I just want to point out that for the 2025 filing season (for 2024 tax year), there's a slightly higher threshold for long-term capital gains tax rates. For single filers, the 0% rate applies up to $47,025 of taxable income and the 15% rate applies up to $518,900. So depending on your income level, this could affect how you fill out the Capital Gain Tax Worksheet. The Qualified Dividends and Capital Gain Tax Worksheet is critical because if you don't use it, you might massively overpay your taxes. FreeFileFillableForms won't catch this - it just takes whatever numbers you input.

Just to add another perspective here - I've been using FreeFileFillableForms for several years with investment income, and the key thing to remember is that it's really just a digital version of the paper forms. You're still responsible for all the calculations that would normally be done on supporting worksheets. For the Qualified Dividends and Capital Gain Tax Worksheet specifically, I usually download the PDF from irs.gov, work through it step by step, and keep a copy with my tax records even though it doesn't get submitted. The most important thing is making sure you use the correct tax year's version - don't accidentally grab last year's worksheet since the income thresholds and rates change annually. One tip that's helped me: after completing the worksheet, I always cross-reference my final tax calculation with the tax tables to make sure everything looks reasonable. FreeFileFillableForms won't catch computational errors in your supporting worksheets, so that sanity check has saved me from mistakes more than once.

Curious if anyone has tried using a Roth conversion strategy with capital losses? I've heard that if you convert traditional IRA funds to Roth, the taxes you pay on the conversion can be partially offset by capital losses (up to the $3k limit). Might be another way to at least get some value from the losses while moving money to a tax-free growth vehicle.

I'm dealing with a similar situation - about $45k in capital losses from some tech stock disasters in 2022. One thing I've learned is that you really need to think strategically about generating capital gains to offset these losses rather than just accepting the $3k annual deduction. Since you're considering an LLC for consulting work, here's something to consider: if your LLC is profitable and you're looking to diversify, you could potentially invest some of those business profits in assets that might generate capital gains (real estate, other investments). When those gains flow through to your personal return, they'd be offset by your existing capital losses. I've also been looking into tax-loss harvesting in reverse - instead of harvesting losses, I'm actually looking for opportunities to harvest gains when I have these massive loss carryovers. It's a completely different mindset but makes sense when you're sitting on nearly $100k in losses like you are. The key is not letting these losses go to waste by only using $3k per year. At that rate, it would take you over 30 years to use them all up!

This is really helpful information everyone! I'm in a similar situation with my 8-year-old's 529 account. One thing I'm curious about - does the 15-year requirement apply from when the account was first opened, or from when the specific contributions were made? For example, if I opened my daughter's 529 in 2020 but made a large contribution in 2023, would I need to wait until 2035 for the account to be eligible, or would I need to wait until 2038 for that specific 2023 contribution to be eligible for rollover? Also, I've been wondering about the timing strategy. Since the annual Roth contribution limits are relatively low ($7,000 in 2024), and you can only roll over what the beneficiary actually earned that year, it seems like you'd want to spread these rollovers across multiple years to maximize the benefit. Has anyone thought through the optimal timing for this?

This thread has been incredibly helpful! I'm actually dealing with a similar situation but with a twist - my son's 529 was opened by his grandparents in 2018, but they made me the account owner last year when they moved to assisted living. Does anyone know if the 15-year clock started ticking in 2018 when they originally opened it, or does it reset when ownership transferred to me? I'm hoping it's the former since that would make us eligible for rollovers in 2033 rather than having to wait until 2039. Also, regarding the earned income requirement that @Dylan Mitchell mentioned - does anyone know if things like scholarship stipends or work-study programs count as "earned income" for Roth IRA purposes? My son is only 12 now, but I'm trying to plan ahead for different scenarios when he gets to college age. The flexibility these new rules provide is amazing, but the complexity is definitely making my head spin! Thanks to everyone sharing their experiences and research.

19 Something that hasn't been mentioned yet is that the IRS audit rate for self-employed people making under $100k is actually pretty low, around 0.6% currently. That said, missing income that has been reported to the IRS via 1099 is one of the surest ways to increase your chances. File that 1040-X as soon as possible, and make sure you pay what you owe plus any interest. The penalties for an honest mistake are usually pretty reasonable if you fix things yourself before they send you a notice.

As someone who went through a similar situation a few years ago, I can tell you that your anxiety is understandable but probably worse than the actual consequences will be. I missed reporting about $4,800 in freelance income and was absolutely terrified about getting audited. Here's what I learned: The IRS gets millions of tax returns and they're looking for patterns of intentional fraud, not honest mistakes from people who are generally compliant. A one-time oversight, especially when you're proactive about fixing it, is viewed very differently than systematic underreporting. I filed my 1040-X about 8 months after my original return, paid the additional tax plus some interest (which wasn't as bad as I expected), and never heard another word about it. The whole thing was resolved without any drama. The key is being proactive. Don't wait for them to find it - fix it yourself. That shows good faith and honest intent, which matters a lot in how they handle these situations.

Just to add another perspective on this situation - before you surrender the policy, you might want to explore the life settlement market. Given that your policy has been in force since 1965 and you're likely older now, there could be life settlement companies interested in purchasing your policy for more than the surrender value. Life settlements typically work best when the insured is over 65 and has some health changes, and your policy's long history could make it attractive to investors. Even if you only get a small premium over the $2,745 surrender value, that's still better than taking the loss. You'd want to work with a licensed life settlement broker who can shop your policy to multiple companies. The process involves a medical evaluation, but if you qualify, you might recover more of your cost basis than surrendering directly to the insurance company. Just another option to consider alongside the great advice others have already shared about keeping the policy active or reducing the death benefit.

This has been such a helpful discussion! I really appreciate everyone taking the time to share their experiences and insights. You've all given me a lot more to consider than I initially thought about. A few key takeaways I'm getting: 1. Unfortunately, I can't deduct the loss from surrendering, which is frustrating but good to know definitively 2. I should call my insurance company to get a complete policy illustration and understand all riders/benefits before deciding 3. The guaranteed interest rate from 1965 might actually be competitive with today's rates 4. Life settlements could potentially get me more than surrender value 5. I need to verify ownership status since my grandfather originally started the policy I think my next steps will be to call the insurance company to get all the policy details, then possibly explore the life settlement option if the ownership is clear. The creditor protection and guaranteed rate aspects might also make keeping it worthwhile. Thanks again to everyone - this community is incredibly knowledgeable! I'll update this thread once I've gathered more information from my insurance company.