Something nobody's mentioned yet - if you're planning to get divorced and will have a formal agreement, you could address this for future years. A divorce decree or separation agreement can specify which parent gets to claim the child for tax purposes, regardless of the residency test. But for your current situation, it's like everyone is saying - only one of you can claim the child as a qualifying child, and usually that's the custodial parent (who the child lived with more). Also, look into the child and dependent care credit if either of you paid for childcare while working or looking for work. That's separate and has its own rules.

I see you're getting a lot of good advice here, but let me add something important that might help with your decision-making process. As others have mentioned, with MFS filing status, you're both ineligible for the Earned Income Credit regardless of who claims your daughter - that's a significant tax benefit you're losing. Given that your daughter lived with you for the majority of the year (10+ months), you would typically be the one eligible to claim the Child Tax Credit under the residency test. The fact that your husband provided more financial support doesn't override this requirement for the CTC. However, before you finalize your filing approach, you might want to run the numbers both ways: MFS with you claiming the CTC versus Married Filing Jointly. Even though you separated, you can still file jointly if you were married as of December 31st. Sometimes the overall tax savings from filing jointly (including potential EIC eligibility) outweigh the benefits of filing separately, even in separation situations. If there are reasons you absolutely must file separately (like wanting to keep finances completely separate or liability concerns), then yes, you should claim your daughter since she lived with you, and your husband cannot use the ODC as an alternative way to claim the same child.

I'm in a similar situation - got the 570/971 codes on my transcript last week and have been stressing about it constantly. Your refund amount looks solid with all the proper credits showing up, which is a good sign. The fact that your account balance is showing the full -$11,652.00 with no penalties or interest accruing means the IRS isn't questioning the refund amount itself, just doing their standard verification process. With EIC claims, they're required by law to hold refunds until mid-February anyway, so you're not really behind schedule yet. Keep checking that transcript every Thursday night/Friday morning for updates - that's when most movement happens for weekly cycle accounts like yours. The waiting is brutal but try to stay positive! 🤞

Hey, I totally feel your stress about the 570/971 codes! I went through the exact same thing last year with my EIC refund. The 971 code means they sent you a notice, so definitely keep an eye on your mailbox - sometimes it takes a week or two to arrive. In my experience, these holds for EIC verification usually resolve within 2-4 weeks if they don't need additional documentation from you. Your transcript actually looks pretty normal for this stage - the fact that all your credits are properly reflected and there's no penalty/interest accruing is a good sign. The IRS is just doing their due diligence since EIC refunds are subject to additional scrutiny. Try to hang in there - I know the waiting is awful when you're counting on that money! 💪

This thread has been incredibly helpful! I'm dealing with a similar situation where our family trust owns multiple LLCs, and I've been going in circles trying to figure out the Section 179 implications. One thing I'd add for anyone reading this - make sure you understand the annual Section 179 limits too. For 2024, the maximum deduction is $1,220,000 with a phase-out starting at $3,050,000 of qualifying purchases. But these limits apply at the individual level, so if you have multiple entities owned by the same grantor trust, you need to coordinate across all of them. Also, don't forget about the "taxable income limitation" - you can't claim more Section 179 than the taxable income from all your businesses combined. This caught us last year when we had a big equipment purchase but lower profits than expected. The combination of using taxr.ai for document analysis and Claimyr to actually talk to the IRS sounds like a solid approach. Sometimes you need that official confirmation from the horse's mouth, especially with complex trust structures.

This has been an incredibly informative discussion! As someone new to this community but dealing with a similar trust/Section 179 situation, I wanted to share my recent experience. I had been struggling with this exact issue - our revocable trust owns an S-Corp that manufactures custom furniture, and we were looking at a major equipment purchase. After reading through this thread, I decided to try both services mentioned. First, I used taxr.ai to analyze our trust documents. Within 48 hours, I had a comprehensive report confirming that our grantor trust structure would allow the Section 179 deduction to flow through. The analysis was thorough and included specific tax code references. Then I used Claimyr to get official IRS confirmation. After weeks of failed attempts to reach the IRS on my own, I was connected to an agent in about 40 minutes. The agent confirmed the analysis and even provided additional guidance on proper documentation. One thing I'd add to this discussion - make sure your trust documents explicitly identify it as a grantor trust. The IRS agent mentioned that unclear language in trust documents can sometimes create complications during audits. Our attorney had to amend one provision to make the grantor status crystal clear. Total cost for both services was under $500, but it potentially saved us from losing out on a $75,000+ deduction. Sometimes the peace of mind and speed is worth paying for professional analysis rather than spending weeks researching on your own.

Does anyone know if using TurboTax or H&R Block online helps with this situation? I moved states too and still have my old license.

I was in a similar situation last year when I moved from Texas to Colorado and was worried about the same thing! Here's what I learned: for federal taxes, your driver's license number isn't even required - the IRS only cares about your SSN. For state taxes, most states have workarounds for people who haven't updated their licenses yet. However, I'd strongly recommend getting your new state license ASAP regardless of taxes. I got pulled over for a minor traffic violation about 8 months after moving and the officer was not happy that I hadn't updated my license within the required 30-day window. Ended up with an additional fine on top of the original ticket. The tax filing worked out fine with my old license, but the DMV compliance issue was definitely a headache I could have avoided!

Has anyone used the partnership tax calculator on the IRS website? I tried inputting different profit allocation scenarios, but I'm not sure if I'm using it correctly. I also heard that different states have different rules about partnership structures - does anyone know if that's true?

Katherine, I've been through a similar situation with my own partnership structure. One important consideration that hasn't been fully addressed is the "material participation" test for self-employment taxes. Even as an LP, if you materially participate in the business (more than 500 hours annually or meet other criteria), you could still be subject to self-employment tax on your share of the income. Also, make sure you understand the difference between guaranteed payments to your wife as GP versus her distributive share. Guaranteed payments are always subject to self-employment tax regardless of her role, while her distributive share as GP would be subject to SE tax. This affects how you structure her 20% compensation. Before finalizing anything, I'd strongly recommend getting a written opinion from a tax attorney or CPA who specializes in partnership taxation. The IRS has been increasingly scrutinizing these arrangements, and having professional documentation of the business purpose and structure will be crucial if you're ever audited.