Thanks, that's reassuring but quick follow-up question - what if my brother ends up not filing at all? Would that mean we only claimed 80% of the policy (my 20% + parents 60%)? Would that cause issues?

If your brother doesn't file at all, that wouldn't necessarily create problems regarding the Premium Tax Credit. The IRS is primarily concerned with making sure no more than 100% of a policy is claimed. Claiming less than 100% might mean some of the credit goes unclaimed, but it's not a compliance issue. However, if your brother was required to file a tax return (based on his income and situation) and received advance premium tax credits, he actually must file a return to reconcile those credits even if he otherwise wouldn't be required to file. Failure to file in this case could result in him being ineligible for advance premium tax credits in future years.

Yes, CashApp Taxes (formerly Credit Karma Tax) does generate Form 8962 correctly including Part IV allocations, even though the user interface doesn't explicitly show this section. I was worried about this too, so I actually downloaded the PDF of my complete return after filing and checked - the allocation was there on the generated 8962.

Thanks, this is helpful! My relocation paperwork does mention a "tax gross-up" for some of the benefits, but not all of them. So for the ones that weren't grossed-up, I'll end up owing taxes on those out of pocket, right?

That's exactly right. For the benefits that weren't grossed-up, you'll need to pay taxes on that amount out of your own pocket. For example, if you received a $3,000 lump sum that wasn't grossed-up, you might owe roughly $750 in taxes (depending on your tax bracket) that comes out of your pocket. The ones that were grossed-up should be fine - the extra amount your employer added should cover the tax liability for those specific benefits. Just be prepared for your W-2 to look higher than you might expect, since it includes both your regular salary and all these additional taxable benefits.

I got that same warning last year but just ignored it. TurboTax throws up caution flags for any significant changes year-over-year. As long as your W-2 accurately reflects everything (including the relocation benefits), you're fine to proceed past that warning. It's just an automated check, not an actual problem with your return.

I've never heard of the Taxpayer Advocate Service. Do they help with complicated situations involving multiple years and different income sources? Also, do they help negotiate payment plans or is that a separate process?

Yes, they absolutely help with complicated multi-year situations - that's actually their specialty. My case involved W2 income, freelance work, and some investment income across several years. They're particularly helpful when your case has special circumstances or when you've tried to resolve issues through normal IRS channels without success. The advocate can help with the entire process including setting up payment plans and exploring options like Offers in Compromise if you can't pay the full amount. They'll look at your financial situation holistically and recommend the best approach. They can even request holds on collection activities while you're working with them. To contact them, call 1-877-777-4778 or find your local office on the IRS website.

This is a really good point. My brother thought he'd owe thousands, but ended up getting about $1,500 back because his W2 withholding more than covered what he owed from his side gig. Don't assume you'll owe until you run the numbers!

How do you calculate the right amount for line 4(c)? Is there a formula or something? Also, is there any risk to withholding too much?

A quick way to estimate is to take the amount she owed this year ($320) and divide by the number of paychecks she receives annually. If she's paid biweekly, that's 26 paychecks, so about $12.50 per check. I suggested $25 to give a buffer for a small refund rather than owing. There's no real risk to withholding too much except that you're giving the government an interest-free loan of your money until you file your taxes and get a refund. Some people actually prefer larger refunds as a form of forced savings, even though financially it's not optimal.

This happened to me too! My employer reclassified me as a different type of employee with the same hours and slightly higher pay, but my withholding dropped by almost 40%. Ended up owing $900 and was NOT happy about it.

Is it possible to file previous years' Form 8606 if you missed them? I've been making non-deductible contributions for 3 years but only learned about Form 8606 recently.

Yes, you can and absolutely should file Form 8606 for previous years if you missed them. You'll need to submit them separately as standalone forms - you don't need to amend your entire return. There's no penalty for filing Form 8606 late if you're only establishing basis (though there would be if you were reporting distributions). File a separate Form 8606 for each tax year, make sure to use the form version for that specific tax year, and write "Filed Pursuant to Section 301.9100-2" at the top to indicate you're filing it late under the automatic extension provisions.

Partial conversions are even trickier in TurboTax. Search for "1099-R" like others suggested, but when it asks what you did with the money, choose "Converted part to a Roth IRA." Then you'll need to specify how much went to the Roth vs how much stayed in the traditional IRA. The pro-rata rule will likely apply in your case since you kept some in the traditional IRA.