All Posts

You did not say whether the TurboTax amount is lower or higher than your calculation.  If part of your income comes from long-term capital gains, then the total is added to your income on Form 1040 line 7.    But, it is taxed at a lower rate than simply looking at the tax tables.   There is a separate worksheet called the Qualified Dividends and Capital Gains Tax Worksheet that applies that lower tax rate to the capital gains.  Without going into great detail, this worksheet separates your capital gains from the rest of your income and applies the capital gains rate to the capital gains income (which is lower than the ordinary income tax rate).  Then your total tax amount is reported on Form 1040 line 16.   You can see this worksheet by using Forms in the upper right corner of the TurboTax desktop version, or by looking for it when printing your return if using TurboTax Online.   When you look at this worksheet, pay attention to lines 23 and 24.  The tax calculated on line 23 takes into account the capital gains tax.  The tax calculated on line 24 comes directly from the tax tables.  Then, the lesser of those two lines is reported on line 25 and Form 1040 line 16.  Therefore, if the capital gains tax rate gives you a lower overall tax, then that is the tax on your Form 1040.  

Yes, you can file a tax return while receiving Social Security Disability, although you may not be required to file depending on your total income and filing status.   Disability benefits may become taxable if your combined income exceeds IRS limits.   For more information, please see below   Do I need to file a tax return? Is Social Security income taxable?      

Item 6 on Form 1099-NEC refers to the "State/Payer's state number," which is a specific state-assigned identification number used for tax reporting. If your 1099-NEC only shows the initials "NM" for New Mexico but not the full state number, this number is typically a state tax identification (or account) number given to the payer by the New Mexico tax authority. The initial "NM" alone is the state abbreviation, not the full state number. You'll need to get the full state number from the payer because it's assigned by the state for tax reporting and is required for accurate filing. If you only have the initials, you cannot substitute a different number; it must be the payer's official state number for New Mexico. Contacting the payer for that number is necessary to complete the form accurately.

Are you able to compute the odometer readings on January 1, 2025 and December 31, 2025?   The beginning and ending odometer readings will compute the total miles driven for the year.  Subtract the business mileage to determine your personal mileage.   You may be able to determine the readings that are needed from mileage records captured during oil changes and other mechanical service.  In some cases, software apps capture your mileage information.  Does your car warranty information capture mileage information?

In order to add a vehicle to your business to claim mileage, here are the steps:   Navigate to Federal > Income > Wages & Income Summary > Self-employment income and expenses Edit your business  Choose add expenses for this work Select the check box for Vehicle and continue ( you may need to select add more expense categories) Now, vehicle will appear in list of expenses. Choose pencil icon to the right of vehicle expenses. Continue through the interview to add details about the vehicle an input mileage.

You may be able to reduce or eliminate the early distribution penalty of 10% depending on whether you meet one of the qualified exceptions.   After you enter the Form 1099-R and any other Form 1099-R to be included in your return, you should see a follow-up screen showing that you owe extra taxes on that income.  Later, there will be a page that shows several categories where you can enter the amount of the distribution used for one of those categories.  This entry could reduce the penalty.     Take a look at the following information to learn about the exceptions to the early distribution penalty:   Retirement topics - Exceptions to tax on early distributions