Has anyone actually gotten audited over backdoor Roth contributions? I'm in the same boat with multiple years showing on one 1099-R and now I'm worried. Should I be concerned about red flags if I report this as described above?

I went through this exact same situation last year and want to share what worked for me. The key thing to understand is that the 1099-R is just reporting the total distribution amount - it's not determining your taxable income. Here's what I did in TurboTax step by step: 1. Enter the 1099-R as a Roth conversion (not a regular distribution) 2. When TurboTax asks about your basis, you'll need your Form 8606 from 2020 AND the one you'll file for 2021 3. The 2021 Form 8606 will show your total basis from both years ($15k in your case) 4. This should result in zero or minimal taxable income since you're converting non-deductible contributions The critical part is making sure you filed Form 8606 for 2020 when you made that contribution. If you didn't file it, you might need to amend your 2020 return first. Also, keep excellent records - bank statements showing the contributions, conversion confirmations, and all your Form 8606s. The IRS wants to see a clear paper trail that these were legitimate backdoor Roth strategies, not attempts to avoid taxes on deductible IRA contributions. Don't stress too much about the single 1099-R - this is actually pretty common when conversions happen across calendar years but get processed together.

One thing nobody mentioned yet is that you should open a separate business checking account ASAP if you haven't already! Makes tracking business income and expenses sooooo much easier when tax time comes. I didn't do this my first year and spent like 3 full days sorting through personal bank statements to figure out what was business vs personal. Nightmare!

As someone who just went through this exact situation last year, I can offer some reassurance! You're not automatically doomed for missing those first two quarterly payments, especially since you literally didn't know about the business when the April deadline hit. The key thing is to make your September 15th payment and make it substantial enough to cover what you should have paid earlier. Since you started in March and have made $34,500 so far, you're looking at owing both regular income tax AND self-employment tax (that 15.3% Social Security/Medicare hit that nobody warns you about). Here's what saved me: I calculated what my total tax liability would be for the year, then made my September payment large enough to get me to that 90% threshold by year-end. The IRS is surprisingly reasonable about first-year businesses as long as you show good faith effort to catch up. Also, definitely start setting aside 25-30% of every payment you receive going forward. I use a separate savings account and transfer the tax money immediately when clients pay me. Trust me, you don't want to be scrambling to find tax money next April! Your photography business sounds like it's off to a great start - don't let the tax stress overshadow that success!

570 codes often pair with 971 notice codes. Check for that too. It's usually just verification. Nothing to panic about. Most clear in 2-3 weeks. Tax Advocate Service can help if it goes longer. They prioritize financial hardship cases. Keep checking your transcript weekly. Look for the 571 release code. That's your signal that processing has resumed.

I totally understand your frustration - once you're in their "system" it really does feel like you're flagged forever! I've been dealing with similar issues since a 2017 offset situation. One thing that helped me was setting up an online IRS account if you haven't already. Sometimes notices show up there before they're mailed, and you can see additional account details that don't appear on the basic transcript. Also, with three kids in activities, I know how tight budgets can be - consider reaching out to Tax Advocate Service (taxpayeradvocate.irs.gov) if this drags on beyond 30 days. They specifically help with cases involving economic burden and have more power to expedite reviews than regular customer service. Hang in there - most 570 codes with CTC do resolve within a few weeks, especially if everything on your return is accurate.

Has anyone in this thread used TurboTax for multiple LLC situations? Their interface seems to struggle with two separate Schedule Cs with different QBI calculations. I'm wondering if the OP's spreadsheet might actually be better than commercial software for this specific case.

This is really impressive work! As someone who's been through the frustration of CPAs missing obvious deductions, I totally get why you went the DIY route. Your spreadsheet approach sounds comprehensive. One area I'd suggest double-checking is the interaction between your home office deduction and the QBI calculation. The home office deduction reduces your Schedule C profit, which then reduces your QBI base. But if you're also claiming the home office deduction on Schedule A (for the non-business portion), make sure you're not double-dipping anywhere. Also, have you considered how state tax implications might affect your federal deduction strategy? Some states don't follow federal bonus depreciation rules, so maximizing federal deductions could actually increase your state tax burden. The fact that you're covering 13 different forms shows you're really thinking holistically about this. That's exactly what most tax preparers miss - they focus on individual forms instead of optimizing across the entire return.

Just want to add something important about dual-status aliens and Form 5471 that hasn't been mentioned yet. Even though you don't need to file Form 5471 for shares sold before becoming a US resident, you might still need to report the sale on your dual-status return. If the sale of those foreign shares resulted in a capital gain, you'll need to report it on Schedule D and Form 8949, but only if it was US-source income or effectively connected with a US trade or business. Foreign-source capital gains realized during your non-resident period are generally not taxable in the US. Double check if you have any dividend income from those shares before selling them too. Depending on the source, those might need reporting.

Has anyone used TurboTax for a dual-status return with foreign income issues? I'm trying to figure out if it can handle Form 5471 correctly for part-year residents.