I can totally relate to your confusion with code P - I had the exact same panic when I first saw it! After dealing with this last year, here's what I learned that might help: Code P means it's a qualified distribution from a Roth account (either Roth IRA or Roth 401k), which is generally non-taxable. The key is to look at the actual distribution date on your 1099-R form, not when you received the document. If the distribution happened in December 2024, it goes on your 2024 return even though you're just getting the form now. Since you mentioned it's from an old 401(k), this was likely a Roth 401(k) that you either rolled over or took a distribution from. The $28,500 amount suggests it might have been the full account value. Even though code P distributions are typically tax-free, you absolutely must report it on your return. The IRS gets copies of all 1099-R forms and will send you a notice if there's a mismatch between what they have and what you reported. Your tax software should handle it fine once you enter all the information exactly as shown on the form. Don't overthink it - just input the details and let the software do the calculations. Most likely you won't owe any additional tax, but you'll have properly documented the distribution for IRS records. If you're still unsure, I'd recommend calling your retirement account administrator to confirm exactly what type of distribution this was and why it received code P. They usually have tax specialists available during filing season who can clarify these situations.

I just went through this exact situation a few months ago with my own 1099-R code P, so I totally understand your confusion! Here's what I learned that might save you some stress: First, don't panic - code P is actually good news. It indicates a qualified distribution from a Roth account, which means it should be tax-free. The distribution goes on the tax return for the year shown on the 1099-R form itself (look for the tax year box, usually in the upper right), not when you received the document. Since you mentioned this was from an old 401(k) and the amount is $28,500, this sounds like it might have been a Roth 401(k) distribution or rollover. The key thing is that even though it's likely not taxable, you absolutely must report it on your return - the IRS gets copies of all 1099-R forms and will send you a notice if there's a mismatch. Your tax software should handle it fine once you enter all the information exactly as shown on the form. You'll probably need to complete Form 8606 as well to document the Roth distribution properly. If you're still uncertain about the specifics, I'd recommend calling your retirement account administrator directly. Most have tax specialists available during filing season who can explain exactly why your distribution received code P and confirm the reporting requirements. It's worth the call to get definitive answers rather than guessing. The bottom line: report it for the tax year shown on the form, don't stress about owing additional taxes (code P distributions are typically tax-free), but definitely don't skip reporting it entirely.

VA taxpayer here! I just went through this exact situation last month. After I completed my ID verification, it took 8 business days for my refund to hit my account. The key thing I learned is that VA's "Where's My Refund" portal is pretty unreliable - mine still showed "processing" even after I got paid! I'd recommend checking your actual bank account daily rather than obsessing over the portal. Also, if you have direct deposit set up, refunds typically hit on weekdays. From what I've seen talking to others, most people are getting theirs within 7-14 business days after verification, so you should be getting close! Stay patient, it's definitely coming.

VA taxpayer here! Just wanted to share my recent experience since I see a lot of people going through the same thing. I completed my ID verification about 2 weeks ago and got my refund deposited yesterday (took 9 business days total). Like others mentioned, the Where's My Refund portal is pretty much useless - it was still showing "processing" when I woke up to find the money in my account! My advice: check your bank account directly each morning if you have direct deposit, and try not to stress too much about the portal status. VA seems to be processing verifications pretty consistently in that 7-14 day window. Hang in there, yours should be coming soon! 🙏

Has anyone used FreeTaxUSA for reporting crypto from gambling sites? Their interface is confusing me for this specific situation and I can't figure out where to put the initial cost basis.

Just wanted to add another perspective here - I work as a tax preparer and see situations like this more often than you'd think. The key thing everyone's getting right is that you have two completely separate tax events happening: 1) Gambling activity: Your gift card purchases were your "wager" and the ETH withdrawal was your "winnings." This gets reported as gambling income. 2) Crypto holding: From the moment you received that ETH, you're holding a crypto asset with a cost basis equal to its fair market value at the time of receipt. That $138 loss is probably correct if ETH dropped after you received it. One tip - make sure your tax software isn't double-counting anything. Sometimes it tries to treat the gift card purchase as a crypto purchase, which would mess up your numbers. The gift cards should only appear as part of your gambling activity calculation, not in the crypto section at all. Also, keep really good records because the IRS is definitely paying attention to crypto gambling situations now. Transaction hashes, withdrawal confirmations, and price documentation for the exact moment you received the ETH are all important to have on hand.

I'm in almost the exact same boat as you! Made about $8,200 last year doing freelance writing and web content, and yeah - that self-employment tax hit was brutal. What really helped me understand it better was realizing that as a 1099 contractor, you're essentially running a small business in the eyes of the IRS, even if it doesn't feel that way. One thing that saved me some money was being more aggressive about tracking business expenses. I started using a simple spreadsheet to log everything - even small stuff like printer paper, ink cartridges, and that ergonomic mouse I bought specifically for work. Those $15-30 purchases throughout the year added up to almost $400 in deductions I would have missed otherwise. Also, if you have a dedicated workspace at home (even just a corner of a room), make sure you're claiming the home office deduction. For my 120 sq ft workspace in my 1,200 sq ft apartment, I could deduct 10% of my rent, utilities, and renter's insurance. That was another $800+ in deductions. The 15% you're setting aside sounds about right for self-employment tax, but don't forget you might get some of that back if you qualify for things like the Earned Income Tax Credit. Definitely worth double-checking all the credits available for lower-income taxpayers!

I totally feel your pain on this! I'm a freelance photographer making similar amounts and had the exact same shock last year. What helped me was understanding that the 15.3% self-employment tax is basically covering your Social Security and Medicare contributions that an employer would normally split with you. One thing that really saved me money was getting serious about mileage tracking. I use a simple app on my phone to log every trip to client meetings, the camera store, or even driving to scout locations. At 65.5 cents per mile, this added up to over $600 in deductions last year that I would have completely missed. Also, since you're in graphic design, make sure you're deducting your internet bill (business portion), any co-working space fees if you use those, and professional development like online courses or design conferences. Even webinars and virtual workshops count as business expenses. The tax system definitely feels unfair to small freelancers, but once you get good at tracking everything and understand the rules, you can minimize that bite. I now set aside 20% just to be safe and usually get a little refund, which feels way better than owing money in April!

This has been such an enlightening discussion! As someone who's been self-employed for just over a year, I had this exact same confusion about the 92.35% calculation when I first prepared my Schedule SE. I actually spent hours thinking I was doing something wrong because the math didn't seem to add up to true equivalence with W-2 employment. Learning that this percentage is essentially a 70-year-old computational compromise designed for the slide rule era completely reframes the issue. It's fascinating (and slightly absurd) that in 2025, when we can instantly solve complex equations on our phones, we're still locked into approximations created for manual calculations in 1954. What really drives the point home is the international comparison - knowing that countries like Canada and Australia have modernized their systems to be mathematically precise while we're stuck with this legacy approach shows it's clearly a matter of political will rather than technical capability. I calculated my own annual "benefit" from this discrepancy at about $51 - not substantial money individually, but when you think about millions of self-employed taxpayers each getting this small advantage purely because updating decades-old math would technically constitute a tax increase, it really highlights how policy inertia can create these unintended quirks in our tax system. Thanks to everyone who contributed such detailed historical context and research - this thread has been more educational than most official tax resources I've encountered!

This has been such a fascinating deep dive into tax policy archaeology! As someone who just started freelancing this year, I had the exact same confusion about that 92.35% figure when I first encountered Schedule SE. I actually triple-checked my calculations thinking there had to be an error somewhere. What really strikes me is how this thread perfectly illustrates the layers of history embedded in our seemingly straightforward tax rules. Learning that we're essentially stuck with 1954-era computational shortcuts designed for manual calculations, while filing taxes electronically in 2025, is both fascinating and slightly absurd. The international comparison is what really drives it home though - knowing that Canada and Australia have modernized their equivalent systems to be mathematically precise while we remain locked into this legacy approximation shows that technical solutions definitely exist. It's clearly more about political inertia than technological limitations. I calculated my own annual "benefit" from this discrepancy at around $39 - not significant money individually, but when you multiply that across millions of self-employed taxpayers, it really highlights how these small historical quirks can have substantial cumulative effects. Thanks to everyone who contributed such detailed historical context and research! This discussion has been far more educational than any official IRS publication I've read. It's exactly the kind of analysis that helps newcomers understand not just the mechanics of tax calculations, but the fascinating policy decisions that created them.