Has anyone noticed that FreeTaxUSA sometimes has issues with the 8606 form? Last year I had to manually enter some stuff because it wasn't calculating my basis correctly after a conversion.

This is a really common mistake! At $95k income, you're definitely above the deduction threshold if you're covered by a workplace retirement plan. The correct approach is: 1. Don't take the Traditional IRA deduction - you're not eligible 2. File Form 8606 to report your $3,200 as a non-deductible contribution 3. Report the conversion to Roth on your return The reason your tax software is behaving this way is because you can't do both - either it's a deductible contribution (which you're not eligible for) OR it's a non-deductible contribution that requires Form 8606. Since you converted immediately, there shouldn't be any taxable gain on the conversion itself. You'll get a 1099-R next year showing the distribution, but since you're properly reporting the non-deductible basis on Form 8606 this year, the conversion won't be taxable. Think of it this way: you put in post-tax money ($3,200), so when you convert that same post-tax money to Roth, there's no additional tax owed. The 8606 is crucial because it tells the IRS "hey, I already paid taxes on this money.

Since you're filing jointly, I've found it easiest to just enter everything once and let the software handle it. No need to split anything manually between you and your spouse. The tricky part is tracking everything correctly for future years. Keep separate folders for receipts that are 100% rental (like repairs only in the tenant's area) vs. shared expenses that need to be prorated. It'll save you hours next tax season!

Just wanted to add something that helped me when I was in a similar situation - make sure you're aware of the "home office" vs "rental property" distinction. Since you're renting out 40% of your home, that portion is treated as rental property (Schedule E), not a home office deduction (Form 8829). This means you can deduct things like advertising costs to find tenants, rental management fees, and even mileage for trips related to the rental property. Also, if you have any startup costs for getting the rental ready (like painting or minor repairs before the first tenant moved in), those might be deductible too. One more tip - if you're planning to do this long-term, consider opening a separate bank account just for rental income and expenses. It makes tracking so much easier and looks more professional if you ever face an audit.

One thing nobody's mentioned yet - in some states, forming an LLC (even as a DRE) means you'll have to pay additional taxes or fees that you wouldn't as a sole proprietor. In California, for example, there's a minimum $800 annual tax just for having an LLC, even if you make no profit! Definitely check your state's requirements before deciding. In some cases, the extra costs might outweigh the liability benefits, especially if you have a very small low-risk business.

For your jewelry business in Michigan, you're in luck! Michigan has relatively low LLC fees - just a $50 filing fee to create the LLC and no annual franchise tax like California has. Michigan also doesn't have that $800 minimum tax burden. However, you will need to file an Annual Statement with the state (around $25) to keep your LLC in good standing. Overall, Michigan is pretty LLC-friendly compared to states like California or New York. Since you're already doing Schedule C filing, the DRE route could work well for you - you'd get the liability protection without changing your federal tax situation, and Michigan's fees are reasonable. Just make sure to weigh the state filing costs against the potential liability protection benefits for your specific business situation.

Important clarification on the 1099-K issue - receiving a 1099-K doesn't automatically mean you owe taxes on that amount. The 1099-K is just an information document that reports gross payment amounts, not net income. Since you're acting as a pass-through coordinator, you would report the 1099-K amount as "Other Income" on your tax return, then deduct the same amount as a business expense when you pay the resort. This nets to zero taxable income from the transaction. The key is documentation. Keep records of: - All incoming Venmo payments with names and amounts - The payment to the resort/vendor - Any receipts or invoices from the resort - A simple spreadsheet showing total collected vs. total paid out This creates a clear paper trail showing you had no net gain from the transaction. Even if you receive a 1099-K, your tax liability from this activity would be zero as long as you can document that all funds were passed through to pay legitimate group expenses.

I went through something very similar when organizing our company's annual retreat last year. We collected about $45,000 through various payment apps including Venmo, and I was terrified about potential IRS issues. Here's what I learned after consulting with a tax professional: The key is treating this as what it actually is - a temporary custodial arrangement, not income. You're essentially acting like a escrow account, holding money temporarily before passing it through to the final recipient. A few practical tips that helped me: 1. Create a simple tracking spreadsheet from day one showing who paid what and when 2. Save screenshots of all Venmo transactions 3. Keep the resort invoice/contract showing the total amount due 4. If possible, try to make the payment to the resort close in time to when you finish collecting funds The multiple transfers due to Venmo's limits actually work in your favor documentation-wise - it creates a clear paper trail. Banks are used to seeing payment app transfers these days, so as long as the amounts align with your normal account activity patterns, you shouldn't have issues. One thing that gave me extra peace of mind was sending a brief email to all participants after the event summarizing the total collected and total paid to vendors. It's not required, but it shows transparency and creates another piece of documentation if ever needed. You're doing the right thing by researching this ahead of time. The fact that you're being thoughtful about proper handling shows this is legitimate coordination, not any attempt to hide income.

Great question about the 1095-A as a dependent! I ran into this exact issue. Even though you're claimed as a dependent, you still need to report the 1095-A information on your return using Form 8962. The key thing is that you'll likely need to "repay" any advance premium tax credits that were paid to your insurance company during the year, since as a dependent you're not eligible to receive those credits. Make sure you have the correct SLCSP (Second Lowest Cost Silver Plan) amount from your 1095-A - that's often where the software errors come from. If your software keeps giving you errors, double-check that you're entering the monthly amounts exactly as they appear on the form, including any zeros for months you weren't covered. The good news is that this situation is pretty common and the IRS system handles it routinely. Just make sure you file the form even if it results in owing money - not filing it when you received advance credits can cause bigger problems later.

The 1095-A dependent situation can be really tricky! I went through this last year and learned the hard way that timing matters a lot with these forms. Since you mentioned filing so close to the deadline, just wanted to add that if your return does get rejected due to 1095-A issues (which happened to my friend), make sure you act quickly during that 5-day grace period someone mentioned earlier. One thing that really helped me was calling the marketplace directly (not the IRS) to verify the SLCSP amounts on my 1095-A were correct. Sometimes there are errors on the form itself, and the marketplace can issue a corrected version if needed. This is especially important if you switched plans mid-year or had coverage gaps. Also, since you're being claimed as a dependent, make absolutely sure your parents aren't also trying to claim any premium tax credits related to your coverage on their return. That can create a nightmare scenario where both returns get flagged. Coordination is key! The payment timing advice everyone gave is spot on though - always pay by the deadline regardless of acceptance status. I learned that lesson the expensive way a few years back.