like 80% of my side income comes in November and December, but I work my regular job year-round.

This is such a great discussion! I'm in a similar boat with my freelance web design work alongside my day job. One thing I wanted to add that hasn't been mentioned yet - make sure to consider the administrative burden of maintaining a solo 401k. While the tax benefits are fantastic (I saved about $3,200 in taxes last year), you do need to keep detailed records of your business income and expenses. I use QuickBooks to track everything, which makes it much easier when it's time to calculate my contribution limits. Also, if you're thinking about expanding your side business in the future, the solo 401k becomes even more valuable. As your self-employment income grows, that 25% employer contribution can really add up. Last year I was able to put away an extra $6,800 beyond my regular 401k limits! Just make sure you're treating your LLC seriously as a business - the IRS can get picky if it looks more like a hobby. Keep good records and try to show you're operating with a profit motive.

Quick tip if you're preparing Form 8919 - make sure you enter code G in box c since you've filed the SS-8 but haven't received a determination. Also, you'll need to fill out the employer information in boxes d through f (name, EIN, and address). The other thing people often miss is that the amount from the 1099-NEC goes in column d (Total wages) of Form 8919, and then that same amount needs to be reported on Schedule 1 as "other income" with a note that it's also being reported on Form 8919. This prevents duplicate taxation while ensuring it's properly reported. If the software doesn't seem to be handling this correctly, try entering your 1099-NEC information, but then go back and look for a section about "Forms" or "Miscellaneous Forms" and specifically add Form 8919.

Just wanted to share my experience since I went through this exact situation about 8 months ago. The key thing that helped me was understanding that Form 8919 needs to be treated as a separate form in your tax software, not just an adjustment to your 1099-NEC. In FreeTaxUSA specifically, after you enter your 1099-NEC information, go to the "Federal Taxes" section and look for "Less Common Income" or "Other Tax Situations." There should be an option for "Unreported Social Security and Medicare Tax" or something similar - that's where you'll find Form 8919. When you complete Form 8919, make sure you: 1. Use reason code G (you filed SS-8 but no determination yet) 2. Enter your employer's full information 3. Put the full amount from your 1099-NEC in the wages section The software should then automatically reduce your self-employment tax and only charge you the employee portion of FICA taxes. If it's still showing the full self-employment tax, double-check that the 1099-NEC amount isn't being counted twice in different sections. One last tip - print out your completed return before filing to verify the numbers look right. You should see Form 8919 attached and your total tax should be significantly lower than if you filed as self-employed.

I've been following this discussion as a fellow small business owner, and it's been really eye-opening! I run a small HVAC company with two service vans, and I've been doing exactly what the original poster described - just tracking personal use and assuming everything else is business. What strikes me most is how many people here have gone through audits and learned these lessons the hard way. It's clear that the IRS really does expect documentation of business purpose, not just personal use exclusion, for company-owned vehicles. I'm curious about one practical aspect that hasn't been fully addressed - for those of you who have employees occasionally driving company vehicles, how do you handle the tracking? Do you require them to log trips too, or do you handle it differently since they wouldn't have personal use? I have a part-time helper who sometimes takes one of the vans to pick up supplies or deliver equipment to job sites. Also, for the original poster and others implementing new systems - has anyone found a good balance between thoroughness and practicality? I'm worried about starting too ambitious and then abandoning the system when it becomes cumbersome during busy seasons.

This thread has been incredibly valuable! As someone who's been putting off proper mileage documentation for my electrical business, reading through everyone's experiences has been a real wake-up call. What really resonates with me is the distinction between "prove business use" versus "prove personal use" that several people mentioned. I've been approaching this completely backwards, thinking that since my work truck is obviously a business vehicle, I only needed to account for the occasional personal trips. The practical solutions shared here - especially the voice-to-text logging and pattern documentation for routine trips - make this seem much more manageable than I initially thought. I was imagining having to write detailed descriptions for every single trip, but "supply run - Home Depot" or "service call - residential" seems sufficient based on the audit experiences shared. I'm planning to start with a simple smartphone app next week and focus on building the habit first. The 15-second voice logging approach sounds perfect for someone who's constantly moving between job sites with dirty hands. Thanks to everyone who shared their real-world experiences, especially those who went through audits. Sometimes you need to hear from people who've actually dealt with the IRS rather than just reading general tax advice online.