My tax software kept flagging my life insurance 1099-INT as an error when I tried to mark part of it as non-taxable. Anyone else have this problem? Any recommendations for tax software that handles this correctly?

This is such a helpful thread! I've been dealing with a similar situation with my universal life policy. One thing I learned from my insurance agent is that you should also check if your policy has any "cost of insurance" charges that might affect the taxable portion of the interest. For anyone still confused about their specific situation, I'd recommend requesting a detailed annual statement from your insurance company that breaks down exactly what portion of any credited amounts are considered taxable interest versus non-taxable policy adjustments. Most companies can provide this breakdown if you ask specifically for tax reporting purposes. Also worth noting - if you've been consistently reporting the full 1099-INT amount as taxable income for several years and it turns out some portion wasn't taxable, you generally have three years from the original filing date to amend those returns and potentially get refunds. Don't stress too much about past years, but definitely get it right going forward!

Just FYI as a tax preparer, bring ALL your medical receipts to your appointment, not just COBRA. Many people forget about mileage to medical appointments (17 cents per mile for 2024), prescription costs, dental expenses, eye care, medical equipment, etc. Every dollar helps get you closer to that 7.5% threshold.

Great question about COBRA and taxes! Just wanted to add one important point that might help you save money - if you have any self-employment income from your freelance work, you might qualify for the self-employed health insurance deduction for your COBRA premiums. This is WAY better than the itemized medical expense deduction because it's an above-the-line deduction (meaning it reduces your AGI directly) and you can still take the standard deduction. Since you mentioned having 1099 income, definitely ask your tax preparer about this. The self-employed health insurance deduction lets you deduct health insurance premiums (including COBRA) as long as you have net self-employment income and you're not eligible for coverage through your spouse's employer plan. Given that you're both on COBRA, this could be a huge tax saver. For documentation, bring your 1099s showing the freelance income and all your COBRA payment records. The preparer can determine if this applies to your situation - it could potentially save you way more than trying to meet that 7.5% AGI threshold for itemized medical expenses!

Just a heads up about income limits for these education credits since no one mentioned it yet. The AOTC starts phasing out if your modified adjusted gross income is above $80,000 ($160,000 if married filing jointly) and completely phases out at $90,000 ($180,000 for joint filers). The Lifetime Learning Credit has lower limits - it starts phasing out at $59,000 ($118,000 for joint filers) and completely phases out at $69,000 ($138,000 for joint filers). So if you or your parents make above these amounts, you might not get the full credit or any credit at all.

This is exactly why I always recommend students review their tax returns carefully! I went through the same thing my junior year - realized I had been missing out on education credits for two years. One thing that might help explain why TurboTax didn't automatically give you the credits: even if you entered your 1098-T, the software needs you to confirm you want to claim the credits and that you meet all the eligibility requirements. Sometimes the questions can be confusing or easy to skip through. Also, keep in mind that if you're working part-time while in school, your income level affects how much of the credit you can actually use. The American Opportunity Credit is partially refundable (up to $1,000), but if your tax liability is low, you might not see the full $2,500 benefit. I'd definitely recommend going back through your previous returns if you think you missed claiming these credits. You can amend returns for the last three years, and with $14,000 in annual education expenses, you're likely leaving significant money on the table. The AOTC alone could have saved you up to $2,500 per year for your first four years of college.

If you filed with a professional tax preparer last year, they might have your PIN or a copy of your return with the AGI on file. Worth giving them a call if that's how you filed. I completely forgot I had used H&R Block last year until I started panicking about my PIN, gave them a call, and they had everything I needed.

Another option if you're still stuck is to request an Identity Protection PIN (IP PIN) from the IRS if you qualify. This is different from your self-select PIN and can be used for identity verification when e-filing. You can check if you're eligible on the IRS website - they've expanded the program in recent years. Also, just a heads up that if you do end up creating a new self-select PIN this year, consider storing it in a password manager or writing it down somewhere safe along with your AGI. I learned this lesson the hard way after going through the same frustration you're experiencing! The IRS recommends keeping your prior year tax return easily accessible for exactly this reason.

I got audited for this exact situation a few years ago and it was a mess! Both me and my girlfriend claimed HOH with the same address and the IRS flagged it immediately. They made us prove who provided more support and who should actually claim the dependent. Ended up with her having to amend and pay back some refund money plus I had to send in all kinds of documentation showing I paid the mortgage, utilities, etc.

This is a tricky situation that I see come up a lot. The key issue here is that to qualify for Head of Household status, you generally need to be able to claim the qualifying person (your son) as your dependent. Since your girlfriend already claimed him, you technically wouldn't qualify for HOH even though you pay most of the household expenses. However, you have a few options: 1) Try to work it out with your girlfriend to have her amend her return - show her the numbers of how much more you'd both benefit if you claim the child and file HOH, 2) Both file paper returns with explanations and let the IRS sort it out (though this could trigger correspondence), or 3) You file as Single this year and make sure you file first next year. The most important thing is to file correctly based on your actual situation. Filing HOH when you don't technically qualify could cause problems later. I'd recommend getting official guidance from the IRS or a tax professional before making your final decision, especially since you mention wanting to avoid relationship issues too.