Don't forget about the impact of realizing $1.3 million in gains on your Medicare premiums two years from now! With income that high, you'll likely hit the top IRMAA bracket for Medicare Part B and D premiums. In 2025, your premiums would be based on your 2023 income. For single filers with income above $500,000, the monthly Part B premium jumps to around $500-600 per month (vs the standard $170ish). Just something else to budget for since this kind of one-time capital gain has lingering effects on your retirement expenses.

This is a great discussion! As someone who went through a similar situation a few years ago, I wanted to add that it's also worth considering the timing of when you realize these gains if you have any control over it. If you're planning to have lower income in future years (which is common in retirement), you might benefit from spreading the gains across multiple tax years to stay in lower capital gains brackets. The 0% bracket goes up to about $44k, and the 15% bracket extends to around $492k for single filers. Also, if you're doing any charitable giving, this could be a great year to consider donating appreciated securities directly to charity rather than cash. You avoid the capital gains tax entirely and still get the charitable deduction. With $1.3M in gains, even a modest charitable giving strategy could save significant tax dollars. Just another angle to consider while you're planning!

Has anyone noticed that tax software seems to get confused with inherited IRAs? I've used three different programs over the years and they ALL struggle with this scenario. I wish they would update their interfaces to make these questions clearer for situations like this!

I went through this exact same situation two years ago when my grandmother passed away and left me part of her IRA. The tax software confusion is real - I think the issue is that these programs are designed primarily for regular IRA distributions, not inherited ones. One thing that helped me was understanding that the "basis" question is really asking whether the original owner ever made contributions with money that was already taxed (after-tax contributions). Most traditional IRAs are funded entirely with pre-tax dollars, so there's usually no basis to worry about. The key is to look at your 1099-R form carefully. If Box 2a (taxable amount) equals Box 1 (gross distribution), then there's no basis and the entire amount is taxable. If Box 2a is less than Box 1, that might indicate some after-tax contributions were made. Since you confirmed with the financial institution that there were no after-tax contributions, you should be fine selecting "inherited IRA = Yes" and "basis = No" and then manually correcting any weird refund calculations the software produces. The important thing is that you report it as an inherited distribution so it's properly coded on your return.

I ran into this question in my job as a traveling nurse. My agency reimburses per diem, but they specifically mention this "50 mile rule" in their policy. From what I understand after talking to our payroll department, the 50 miles is actually THEIR policy, not an IRS requirement. They use it as a simplified way to determine who qualifies for tax-free per diem. A company can set their own policies for reimbursement that are more restrictive than the IRS minimum requirements. So if you're getting per diem from your employer, check THEIR policy documents rather than just IRS publications.

As a tax preparer, I see this confusion about the 50-mile rule constantly during tax season. What many people don't realize is that the IRS actually uses a "sleep or rest" test rather than a specific mileage requirement. Publication 463 explains that you must be away from your tax home long enough to require substantial sleep or rest to meet the demands of your work. The 50-mile distance is more of a practical guideline that courts and the IRS use to help determine if overnight travel was truly necessary for business purposes. If you're traveling 30 miles but genuinely need to stay overnight due to early morning meetings or safety concerns, that could still qualify. Conversely, traveling 60 miles for a day trip wouldn't qualify for per diem. For audit protection, I always tell my clients to maintain a detailed travel log with business purpose, dates, locations, and why overnight stay was necessary. Also keep any employer communications about travel requirements - these carry significant weight with auditors.

I went through this exact same situation a couple years ago! The stress is real, but here's what I learned after consulting with a tax professional: Since these "thank you" payments are directly tied to your babysitting services, they're almost certainly considered tips/additional compensation rather than gifts. The IRS doesn't care what the family calls them - what matters is that they're given in appreciation of services you provided. You should report all of these payments as income, even if you don't receive a 1099. Keep track of everything - screenshots of Venmo transactions, notes about cash payments, etc. If it totals over $400 for the year, you'll also need to file Schedule SE for self-employment tax. One tip: start keeping better records now for next year. Create a simple spreadsheet tracking your regular pay vs. these bonus payments. It'll make tax time much less stressful! And don't panic - the IRS is generally understanding if you're making a good faith effort to report everything correctly.

Hey Oliver! I totally understand the stress - I was in almost the exact same boat last year with irregular payments from a tutoring family. The uncertainty about whether you're doing something wrong is the worst part! Based on everything I learned (and what others have shared here), those Venmo "thank you" payments are almost definitely going to be considered income since they're directly tied to your babysitting work. Even though they're irregular and the family is calling them gifts, the IRS looks at the underlying reason for the payment. A few practical things that helped me: - Start tracking everything NOW in a simple spreadsheet (regular pay vs bonus payments) - Take screenshots of all your Venmo transactions - Keep notes about any cash payments with dates and amounts - Don't wait until tax season to figure this out The good news is that even if you owe some extra taxes (including self-employment tax if it's over $400 total), you're not going to get in serious trouble for making a good faith effort to report everything correctly. The IRS really goes after people who are intentionally hiding income, not folks like you who are actively trying to do the right thing. You've got this! Better to deal with it now than stress about it for months.

Has anyone actually had the IRS contact them about this kind of duplicate 1099 situation? I'm wondering how likely it is that this would trigger an audit or something.

This is such a frustrating situation that happens way too often with online gambling platforms! I went through the same thing last year with DraftKings and Venmo. The key thing to remember is that you absolutely need to report both 1099s on your return, but you only pay taxes on the actual income once. When you're in TurboTax, enter both forms exactly as they appear, then look for the "duplicate income" or "adjustment" section where you can subtract out the duplicated amount. Make sure you keep detailed records showing the money flow - screenshot your PrizePicks withdrawal, your PayPal deposit, and any confirmation emails. If the IRS ever questions it, you want to be able to show a clear paper trail that it's the same funds. Also pro tip: if the amounts are slightly different due to processing fees, report the higher amount (usually from the gambling platform) as your income, and you might be able to deduct those transfer fees if you itemize. The most important thing is being consistent and having good documentation to back up your filing.