Has anyone tried using an FSA (Flexible Spending Account) to reduce AGI? My HR department keeps pushing this but I'm not clear if it actually reduces AGI or just taxable income. Also, we have a bunch of medical expenses coming up next year.

Great question about AGI reduction strategies! At your income level of $340K, you're in a high tax bracket so maximizing pre-tax contributions will have significant impact. Here's what I'd prioritize in order: 1. **Max out ALL pre-tax retirement accounts**: Your partner should increase TSP contributions to the max ($23,000 for 2024, plus $7,500 catch-up if 50+). You should start contributing to your 401k immediately even without matching - that's potentially $46,000+ in AGI reduction. 2. **HSA if available**: If you have access to a high-deductible health plan, max out HSA contributions ($4,300 individual/$8,550 family for 2024). This is triple tax-advantaged. 3. **Consider mega backdoor Roth**: Check if your 401k plans allow after-tax contributions with in-service withdrawals - this won't reduce AGI but helps with future tax diversification. 4. **Dependent Care FSA**: If you have childcare costs for your kids, this can reduce AGI by up to $5,000. At your income level, you're phased out of deductible traditional IRA contributions, but backdoor Roth is still valuable for long-term planning (just doesn't help current AGI). One thing that might help is running specific scenarios with your numbers - sometimes seeing the actual tax impact makes the strategy clearer than general advice.

This is such a helpful thread! I'm dealing with a similar situation where I left my company last year and just sold some ESPP shares. One thing I wanted to add for anyone else in this boat - make sure to check if your old company switched payroll providers or got acquired after you left. I spent weeks trying to get my old W-2s from my former employer's HR, only to find out they had been acquired and all the payroll records moved to a different system. I finally had to request copies directly from the IRS using Form 4506-T, which took about 10 days but was totally worth it to get the exact compensation amounts that were reported. Also, if you're having trouble finding the ESPP compensation on your W-2, sometimes it's not in Box 14 like others mentioned. On mine it was actually included in Box 1 (wages) and I had to look at my final paystub from that year to see the breakdown of regular wages vs. ESPP compensation. Just another place to check if you're coming up empty!

This thread has been incredibly helpful! I'm in a similar situation where I left my job at a tech company about 8 months ago and just sold some ESPP shares. One thing I learned the hard way is to double-check the cost basis calculation even if your broker provides a "Supplemental Information Statement" like Emily mentioned. I found that Schwab had the right compensation amount but applied it to the wrong lot of shares (I had multiple purchase periods). This would have resulted in me overpaying taxes on some lots and underpaying on others. What I ended up doing was creating my own reconciliation spreadsheet using Yuki's method above, then cross-referencing it with both my 1099-B and the supplemental statement. Found a $400 discrepancy that would have cost me about $150 in extra taxes! Also want to second the recommendation about keeping detailed records going forward. I set up a simple Google Sheet now that automatically calculates the discount amount and tracks holding periods. Takes 5 minutes after each ESPP purchase but will save hours during tax season.

Does anyone know about late K-1s and extensions? If I know I'm getting a K-1 that won't arrive until after April 15, should I just automatically file for an extension? Or can I file my return and then amend it later? Which is easier?

One thing that's really helped me manage K-1 timing is keeping a simple spreadsheet tracking my partnership investments and their historical K-1 delivery dates. I note the company name, investment amount, and when the K-1 arrived for the past 2-3 years. This gives me a pretty good sense of which ones are reliable early filers versus the chronic late ones. For example, I noticed that one of my REIT partnerships consistently sends their K-1 in mid-February, while another energy MLP is always late March or early April. Having this data lets me plan whether to file early or automatically request an extension. Also worth mentioning - some brokerages now flag partnership investments in your account with little K-1 icons or warnings, which is super helpful for portfolio planning. Schwab started doing this last year and it's been a game changer for avoiding surprises.

I'm dealing with a similar situation right now! I've been legally blind since childhood but only recently learned about the tax benefits. One thing I'd add is that if you're employed, you might also want to look into whether your employer offers any vision-related benefits or accommodations that could have tax implications. Some assistive technology purchases for work can be deductible as unreimbursed employee expenses if you itemize. Also, I discovered that if you use a tax preparer, many of them aren't familiar with these specific deductions for blindness. When I went to H&R Block last year, the preparer had to look it up because they'd never handled it before. So don't feel bad about not knowing - even some tax professionals miss this stuff! It might be worth specifically asking your preparer about disability-related deductions when you file going forward.

Great question about assistive technology deductions! From my experience, items like screen readers, braille displays, and voice recognition software can potentially qualify as medical expenses if they're primarily for managing your blindness, but the rules are tricky. For work-related equipment, it depends on whether your employer reimburses you and whether you itemize vs take the standard deduction. The key thing with assistive technology is documenting that it's "primarily for medical care" - so if you use a braille display 80% for managing daily tasks related to your blindness and 20% for general computer use, it would likely qualify. But if it's mainly for general productivity, it might not. One thing that helped me was getting a letter from my eye doctor specifically stating that certain equipment is medically necessary for my condition. This creates a clear paper trail if the IRS ever questions it. Also, keep detailed records of how you use each piece of equipment - the IRS may want to see that it's truly medical in nature rather than just convenient technology. You're absolutely right about asking your CPA to review past returns! Many tax professionals don't specialize in disability-related deductions, so being proactive about bringing this up could uncover missed opportunities. There are often multiple angles beyond just the standard deduction - medical expenses, equipment costs, sometimes even transportation expenses related to medical care.

My sister actually got busted for this exact thing last year. She was claiming my niece who lived with their dad. The IRS sent her a letter demanding proof that the child lived with her. When she couldn't provide it, they made her pay back THREE YEARS of tax refunds plus penalties! It was like $16k total and she's still paying it off. Tell your friend it's not worth it. The IRS has been getting way more aggressive about this lately with their new funding. They know exactly what to look for.

This is definitely tax fraud and your friend needs to stop immediately. The IRS has specific rules about who can be claimed as a dependent - they must live with you for more than half the year AND you must provide more than half their financial support. Just being related isn't enough. What makes this worse is that they're openly admitting to splitting the fraudulent refund money, which shows intent to defraud. The IRS has been cracking down hard on dependent fraud lately with their increased funding and better detection systems. Your friend could face serious consequences: paying back all the fraudulent refunds (potentially thousands per year), hefty penalties, interest charges, and even criminal prosecution. The "everyone does it" excuse won't hold up in court or with IRS agents. If I were you, I'd strongly encourage your friend to consult with a tax professional immediately about how to handle this situation going forward. The longer this continues, the worse the eventual consequences will be.