Quick question - has anyone had this issue with TurboTax or other tax software? I'm trying to file both my federal and local returns through TurboTax but it keeps flagging the missing boxes and won't let me proceed.

Don't panic - this is actually more common than you think! The blank boxes 18-20 on your W-2s simply mean your employers didn't withhold local municipality taxes from your paychecks during the year. This doesn't mean you don't owe them - it just means you'll need to pay them now when you file. For your municipality filing, here's what you should do: - Use the wage amount from Box 1 (your federal wages) as your local taxable wages - Enter "0" for local tax withheld since nothing was taken out - For the locality name, use the municipality where you physically worked (or your employer's location) The reason your third W-2 has this information filled in is probably because that employer was located in your municipality and properly withheld local taxes throughout the year. You should also ask your employers (the ones with blank boxes) why they weren't withholding local taxes - they might need to correct this going forward so you don't face a big tax bill again next year. Some employers don't realize they need to withhold for the municipality where their employees live or work.

If your keeping the loan under 10k, make sure neither of you already gave each other gifts that year that would push you over the annual exclusion when combined with the "imputed interest" amount. The IRS looks at the total benefit transferred in a year, not just individual transactions.

Great question! I went through something similar when my sister needed help with a down payment. Here's what I learned from my tax advisor: The key is proper documentation - even for family loans. Create a simple promissory note that includes: - Loan amount ($13,500) - Payment schedule (monthly payments over 3 years) - 0% interest rate explicitly stated - Both signatures and date Since your loan is over $10k, your friend technically should report imputed interest income based on the current Applicable Federal Rate (AFR). However, if you're using the money for personal expenses (not investments), the imputed interest amount is usually pretty minimal. One alternative that worked for us: we structured it as two separate $6,750 loans with slightly different start dates to keep each under the $10k threshold. This completely avoided any imputed interest issues while still giving us the full amount we needed. Whatever you decide, keep records of every payment made. The IRS wants to see it's truly functioning as a loan, not a disguised gift.

This thread has been incredibly helpful! As someone who's been stressing about this exact issue with my twin sons starting college next fall, I feel much more confident about the documentation approach now. The consensus seems clear: keep records of major expenses (rent, meal plans, big grocery trips), maintain a simple tracking system showing you stayed within the school's published room and board allowances, and don't worry about every small purchase. The real-world audit experience shared by @Yara Sabbagh is particularly reassuring - it sounds like the IRS is looking for reasonableness, not perfection. I love the idea of using a dedicated checking account for college expenses funded by 529 withdrawals. That's definitely going on my to-do list before the boys start school. It would make year-end tax prep so much cleaner and create that clear paper trail everyone's talking about. One thing I haven't seen mentioned - does anyone know if there are differences in documentation requirements between in-state vs out-of-state schools, or public vs private institutions? The room and board allowances vary so dramatically between different types of schools, I'm wondering if that affects how carefully the IRS looks at these expenses. Thanks to everyone who shared their experiences and advice. This community is such a valuable resource for navigating these complex tax issues!

This has been such a helpful discussion! I went through this same confusion last year when my daughter started college. After reading everyone's experiences, I think the key takeaway is that the IRS wants to see reasonableness, not perfection. What worked for me was creating a simple system: I keep the school's official cost of attendance letter in a file, maintain receipts for major expenses (rent, meal plan charges, large grocery trips over $100), and use a basic spreadsheet to track monthly totals. For smaller daily expenses like coffee or snacks, I just estimate based on what seems reasonable for a college student. The most important thing I learned is that staying UNDER the school's published room and board allowance gives you a huge safety buffer. If the school says room and board costs $12k per year and you only spend $10k, you're in great shape even without perfect documentation. One practical tip: I take photos of receipts with my phone right when I get them, then organize them into folders by month. It takes 30 seconds but creates a digital backup that's easy to access if needed. Much better than trying to dig through shoe boxes of paper receipts later! Thanks to everyone who shared their real experiences - especially those who've actually dealt with IRS questions about this. It's so much more helpful than just reading the vague official guidance.

Has anyone used QuickBooks to handle this Schedule L balancing issue? We're in a similar situation (4-member LLC, 3 years behind) and I've been told we should just start with QB to reconstruct everything.

I went through almost the exact same situation with our 3-partner LLC last year - multiple years behind on taxes and a completely messed up Schedule L. Here's what finally worked for me: First, don't stress too much about having perfect inventory numbers from 2020. The IRS understands that small businesses sometimes have incomplete records, especially when catching up on back filings. What matters is that your methodology is reasonable and documented. For the Schedule L balance, I found it helpful to work through it step by step: 1. Start with your cash accounts - these are usually the most accurate 2. Work through your fixed assets (equipment, furniture, etc.) - use purchase receipts or reasonable depreciated values 3. For inventory, since yours stays consistent, using current levels adjusted for any major changes is totally acceptable 4. Then tackle liabilities - loans, credit cards, accounts payable 5. Finally, capital accounts should reflect what each partner actually contributed The key thing that saved me was creating a simple spreadsheet to track each partner's contributions and distributions year by year. This helped me figure out the correct capital account balances. Also, once you get Schedule L sorted, definitely deal with the IRS sooner rather than later about the late filing penalties. They're surprisingly reasonable if you're proactive about catching up, and there are penalty relief options for first-time filers who are behind. You've got this - the hardest part is just getting started!

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.