One more suggestion - don't forget to check your online IRS account if you have one. Sometimes adjustments are being processed that you don't know about. When I had a similar issue with an excess contribution correction, I noticed that my account showed an adjustment in process before I even contacted them. Turns out their automated systems had flagged the discrepancy and they were already working on it. It just hadn't been completed yet.

I went through this exact same situation last year with my excess Roth contribution. The frustration is real - it feels like the IRS just completely ignored your Line 26 payment! What worked for me was calling the IRS with very specific documentation ready. Before calling, I prepared a simple timeline showing: 1) Original excess contribution date, 2) Date I corrected it with my brokerage, 3) Date I filed amended 2022 return and made the $258 payment, 4) The 2023 1099-R with code 8J. When I finally got through to an agent, having this timeline made the conversation much smoother. The agent could see my 2022 payment in their system and understood immediately that this was a double taxation issue. They processed an adjustment for the full amount I was owed. The key is being very clear about the sequence of events - that you already paid tax on those earnings in 2022, but the 1099-R is trying to tax them again in 2023. Line 26 exists specifically to prevent this double taxation. Don't give up - you're absolutely entitled to that credit!

Anyone else notice that FreeTaxUSA sometimes doesn't import all transactions correctly? I had to manually check every single stock sale against my 1099-B because it missed about 10% of my trades when I tried the import function.

Great question! You're right to be cautious about doing things correctly. As others have mentioned, you definitely don't need to mail your 1099-B to the IRS - Fidelity already sent them a copy electronically. Just make sure when you're entering the data into FreeTaxUSA that you double-check all the numbers match exactly what's on your form. Pay special attention to the cost basis - if it shows "basis not reported to IRS" for any transactions, you'll need to make sure you have your own records of what you paid for those shares. With $3,200 in gains, you're well above the threshold where this needs to be reported, but it's not a huge amount that would typically trigger extra scrutiny. The key is just being accurate and consistent with what your broker reported. Good luck with the rest of your filing!

This thread has been incredibly helpful! I was in a similar situation and was completely overthinking this. I had $9,500 in property taxes and $3,200 in state income taxes last year, so I was right at the $10,000 SALT cap with $2,700 of my state income taxes actually being deductible. When I got a $800 state tax refund this year, I initially panicked thinking the whole amount was taxable. But after reading through all these explanations, I realized that since only $2,700 of my state income taxes provided a federal benefit, and my refund was less than that amount, the full $800 refund is taxable income. The key insight for me was understanding that it's not about whether you hit the SALT cap or not - it's about which specific taxes within that cap actually gave you a federal deduction. In my case, both my property taxes AND a portion of my state income taxes fit under the $10k limit, so getting a refund on those state income taxes does create taxable income. Thanks everyone for breaking this down so clearly! The IRS worksheet suddenly makes a lot more sense now.

This is such a helpful discussion! I was completely confused about this same issue until I worked through it step by step. For Emma's original question with $28,500 itemized vs $25,100 standard deduction - the $1,200 state refund taxability really depends on the breakdown of that SALT deduction. If you can find your prior year Schedule A (line 5a for state income taxes and line 5b for property taxes), that will show you exactly what went into your $10k SALT cap. The formula is basically: Look at how much of your state income taxes actually fit under the SALT cap after accounting for property taxes. That's the maximum amount of any state refund that could be taxable. Then compare that to your overall itemized vs standard deduction benefit to see if you actually got a federal tax advantage. One thing I learned the hard way - keep good records of what types of state/local taxes you paid because you'll need those details when refunds come in the following year. The IRS forms don't always make it obvious how to trace this back, especially when you're dealing with estimated payments, withholding, and property tax installments all mixing together. It's definitely worth getting this right because the difference between reporting the full refund as taxable versus the correct partial amount can be significant on your tax bill!

I've been using Cash App Taxes for two years now and overall it's been solid for my situation. The biggest advantage is obviously that it's completely free - no hidden fees or upsells like you get with other services. The interface is pretty intuitive and it imported my W-2 and 1099 info without issues. One thing to consider is the customer support limitation that others mentioned. Last year I had a question about reporting some freelance income and it took forever to get help. The FAQ section covers basics but if you run into anything unusual, you're pretty much on your own. Also worth noting - if you're used to TurboTax's extensive error checking and advice features, Cash App is more bare-bones. It'll catch obvious mistakes but doesn't provide the same level of guidance on tax optimization strategies. For straightforward returns though, it gets the job done and saves you a good chunk of money.

I've been using Cash App Taxes for the past year after switching from TurboTax, and honestly it's been a game changer for my wallet. The free filing for both federal and state saved me about $120 compared to what I was paying before. The interface is surprisingly smooth - it walks you through everything step by step just like the paid services. I was able to handle my W-2, some 1099-MISC income from side work, and student loan interest deduction without any issues. The refund hit my account in about 10 days which was faster than I expected. My only real complaint is the limited help when you get stuck. I had a question about reporting some cryptocurrency transactions and basically had to figure it out myself since their support resources are pretty thin. If you have a complex tax situation, you might want to stick with a paid service for the extra guidance. But for most people with straightforward taxes, Cash App Taxes does exactly what you need it to do without the hefty fees. Definitely worth trying if you're looking to save money on tax prep.

I'm just curious - has anyone tried using something other than straight-line depreciation for vehicles? Maybe accelerated depreciation methods or even Section 179? I know Section 179 has those luxury auto limits, but wondering if there's any advantage to front-loading the depreciation if you know you'll convert to personal use later?

Great question about BMW M5 depreciation! One thing to consider that hasn't been fully addressed is the luxury auto depreciation limits under IRC Section 280F. For 2024, the first-year limit is $12,200 (or $20,200 with bonus depreciation), then $19,500, $11,700, and $6,960 for subsequent years. Since you're looking at an $82,000 BMW, these limits will significantly impact your depreciation schedule regardless of whether you use straight-line or accelerated methods. You won't actually be able to take $16,400 per year - you'll be limited to much lower amounts. This actually works in your favor for conversion planning! The luxury limits reduce your depreciation recapture exposure when you eventually convert to personal use. Just make sure to track your business use percentage carefully with a mileage log - the IRS is particularly strict about vehicle documentation. Also, consider the timing of your conversion. If you convert mid-year, you'll need to prorate the depreciation and carefully document the exact conversion date and vehicle condition. The Section 280F limits make the math more complex but generally reduce your overall tax risk.