I went through almost the exact same situation last year with my father's inherited IRA. The key thing that saved me was understanding that the 1099-R reporting doesn't automatically reflect rollovers - you have to manually indicate this on your tax return. Here's what worked for me: On Form 1040, I reported both 1099-R amounts on the "IRA distributions" line, but then on the "taxable amount" line, I only included the actual disbursement ($12,500 in your case). I attached a statement explaining that $215,000 was a direct rollover to an inherited IRA and therefore not taxable. The IRS accepted this without question. Make sure you keep detailed records of the rollover transaction - account statements showing the money going from the original IRA directly into your new beneficiary IRA. This documentation is crucial if you ever get audited. One tip: if you used different financial institutions for the original and new IRAs, the transfer might have been coded as a distribution + contribution rather than a direct rollover, which could explain why you're seeing it as taxable income. This can usually be corrected with proper documentation on your return.

I had a very similar situation with my grandmother's IRA last year and want to share what I learned through the process. The confusion you're experiencing is unfortunately very common because the 1099-R forms don't automatically show the full picture of what happened with your money. You're absolutely right that you shouldn't be taxed on both the transfer AND the disbursement - that would indeed be double taxation. The $215,000 that went directly into your beneficiary IRA should not be taxable income since it remained in a qualified retirement account. Here's what I discovered: You need to look carefully at both 1099-R forms. The first one (for the $215,000) should have a distribution code in Box 7 - likely code 4 since it's a death benefit. However, it probably doesn't have a rollover code like G or H, which is why it's appearing as fully taxable. When you file your return, you'll report the full amount from both 1099-Rs on the "IRA distributions" line, but on the "taxable amount" line, you should only include the $12,500 that you actually received as cash. The difference ($215,000) should be reported as a non-taxable rollover. I strongly recommend keeping detailed documentation of the transfer - bank statements, account opening documents for the beneficiary IRA, and any correspondence with the financial institutions. If the transfer happened between different companies, make sure you have proof it was completed within the required timeframe. The IRS sees this type of situation frequently, so as long as you document it properly on your return, it should process without issues. Consider consulting with a tax professional if you're unsure about the specific forms to complete, as inherited IRA rules can be quite complex.

Important clarification on the 1099-K issue - receiving a 1099-K doesn't automatically mean you owe taxes on that amount. The 1099-K is just an information document that reports gross payment amounts, not net income. Since you're acting as a pass-through coordinator, you would report the 1099-K amount as "Other Income" on your tax return, then deduct the same amount as a business expense when you pay the resort. This nets to zero taxable income from the transaction. The key is documentation. Keep records of: - All incoming Venmo payments with names and amounts - The payment to the resort/vendor - Any receipts or invoices from the resort - A simple spreadsheet showing total collected vs. total paid out This creates a clear paper trail showing you had no net gain from the transaction. Even if you receive a 1099-K, your tax liability from this activity would be zero as long as you can document that all funds were passed through to pay legitimate group expenses.

I went through something very similar when organizing our company's annual retreat last year. We collected about $45,000 through various payment apps including Venmo, and I was terrified about potential IRS issues. Here's what I learned after consulting with a tax professional: The key is treating this as what it actually is - a temporary custodial arrangement, not income. You're essentially acting like a escrow account, holding money temporarily before passing it through to the final recipient. A few practical tips that helped me: 1. Create a simple tracking spreadsheet from day one showing who paid what and when 2. Save screenshots of all Venmo transactions 3. Keep the resort invoice/contract showing the total amount due 4. If possible, try to make the payment to the resort close in time to when you finish collecting funds The multiple transfers due to Venmo's limits actually work in your favor documentation-wise - it creates a clear paper trail. Banks are used to seeing payment app transfers these days, so as long as the amounts align with your normal account activity patterns, you shouldn't have issues. One thing that gave me extra peace of mind was sending a brief email to all participants after the event summarizing the total collected and total paid to vendors. It's not required, but it shows transparency and creates another piece of documentation if ever needed. You're doing the right thing by researching this ahead of time. The fact that you're being thoughtful about proper handling shows this is legitimate coordination, not any attempt to hide income.

This is exactly the kind of complex tax situation where having professional guidance really pays off. Your 1099-R is actually correct - financial institutions are required to report the full distribution amount because they don't track your basis (after-tax contributions). The key is Form 8606, which calculates the taxable vs. non-taxable portions using the pro-rata rule that Noah mentioned. Based on your numbers, you should only owe taxes on about $7,600 of the $20,300 conversion. A few important reminders: 1. Make sure you have documentation of all your non-deductible contributions ($8,000 + $4,700) 2. TurboTax should ask about IRA basis when you enter the 1099-R - if it doesn't, search for "non-deductible IRA contributions" 3. Double-check that Form 8606 is generated and shows the correct basis amount 4. Don't forget about state tax implications If you're still having trouble getting TurboTax to recognize your basis, you might want to consider consulting a tax professional for this year, especially given the complexity of your situation with multiple types of contributions and the recharacterization.

Your question about documentation is spot-on - this is crucial for IRA basis tracking! Here's what you should definitely keep: **Essential Documentation:** - All tax returns with Form 8606 (these are your primary proof of basis) - Form 5498 from your IRA custodian showing contributions for each year - Any correspondence about recharacterizations or rollovers - Records of any distributions that reduced your basis **Good to Have:** - Bank statements showing IRA contributions (not strictly necessary but helpful) - Investment statements showing account values at year-end - Any worksheets you used to calculate basis The IRS generally accepts your filed Form 8606 as proof of basis unless they have reason to question it. Your old tax returns are usually sufficient documentation. Regarding audits on Roth conversions - they're relatively uncommon unless there are red flags like missing Forms 8606 or inconsistent reporting across years. If audited, the IRS typically wants to see: 1. Your basis calculation (Form 8606 history) 2. Proof of the non-deductible contributions (Form 5498s) 3. Documentation of the conversion transaction itself With your $3K non-deductible and $2K pre-tax situation, you'd only owe taxes on $1,200 of a full $5K conversion using the pro-rata rule. Make sure to file Form 8606 this year to establish your basis properly!

I just went through this exact situation a few months ago - forgot to report about $10k in freelance photography income and didn't catch it until nearly a year later. The anxiety was overwhelming, but filing that amended return was absolutely the right call. Here's what I learned: The IRS distinguishes between honest mistakes and intentional tax evasion. Since you're voluntarily correcting this before they contacted you, that demonstrates good faith. When I called (using Claimyr after reading about it here - definitely worth it to avoid the hold times), the agent actually thanked me for being proactive. My total penalties came to about $850, which was painful but manageable. The key things that helped: I documented every business expense I could legitimately claim (software, equipment, portion of home internet, even some networking events), and I requested First Time Abate in my amendment letter since I had a clean compliance history. Don't forget to file Schedule C for your business income/expenses and Schedule SE for self-employment tax. The SE tax (15.3% for Social Security/Medicare) was actually a bigger hit than the penalties for me. One last tip - set up quarterly estimated payments for this year using the safe harbor method (100% of last year's total tax divided by 4). It'll save you from going through this stress again. You're going to be fine - this happens more than you think!

I'm reading through all these responses and feeling so much better about my situation! I completely forgot to report about $7k in freelance writing income from last year and have been absolutely panicking about what the IRS might do to me. The First Time Abate policy that several people mentioned is something I had never heard of before - definitely going to include that request in my amended return since I've never had any tax issues before. And the advice about documenting every possible business expense is spot on. I've been so focused on the penalties that I forgot I can actually deduct things like my writing software subscriptions, laptop upgrades, and home office expenses. One question for everyone who's been through this - how long did it take to hear back from the IRS after filing your amended return? I'm planning to file mine next week but wondering if I should expect weeks or months before I know exactly what I owe. Thanks to everyone sharing their experiences here. It's such a relief to know this happens to other people and that the IRS isn't going to destroy my life over an honest mistake!

I've been watching this thread with interest as someone who's been in a similar situation! Maya, based on all the excellent advice shared here, I'd suggest taking a multi-pronged approach. First, definitely check Costco this weekend for TurboTax Premier - the $75 price point Sophia and others mentioned is genuinely hard to beat. But don't stress if they're sold out. What really caught my attention were the alternative suggestions, especially TaxAct that Fatima mentioned. Half the cost of TurboTax Premier plus better customer support sounds compelling, particularly for someone new to handling freelance income. The fact that Dylan found it more educational and thorough with deduction prompts could be really valuable for your first year dealing with Schedule C. That said, the taxr.ai suggestion from Grant is intriguing too - an AI walking you through the process and potentially catching missed deductions could be perfect for someone transitioning from simple W-2 filing to more complex returns. Regardless of which software you choose, everyone's advice about organizing your freelance expenses first is spot-on. Home office deduction, equipment, supplies, mileage, business use of phone/internet - these really add up and can significantly impact your refund. You might also want to consider this as an opportunity to set up better systems for next year (separate business account, quarterly payment planning) while you're getting organized for this filing season. Good luck with whatever route you choose - sounds like you have some great options to explore!

Wow, this thread has been absolutely incredible to follow! Maya, you've really tapped into something here - what started as a simple question about where to find TurboTax has turned into the most comprehensive guide to freelance tax prep I've ever seen. I'm in a very similar situation (W-2 plus growing freelance income) and honestly felt pretty overwhelmed about tackling taxes this year. Reading through everyone's experiences and advice has been so reassuring. The variety of options people have shared - from the traditional Costco TurboTax hunt to alternatives like TaxAct, FreeTaxUSA, and even taxr.ai - shows there are really good solutions out there for every budget and comfort level. What really stands out to me is how many people emphasized getting organized with expenses first, regardless of which software you choose. The home office deduction, business equipment, mileage tracking - I definitely need to get my act together on documenting all of these before I even start filing. The separate business banking account tip from Tami is something I'm implementing immediately. That alone is going to save so much headache next year when I'm trying to sort through transactions. Thanks to everyone who shared their experiences - this community really delivered! Maya, whatever route you end up choosing, you're going to be way ahead of the game with all this knowledge.