This is such a helpful thread! I'm also a new parent (my twins were born in August 2023) and I was completely lost about how tax credits work versus deductions. What finally made it click for me was realizing that the Child Tax Credit comes off your final tax bill, not your income. So if I calculate that I owe $4,000 in federal taxes, the $4,000 in Child Tax Credits for my twins ($2,000 each) would bring that down to $0. If my employer withheld $5,000 throughout the year, I'd get a $5,000 refund. I was initially skeptical when tax software showed such a large refund estimate, thinking there had to be some catch. But now I understand it's just the math working in our favor! The credits are directly reducing what we owe, which effectively increases our refund by the same amount. One thing I'm still figuring out is whether there are any other child-related tax benefits I should be aware of as a new parent. Are there other credits or deductions that pair well with the Child Tax Credit?

I'm also a new parent and was equally confused about this! What really helped me understand the Child Tax Credit was thinking about it as a coupon that gets applied at the very end of your tax calculation. Here's how I think about it: First, your income gets reduced by deductions (like the standard deduction), then your taxes are calculated on that amount. Finally, credits like the Child Tax Credit get subtracted from your actual tax bill - it's like having a $2,000 coupon that reduces what you owe. So if you calculated that you owe $3,500 in taxes and you have the $2,000 Child Tax Credit, you'd only owe $1,500. If your employer withheld $4,000 from your paychecks during the year, you'd get a $2,500 refund ($4,000 withheld minus $1,500 you actually owe after the credit). This is why online calculators show it "adding" to your refund - they're not literally adding free money, they're reducing what you owe, which increases what comes back to you. The end result looks the same in your bank account, but understanding the mechanics helps with tax planning. Hope this helps clarify things for you!

For any other Australians filling out W-8BEN, remember to write your date in MM-DD-YYYY format instead of the DD-MM-YYYY format we use here. I had my form bounced back because I wrote the date "Australian style" and the US company's system couldn't process it. Also, make sure to write "Australia" as your country of citizenship in Part 1, not "Australian" or "AU". These little details can save you a lot of back-and-forth!

As a fellow Australian who's been through this process multiple times, I can confirm that Sean's advice about Article 14 is spot on for most freelance editing work. Just wanted to add a couple of practical tips that helped me avoid headaches: 1. When you write "Australia" in the country field, make sure it's consistent throughout the form - don't mix "Australia" and "Australian" 2. For the treaty article description, I usually write something like "Article 14 - Independent Personal Services - Video editing services provided remotely from Australia" 3. Keep a scanned copy of your completed W-8BEN for your records - some clients lose them and you'll need to provide another copy The key thing to remember is that without completing Section 2 properly, you'll have 30% withheld instead of 0% for independent contractor services. That's a huge difference when you're trying to make a living as a freelancer! The Australia-US tax treaty is actually quite favorable for our type of work, so it's definitely worth taking the time to get it right.

Don't stress too much about this. The amount you'll owe is small based on what you described. Since you only made around $2k at the restaurant job, the most your uncollected Medicare tax could be is about $29 (1.45% of $2,000). When you enter your W2 information into TurboTax, it should automatically handle this. Just make sure you enter everything from all boxes on your W2 correctly.

Just to add another perspective - I work part-time at a pizza place and see this Code B on my W2 every year. One thing that helped me understand it better is thinking of it this way: when you report your cash tips to your employer during the year, they're supposed to withhold Medicare tax on those tips from your regular paycheck. But sometimes your regular wages aren't high enough to cover all the withholding needed. For example, if you worked a 4-hour shift and earned $40 in wages but reported $200 in tips, your employer can't withhold Medicare tax on all $200 of those tips from just your $40 paycheck. The "uncollected" amount shows up as Code B and you pay it when you file your return. The good news is that most tax software handles this automatically when you enter your W2 info. You shouldn't need to do any manual calculations - just make sure you enter all the information from your W2 accurately and the software will take care of the rest!

I went through something very similar last year when I had to sell my condo after only 8 months due to a job relocation. Like others have mentioned, you won't owe any capital gains tax on a loss - that's the silver lining in this tough situation. One thing I wish someone had told me earlier: make sure to track ALL your selling expenses (realtor commissions, title fees, attorney fees, etc.) because those get added to your loss calculation. In my case, those expenses added another $8k to my deductible loss. Also, since you mentioned unexpected family issues, you might want to look into whether this qualifies as a hardship that could help with any early mortgage payoff penalties if you have them. Some lenders have provisions for genuine hardship situations. Best of luck with everything - I know how stressful this situation can be.

I'm sorry to hear about the difficult family situation you're facing. Just wanted to add one more perspective that might be helpful - since you've only owned the property for 2 months, you might also want to check if you have any recourse with your home inspection or if there were any undisclosed issues that could affect your loss calculation. Also, when you do sell, make sure to get a detailed HUD-1 or closing disclosure that clearly shows all your costs. The IRS will want to see documentation of your original purchase price plus any qualifying improvements or costs, and your sale price minus all selling expenses. Keep everything organized because if you do carry forward unused losses to future years, you'll need this documentation. One last thought - if this was going to be your primary residence, you might want to consult with a tax professional about whether any special rules apply since you never really got to establish it as your main home. The rules can get complex when life throws you curveballs like this.

Make sure you keep all documentation related to the settlement in case of an audit! I had a similar situation and the IRS questioned it three years later. Having the settlement agreement and evidence of the payment saved me from a huge headache. Also consider if any portion of the settlement was for attorney fees (even if you represented yourself) as there might be some deduction possibilities.

Just went through something similar last year. One thing to watch out for - if your settlement was over $600, the company is supposed to issue you either a 1099-MISC or include it on a corrected W-2, but many don't follow through properly. Don't wait for them to send the forms - you still need to report the income even without receiving the proper tax documents. I'd recommend reaching out to your former employer's payroll department to ask how they're reporting the settlement payment to the IRS. This will help you report it consistently. If they say they're not issuing any forms (which happened to me), document that conversation and report it as "Other Income" as others have mentioned. The key is being proactive since employers often drop the ball on settlement tax reporting.