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!

Florida repealed their intangible tax in 2007. There's no Florida state tax on interest income anymore. Been a Florida resident for 20+ years and a tax preparer for 15.

Thanks for the correction! I was confusing it with documentary stamp taxes on other financial instruments. That's why I should check my facts before posting. Good to know Florida residents truly don't have to worry about state taxes on interest income.

I hadn't considered that! Is it too late to do that for this tax year or can I still make a contribution that would count for this filing?

You're in luck! You can still make IRA contributions for the previous tax year until the tax filing deadline (usually April 15th). So you absolutely still have time to make a contribution and have it count for this filing. Just make sure when you make the contribution you specifically tell your financial institution it's for tax year 2024 (assuming that's the year you're filing for). They'll know how to code it properly. Then you can include that deduction in your tax return and it should reduce what you owe.

Thanks for pointing that out about the child support. I didn't think it was deductible but wasn't 100% sure. Do you know if there are any tax benefits I can still get even with the married filing separately status? I'm worried my tax bill is going to be much higher now.

While married filing separately does limit many tax benefits, you can still claim some deductions. You can take your portion of mortgage interest and property taxes if you itemize (though remember you can only deduct what you actually paid). You can still contribute to retirement accounts like 401(k)s and IRAs, though income limits for deductible IRA contributions are much lower when filing separately. You might still qualify for the child and dependent care credit if you're the custodial parent, but the income limits are lower. And don't forget that you can still take your standard deduction - it's just half of what joint filers get. Your tax professional can run scenarios to see whether itemizing or taking the standard deduction benefits you more in your specific situation.

Just want to add to this - if you're losing health insurance coverage because of divorce, that counts as a qualifying life event that lets you enroll in a marketplace plan outside of open enrollment. You have 60 days from when you lose coverage to enroll. Don't wait until the divorce is final if your coverage will end before then!

You definitely want to include specific language about how uncovered medical expenses will be split (like 50/50 or proportional to income). Make sure it clearly defines what counts as a medical expense - does it include just doctor visits and prescriptions, or also dental, vision, therapy, and orthodontics? Also include details about who needs to approve non-emergency medical treatments, how information about health issues will be shared between parents, and how reimbursement will work (timeframes for providing receipts and making payments). The more specific you can make these provisions, the fewer conflicts you'll have later. And remember that medical expense arrangements for the children can be modified in the future if circumstances change significantly.