I remember this credit! The original 2008 version was basically a $7,500 interest-free loan you had to pay back over 15 years. Lots of people got confused because later versions (2009-2010) turned into a true credit you didn't have to repay if you kept your home long enough. What sucks about your situation is that since you sold the home in 2016, the ENTIRE remaining balance would have become due on your 2016 taxes. That's probably why your 2018 and 2019 returns are getting rejected - there's an outstanding balance the IRS is looking for. The fact that BoA mentioned your loan was from 2009 is probably because of the refinance, which is a separate issue from the homebuyer credit. I suggest calling the IRS (I know, painful) and asking specifically about your Form 5405 from 2008 and what the remaining balance is. Then file your 2016 return with that repayment info.

This is a really complex situation, but it sounds like you definitely received the 2008 First-Time Homebuyer Credit even though you weren't aware of it. The key detail is that September 2008 refund showing up right around your home purchase - that's almost certainly the $7,500 credit. Here's what likely happened: Your tax preparer included Form 5405 on your 2008 return, which triggered the credit. The 2008 version was structured as an interest-free loan requiring $500 annual repayments starting in 2010. The critical issue is that when you sold in 2016, you should have repaid the entire remaining balance (roughly $4,000-4,500) on that year's tax return using Form 5405 Part II. Since you didn't file in 2016, that outstanding balance is now preventing your newer returns from being accepted. Your action plan should be: 1. Get your complete tax transcript for 2008 to confirm the exact credit amount 2. Calculate remaining balance (original amount minus any payments from 2010-2015) 3. File your 2016 return immediately with Form 5405 showing the full repayment 4. Once 2016 is processed, then file your 2018 and 2019 returns The Bank of America loan modification issue is separate - they were likely referring to your 2009 refinance date, not the original mortgage or the tax credit. This is definitely fixable, but you'll need to tackle that missing 2016 return first to clear the IRS block.

I've been through two dependent verification audits myself (2020 and 2022), and the key thing I learned is that consistency across all documents is what the IRS is really looking for. They want to see that your story holds together from multiple angles. Beyond what others have mentioned, I'd recommend gathering any records that show you made decisions as the responsible adult - things like signing permission slips for school activities, being listed as the emergency contact on school forms, or having your dependent listed on your voter registration if your state allows it. One document that really sealed the deal for me was a letter from my dependent's teacher acknowledging me as the primary guardian at parent-teacher conferences. The IRS seems to appreciate third-party validation from schools, doctors, or other institutions. Start organizing everything now by month - it makes their job easier and yours too. Also, keep detailed notes about where each document came from and when you obtained it, because sometimes they'll ask follow-up questions months later about specific pieces of evidence.

Based on my experience with a dependent verification audit in 2023, I'd strongly recommend creating a summary sheet that lists every document with dates and page numbers - this became invaluable when the IRS agent called with follow-up questions about specific items. Something I haven't seen mentioned yet that really helped my case was obtaining a formal residency affidavit from a neighbor or family friend who could attest to seeing my dependent at our address regularly throughout the year. The IRS accepted this as supporting evidence alongside the official documents. Also, don't overlook digital evidence like Amazon delivery records showing items purchased for your dependent sent to your address, or even photos with timestamps showing them at family events at your home throughout the year. The audit process is stressful, but being over-prepared is definitely better than scrambling later. One last tip: when you mail everything, include a cover letter that briefly explains each document's relevance and organizes them in the order you're presenting them - this shows the agent you're taking the process seriously and makes their job easier.

Great thread! I'm dealing with similar S Corp medical expense questions right now. One thing I wanted to add that hasn't been mentioned yet - make sure you're also considering state tax implications. Some states don't follow the federal treatment of S Corp health insurance premiums, so you might need to make adjustments on your state return. Also, regarding the timing - if you're setting up health insurance or a QSEHRA for this year, you generally need to have it established before the end of the tax year for it to be deductible. Don't wait until you're preparing your tax return to figure this out! I learned this lesson when I tried to retroactively claim health insurance premiums I had paid personally - the IRS requires that the S Corp actually pay the premiums during the tax year, not reimburse you later. The documentation trail matters a lot for audit purposes. For anyone just starting out with an S Corp, I'd recommend getting this health benefit structure sorted out early in the year rather than scrambling at tax time like I did my first year.

This is such a comprehensive discussion! As someone who's been through the S Corp medical expense maze myself, I wanted to add a few practical tips that might help: 1. **Set up a separate business credit card** specifically for health-related expenses paid by your S Corp. This makes tracking much easier at year-end and creates a clear paper trail for your accountant. 2. **Consider the cash flow impact** - remember that health insurance premiums paid by your S Corp will increase your W-2 wages, which means higher quarterly estimated tax payments. Plan for this so you're not caught off guard. 3. **HSA compatibility** - if you're thinking about an HSA, make sure your health insurance plan qualifies as a High Deductible Health Plan (HDHP) BEFORE the S Corp starts paying premiums. You can't contribute to an HSA if you have non-HDHP coverage, even if it's paid by your business. 4. **Monthly vs annual planning** - I found it helpful to have my S Corp pay health insurance premiums monthly rather than trying to do one big annual payment. It smooths out the payroll tax impact and makes budgeting easier. The learning curve is steep but once you get the system down, it really does provide good tax benefits compared to paying everything personally with after-tax dollars. Just make sure to document everything properly from day one!

One additional consideration that hasn't been mentioned - if you're planning to move closer to your new job, make sure you understand the timing requirements for the Section 121 exclusion. You need to have used the home as your primary residence for at least 2 of the 5 years before the sale. Since you've lived there for 5 years already, you have some flexibility. But if you rent it out for 2 years and then sell, you'll be right at that 5-year lookback period. If for any reason the sale gets delayed (market conditions, finding buyers, etc.), you could potentially lose eligibility for the exclusion. Also, consider whether renting it out for just 2 years makes financial sense after factoring in landlord responsibilities, potential vacancy periods, property management costs, and the tax complexity it creates. Sometimes the headache isn't worth the extra income, especially if you're not planning to be a long-term landlord. You might want to run the numbers on selling now versus the rental income minus all associated costs and taxes.

Great discussion everyone! I'm actually a tax professional and wanted to add a few clarifications to help @Melina Haruko and others in similar situations. First, the Section 121 exclusion is indeed available as long as you meet the 2-out-of-5-year test, but there's an important nuance: if you claim depreciation during the rental period (which you're required to do), that portion of the gain will be subject to depreciation recapture at 25%, even if you qualify for the exclusion on the remaining gain. Second, regarding the tools and services mentioned - while they can be helpful, I'd strongly recommend consulting with a tax professional for your specific situation, especially given the complexity of partial-use properties. The IRS rules around this are quite detailed and small mistakes can be costly. Finally, @Zara Rashid made an excellent point about timing. Consider not just the tax implications, but also the practical aspects: property management from a distance, market timing risks, and whether the net rental income (after all expenses and taxes) justifies the complexity. Sometimes the cleanest financial move is to sell before converting to rental property. Feel free to ask if you have specific questions about the tax calculations!

Has anyone tried other full-service options like H&R Block or the newer services like Keeper Tax? Wondering if there's actually a good option out there or if they're all equally disappointing.

Wow, this thread has been incredibly helpful! As someone who's been dreading tax season because of similar horror stories, it's great to see actual solutions being discussed. I'm in a similar boat to the OP - switched jobs twice last year plus some freelance work, and I was considering TurboTax Full Service but clearly dodging a bullet there. The AI tax tool (taxr.ai) that Victoria mentioned sounds really promising, especially the part about flagging audit risks upfront. That's exactly the kind of guidance I need without the human error factor. And honestly, the Claimyr service could be a lifesaver too. I've had to call the IRS before and it's absolutely brutal - spent an entire afternoon on hold just to get disconnected. Having something that can navigate that nightmare for you seems worth every penny. Thanks everyone for sharing your real experiences. This is way more valuable than any review site!