Has anyone actually successfully filed hobby income from a 1099-NEC as "Other Income" instead of on Schedule C using TurboTax or H&R Block? When I tried this last year, TurboTax wouldn't let me skip entering the 1099-NEC into their business section.

I've been dealing with this exact situation for three years now! After trying multiple approaches, here's what I've learned works best: The key is understanding that while the 1099-NEC gets issued to you, how you report it depends on the nature of your activity. For true hobby income (like product testing where you're not trying to build a business), you have two viable options: 1. Report it as "Other Income" on line 8z of Form 1040 and don't enter the 1099-NEC form itself into your tax software (to avoid doubling the income). Include a brief statement with your return explaining it's hobby income from product testing. 2. Use Schedule C but ensure your software asks about "profit motive" and answer that you're NOT engaged in this activity for profit. This should prevent self-employment tax from being calculated. The reason your current software only shows business options is because most basic programs assume all 1099-NEC income is business income. TurboTax and similar programs have this limitation. I'd recommend either switching to FreeTaxUSA (which handles this better) or using one of the specialized services mentioned above. Don't stress too much - this is a genuinely confusing area of tax law that even CPAs sometimes get wrong!

Something no one mentioned yet - make sure you and your spouse don't accidentally exceed the family limit COMBINED during the transition months. When my husband and I went through this, our benefits department counted wrong and we over-contributed by accident. Had to withdraw the excess contribution before filing taxes which was a hassle because we'd already spent some of the HSA funds on medical expenses. Just double check all your calculations!

This is such a timely question! I just went through something similar when my partner switched jobs mid-year. One thing that really helped me was keeping detailed records of exactly when each coverage period started and ended - down to the specific dates, not just months. The IRS can be pretty strict about the timing, especially if there are any gaps in coverage or overlapping periods. I'd recommend documenting everything: when your wife's current coverage under your plan ends, when her new employer's coverage begins, and whether there's any continuation coverage (like COBRA) in between. Also, don't forget about the catch-up contributions if either of you is 55 or older! Those rules can get even more complex with mid-year changes. The additional $1,000 catch-up contribution follows the same monthly calculation rules, so you'd need to factor that in too. One last tip - consider setting up automatic contributions to match your calculated monthly limits rather than trying to make one large contribution at year-end. It helps avoid accidentally over-contributing and makes the whole process much more manageable.

Has anyone tried using a virtual CD drive to get around the no-CD-drive problem? I did this last year with my old TurboTax CD using WinCDEmu and it worked perfectly. You basically create an ISO image of the CD and then mount it virtually whenever you need to use the software.

I actually went through this exact situation last year! My family has been sharing a TurboTax Premier CD for years, and when my laptop died and I got one without a CD drive, I was worried we'd have to buy multiple copies. What worked for me was downloading TurboTax online and using the license key from the CD. The key thing is that TurboTax treats the license as transferable as long as it's only active on one computer at a time. After I finished my taxes, I uninstalled the software completely, and then my mom was able to install it on her computer using the same license key without any issues. One important thing I learned: make sure you actually complete and file your return before uninstalling. If you just prepare but don't file, and then uninstall, you might lose your work when the next person installs it. Also keep track of how many federal and state returns you've filed total across all family members - the CD has limits (usually 5 federal returns). The online account creation doesn't permanently bind the license to your account. It's really just for convenience features like saving your return online. The actual license activation is tied to the software installation, not your online account.

Has anyone successfully gotten this fixed going forward without getting HR involved? My company's HR is outsourced and practically impossible to reach.

I went through this exact same issue about 6 months ago! What worked for me was being very persistent with documentation. I created a folder with: 1. Screenshots of all my paystubs showing the incorrect local tax withholding 2. My lease agreement proving my home address 3. Photos of my home office setup with timestamps 4. A letter from my manager confirming I'm 100% remote The key was making it crystal clear that this wasn't just a temporary work-from-home situation - I was hired as a remote employee and have never worked from their office location. When I presented all this to HR, they couldn't really argue with the documentation. They fixed my withholding within two pay periods. For the back taxes, I had to file a non-resident return with the city that had been collecting my taxes incorrectly, but I got about $1,400 back within 8 weeks. Pro tip: If your HR pushes back, ask them to show you the specific tax law or company policy that requires withholding taxes for a location where you don't physically work. Most of the time they can't produce anything because there isn't a valid legal basis for it.

One thing I haven't seen mentioned yet is the potential impact of any energy-efficient improvements you've made over the years. If you installed solar panels, energy-efficient windows, insulation, or HVAC systems, you might have claimed federal or state tax credits for some of these improvements. The IRS has specific rules about how these credits affect your cost basis. Generally, if you claimed a tax credit for an improvement, you need to reduce your cost basis by the amount of the credit you received. For example, if you spent $20,000 on solar panels but got a $6,000 federal tax credit, only $14,000 would count toward your cost basis. This is easy to overlook when you're tallying up 27 years of improvements, but it can make a significant difference in your capital gains calculation. I'd recommend reviewing your old tax returns to identify any energy credits you claimed and adjust your improvement costs accordingly. Also keep in mind that some utility company rebates might need to be treated similarly - they could reduce the amount you can claim as a capital improvement. The documentation requirements for these adjustments are pretty strict, so make sure you have copies of both the original receipts and any credit/rebate documentation.

Just a heads up for everyone dealing with similar documentation challenges - I recently went through this exact process after 25 years in our home. One thing that really helped was creating a digital folder structure organized by year and type of improvement. I scanned all my old receipts and organized them into folders like "2010-Kitchen", "2015-HVAC", etc. Also wanted to mention that your homeowner's insurance company might have records that can help fill gaps in your documentation. When I called my insurance company, they had records going back decades showing when we increased our coverage due to major improvements like the deck addition and finished basement. These records included estimated values that helped me document improvements where I'd lost some receipts. Don't forget about any HOA assessments for capital improvements either - if your community did shared improvements like new roofing or siding that increased property values, those assessments might qualify as additions to your cost basis too. I found documentation for these in my old HOA meeting minutes and assessment notices. The key is being thorough now rather than scrambling if you get audited later. Good luck with your sale!