I was confused by the same thing last year! Just wanted to add that the reason this is all so confusing is that the $5,000 FSA limit hasn't been updated in decades while childcare costs have skyrocketed. It's ridiculous that the tax code hasn't kept up with real costs. For my family, even using both the FSA and the tax credit, we only get tax relief on about a third of what we actually spend on childcare. I wish they'd update these limits to reflect what childcare actually costs in 2025!

This is such a helpful discussion! I'm in a similar boat but with slightly different numbers. I have one child and spent $8,000 on daycare last year. I put the full $5,000 into my dependent care FSA, so I have $3,000 in remaining expenses. From what I'm understanding here, since I only have one qualifying child, my maximum eligible expenses for the Child and Dependent Care Credit would be $3,000. But I need to subtract my $5,000 FSA contribution from that $3,000 limit... which would give me a negative number? Does this mean I can't claim ANY additional expenses for the tax credit since my FSA already exceeded the $3,000 single-child limit? Or am I misunderstanding how this works?

Another trucker here - just to add a real example: I bought my Peterbilt for $175,000 last year. My CPA took Section 179 deduction for the full amount on last year's taxes. This year I'm only deducting the INTEREST portion of my loan payments which is about $12,000 for the year. If I deducted the full loan payments (around $36,000/year including principal), that would definitely be double dipping since I already deducted the truck's value through depreciation.

I'm an owner-operator and just wanted to add that this confusion is super common. Like half the guys at my terminal are doing their taxes wrong. Remember: - The TRUCK (asset) = depreciable - The INTEREST on loan = deductible expense - The PRINCIPAL on loan = NOT deductible (that's what depreciation covers) - REPAIRS/MAINTENANCE = always deductible The IRS isn't dumb - they know what a loan payment includes and they'll catch double-dipping eventually!

Carmen, I went through something very similar when my daughter moved to the UK with her mother two years ago. Here's what I learned from my experience and research: You can likely claim your kids as dependents since they're US citizens and you're providing over half their support with those $1,650 monthly payments. The key is documenting everything - keep those bank transfer records, tuition payments, and any other support you provide. For the Child Tax Credit, it's more restrictive. The IRS typically requires children to live with you in the US for more than half the year. Since your kids moved to Spain permanently (not temporarily), you probably won't qualify for the full CTC. However, you might still be eligible for other credits or deductions. One important thing to check: make sure your ex isn't also claiming them as dependents on her US return if she's still required to file here. That would create a conflict. Also, since you mentioned she moved to Spain, look into whether the US-Spain tax treaty affects your situation - it has specific provisions about dependent claims in cross-border situations. Given the complexity and the potential tax savings involved, I'd honestly recommend getting a consultation with a tax professional who specializes in international situations. The peace of mind and potential refund increase would likely cover the consultation cost, especially with $1,650/month in support payments at stake.

Carmen, I've been following this thread and there's some excellent advice here. I want to add a practical perspective as someone who went through IRS scrutiny on a foreign dependent situation. The key thing that saved me during my audit was having a comprehensive support calculation worksheet. You'll want to document not just what you pay, but estimate the total cost of supporting each child for the year. This includes housing (their portion of rent/utilities in Spain), food, clothing, medical expenses, education, transportation - everything. Then you show that your $1,650/month ($19,800/year) plus direct tuition payments represent more than 50% of that total. The IRS agent actually appreciated that I had done this math upfront rather than just pointing to my bank transfers. One thing I haven't seen mentioned yet - if your kids visit you in the US during the year, document those stays too. While it probably won't change the Child Tax Credit eligibility since they're permanent residents of Spain, it does help establish the ongoing parent-child relationship for dependency purposes. Also, make sure you have their current Spanish address documented. The IRS sometimes wants to verify where dependents actually live, especially in international cases. Having utility bills or school enrollment documents with their Spanish address can be helpful if questioned. The investment in getting this right is definitely worth it - between the dependency exemption and any partial credits you might qualify for, you're looking at potentially significant tax savings.

Has anyone here successfully e-filed an amended return for education credits? I know the IRS started allowing e-filing for Form 1040-X a few years ago, but I've heard mixed things about whether it works for all situations.

I went through this exact same situation last year when my tax preparer missed my education credit! It's so frustrating having to clean up someone else's mistake, especially when you provided all the documentation. Based on your numbers, you definitely qualify for the Lifetime Learning Credit. With $6,200 in qualified expenses minus $2,100 in scholarships/grants, you have $4,100 in eligible expenses. At 20%, that would give you an $820 credit, which matches what you calculated. A few things to keep in mind when filing your 1040-X: - Make sure to check your AGI phase-out limits (for 2022, the LLC phases out between $59,000-$69,000 for single filers, so you're well within the range) - Double-check that you haven't already used 4 years of AOTC, which it sounds like you have - Include a clear explanation in Part III of the 1040-X about why you're amending The whole process took about 14 weeks for me to get my refund, but it was worth it. Don't let your preparer's mistake cost you money that's rightfully yours! You've got this.

One thing nobody's mentioned is that the 1099-C might also include interest that was forgiven, not just principal. Box 3 on the form should show the interest if any was included. This matters because forgiven interest might be treated differently than forgiven principal for tax purposes.

This is a really tough situation, and I feel for you having to deal with this unexpected tax burden. A few important things to consider: First, you absolutely need to report the 1099-C on your tax return - the IRS has a copy too, so ignoring it isn't an option. However, you may qualify for exclusions that could reduce or eliminate the tax impact. Since you mentioned you're already struggling with bills, definitely look into the insolvency exclusion that others have mentioned. Given that you co-signed in 2019 and your brother lost his job, it sounds like your financial situation may have been difficult when the debt was actually canceled. You'll need to calculate your total assets vs. total debts at the time of cancellation (not now). Regarding your brother - he may or may not have received a 1099-C depending on how the lender handled it. Sometimes they only send it to the primary borrower or co-signer they have the best contact info for. I'd strongly recommend consulting with a tax professional if possible, especially given the amount involved ($12,750). Many offer free consultations and can help you determine if you qualify for any exclusions. Don't let this sit until the last minute - you have options, but you need to explore them properly.