Thanks for bringing up the Head of Household point - I didn't even think about that! Do I need any specific documentation to prove I qualify for that status? I'm worried that if I have to paper file, it's going to be a huge mess.

For Head of Household status, you need to show you paid more than half the cost of keeping up the home where your child lived for more than half the year. Keep records of rent/mortgage payments, utility bills, property taxes, food expenses, repairs, etc. Paper filing in these situations is unfortunately common. The key is sending a complete package - your tax return, a signed statement explaining the custody situation, and copies (not originals) of documents proving where your child lives. Include a cover letter referencing "dependent dispute" and attach any evidence that shows you're the custodial parent. It takes patience, but the IRS will sort it out if you have proper documentation.

Would text messages where the other parent acknowledges the custody schedule help? I'm dealing with this right now and have tons of texts but no formal agreement.

I didn't know about the qualifying widow(er) status! That's really helpful information. In this case though, they didn't have dependent children living with them. It sounds like for the 2020 return, they should file jointly without the deceased designation, then for 2021 file jointly with deceased designation, and then for 2022 she would have to file as single. Is that right?

Yes, you've got it exactly right! For 2020, file jointly with no deceased designation since he was alive all year. For 2021, file jointly with deceased designation since that's the year he passed away. Then for 2022 forward, she'll file as single (or head of household if she has qualifying dependents, but it sounds like she doesn't). One thing to note - when filing that 2021 return with deceased status, make sure to write "DECEASED" and the date of death across the top of the return to ensure proper processing. Some tax software handles this automatically, but it's good to double-check.

I'm in Illinois, which definitely has state income tax unfortunately. So based on what everyone's saying, it sounds like I do need to file a state return even though all my income is from investments. Do you know if there's a minimum threshold for filing in states that do have income tax? Like if my investment income is pretty small, maybe I don't need to file?

Illinois definitely requires filing for investment income. Their threshold is pretty low too - I believe it's only $2,275 for single filers in 2024. If your total income from all sources (including those 1099 forms) exceeds that amount, you need to file. Even with relatively small investment income, you should still file. One benefit is that Illinois has a property tax credit that you might be eligible for, so you could actually get money back depending on your situation. Many people miss out on state tax credits because they incorrectly assume they don't need to file.

Not a stupid question! Investment companies report your info to the IRS with your SSN but don't actually determine which state you file in. They typically send 1099s with your federal info only. It's your responsibility to report that income on the correct state returns based on your residency.

Is there a calculator or something that shows the break-even point between traditional vs Roth? I always hear conflicting advice and don't know how to figure out which is actually better for my situation.

There's no perfect calculator because it depends on assumptions about future tax rates that nobody can predict with certainty. However, a good rule of thumb is that if you expect your tax rate in retirement to be higher than it is now, go with Roth. If you expect it to be lower, go traditional. For young people early in their careers with relatively low incomes, Roth often makes more sense because they're likely in a lower tax bracket now than they will be in retirement. But everyone's situation is different - factors like pension income, Social Security, and other retirement income sources can affect your future tax situation.

This is exactly what I do too! It's called "tax diversification" and it means you'll have both tax-free and taxable income sources in retirement, which gives you flexibility for tax planning. Smart strategy.

Thanks for mentioning this! I do actually use my personal phone to coordinate with the cleaning company about the referrals, and sometimes I drive to meet potential referral clients to assess their needs before connecting them. Would those miles be deductible? And what percentage of my phone bill could I reasonably claim?

Yes, the mileage for driving to meet potential referral clients would absolutely be deductible! Keep a log of those trips with dates, miles driven, and purpose. The current mileage rate for 2025 is 67 cents per mile, which adds up quickly. For your phone, you would deduct the percentage that you use for business purposes. If you use your phone about 30% of the time for these referrals, then you could deduct 30% of your bill. Just make sure you have a reasonable basis for whatever percentage you claim and keep your phone bills as documentation. You might also consider a separate phone line for business if the volume increases.

But you can deduct half of the self-employment tax on your 1040, which helps a little bit at least!