I can confirm that everyone here is correct - you absolutely need to use the regular monthly long-term AFR of 1.72%, not the adjusted AFR of 1.31%. I recently helped my sister navigate this exact situation when she was setting up a family loan for her home purchase. The adjusted AFR is used for very specific tax situations involving tax-exempt bonds and certain income calculations that don't apply to family mortgage loans at all. Your dad's accountant is spot-on with this advice. A few things I learned that might help you: - The 1.72% is the minimum rate to avoid gift tax issues, but you can go higher for extra safety - Make sure your loan term is actually over 9 years to qualify for the long-term AFR (if it's 3-9 years, you'd need the mid-term AFR instead) - The rate you set gets locked in for the entire loan term, so you won't need to adjust it later Most importantly, document everything properly! We created a formal promissory note with clear payment terms and recorded the mortgage with our county. The IRS wants to see that you're treating this like a real commercial loan, not just a family arrangement. Regular payments and proper documentation are key to avoiding any issues. The process worked out great for us - my sister gets the mortgage interest deduction and our parents report the interest income correctly. Just make sure to treat it seriously from day one!

I'm in a very similar situation and have been researching this extensively. Your dad's accountant is absolutely right - you must use the regular monthly long-term AFR of 1.72%, not the adjusted AFR of 1.31%. The adjusted AFR is only used for very specific tax calculations involving tax-exempt obligations and certain bond computations that have nothing to do with family mortgage loans. Using the 1.31% rate would put you well below the IRS minimum threshold, and the difference between what you should charge (1.72%) and what you actually charge (1.31%) would be considered a taxable gift. A few key points from my research: - Since this is for a house purchase, make sure your loan term is actually over 9 years to qualify for the long-term AFR - You can use a rate higher than 1.72% for extra safety - many families round up to 2% - The AFR you choose at loan origination stays fixed for the entire term - Treat this exactly like a commercial loan with proper documentation, regular payments, and clear terms I'd also recommend recording the mortgage with your county if possible. It creates an official record that helps establish legitimacy and allows you to claim the mortgage interest deduction. The recording fee in most areas is under $100 and well worth it for the tax benefits and legal protection. The IRS really scrutinizes family loans to ensure they're legitimate debt arrangements versus disguised gifts, so getting the documentation right upfront will save you potential headaches later. Good luck with your home purchase!

Just wanted to add - be VERY careful about the "providing more than half the cost of maintaining the home" requirement for HOH. The IRS looks at this closely. My friend got audited specifically on this point. Make sure you keep good records of what you pay for: rent/mortgage, property taxes, utilities, repairs, food consumed in the home, etc. Total it all up to prove you're over the 50% threshold. My friend ended up having to pay back taxes plus penalties because he couldn't prove he paid more than half when asked.

This is a great question that many unmarried couples face. What you're describing is actually completely legitimate under IRS rules - you can file as Head of Household while your girlfriend claims your daughter as a dependent, and this could indeed save you significant money. The key requirements you need to meet are: 1. Your child must live with you for more than half the year (which sounds like she does) 2. You must pay more than 50% of the household expenses (rent/mortgage, utilities, groceries, etc.) 3. You and your girlfriend must agree on this arrangement The IRS specifically allows the "qualifying person" for HOH status to be different from who claims the child as a dependent. Since you're in a higher tax bracket, having your girlfriend claim the child tax credit while you get the HOH filing status benefits makes perfect financial sense. The tax software questions about support and living situations are normal - they're just verifying you meet the IRS requirements. Keep good records of your household expense payments (bank statements, receipts, etc.) in case you ever need to prove you pay more than half the costs. You're not doing anything wrong here - you're just optimizing your tax situation within the rules. Many tax professionals actually recommend this exact strategy for unmarried couples in similar income situations.

Has anyone checked if there might be a simple data entry error? I once had a $900 difference just because I entered a number wrong in the federal withholding box. Double-check the withholding amounts on both W2s and make sure they're entered exactly right in TaxAct.

This is a really frustrating situation but unfortunately pretty common! I work as a tax preparer and see this happen a lot when people try to do their own taxes after getting a professional estimate. A few things that could explain the $1,400+ difference: 1. **Multiple job withholding calculation**: With two W-2s from different parts of the year, the withholding tables at each job might not have accounted for your total annual income. This can result in under-withholding that reduces your refund, but tax software sometimes miscalculates this. 2. **State tax considerations**: Make sure you're looking at the same thing - federal refund vs. total refund including state. Sometimes people compare apples to oranges here. 3. **Filing status**: Even small differences in how filing status is determined can make a huge impact on your refund amount. My advice: Ask your tax preparer for a detailed breakdown of exactly what deductions and credits she's claiming. She should be able to show you line by line what's creating the difference. If everything looks legitimate, it might be worth paying her fee to get the larger refund. But if you can't get a clear explanation of where that extra $1,400 is coming from, I'd be cautious about proceeding.

Slight tangent but related - has anyone noticed that the reporting thresholds for these forms keep changing? I know for 1099-K (for payment processors) they were going to lower the threshold to $600 for 2023 taxes but then delayed it. Is there a similar threshold change happening for 1099-MISC too? Just wondering if more people will be getting these forms for small amounts like OP.

One thing I'd add that hasn't been mentioned yet - make sure you save a copy of that 1099-MISC form somewhere safe! The IRS already has their copy, but you'll need yours for your records and to reference when filing. I learned this the hard way when I lost mine and had to contact Zazzle to get a duplicate. Also, since this is your first time dealing with this, you might want to set up a simple spreadsheet or folder system to track your Zazzle earnings throughout the year. It makes tax time much easier when you can see your monthly totals and any business expenses you might be able to deduct. Even if you're not actively creating new designs, keeping organized records will save you headaches later. The good news is that once you figure out the process this year, it becomes pretty routine for future years!

I'm dealing with a similar situation with multiple healthcare staffing apps! One thing that really helped me was creating a simple monthly routine where I screenshot my earnings summary from each app right after I get paid. I store these in a dedicated folder on my phone labeled "Tax Documents 2024." Also, since you mentioned you're new to this type of work - don't forget about the home office deduction if you do any administrative work from home (like checking schedules, communicating with facilities, or managing your bookings). Even if it's just a corner of your bedroom where you handle work-related tasks, you might be able to deduct a portion of your rent/mortgage and utilities. The key thing is to be proactive about record-keeping going forward. The IRS cares more about you reporting all your income honestly than having perfect documentation, especially for legitimate gig work like healthcare staffing.

I can relate to your situation! I've been doing healthcare staffing through apps for about 3 years now and went through the same confusion my first year. Here's what I learned: First, definitely report all that income on Schedule C even without a 1099. The IRS actually expects this - they know many gig platforms don't issue forms for smaller amounts. Your payment records from the app are totally sufficient documentation. For organizing records, I create a simple spreadsheet with columns for: Date, Platform, Facility, Hours Worked, Gross Pay, and any expenses. I update it weekly while everything is fresh in my memory. This makes tax prep so much easier than scrambling at year-end. One thing that caught me off guard my first year was the self-employment tax (15.3%) on top of regular income tax. On $13,500, that's about $2,070 just for SE tax. I'd recommend setting aside 25-30% of your earnings going forward for taxes. Also, start tracking ALL work-related expenses now: mileage between facilities, parking fees, scrubs, stethoscope, any medical supplies you buy, license renewals, continuing education, even a portion of your phone bill if you use it for work communication. These deductions can significantly reduce your tax burden. Don't stress too much - this is very common in the healthcare gig economy and the IRS understands these situations!