Wait I'm still confused. If the employer already determined this was non-taxable income and didn't include it on the W2, does OP need to do anything on their tax return? Do they need to report the reimbursement somewhere even if it's ultimately not taxable?

Based on everything discussed here, it sounds like your employer handled this correctly and you can file your return using the W2 as-is. The fact that they specifically labeled it "Educ Reimb Non-Taxable" on your paystub shows they made a deliberate determination that your MBA qualifies as a working condition fringe benefit. Since you're already in management and the MBA enhances those existing skills rather than qualifying you for a completely different position, this appears to be the right classification. Your tax attorney professor's experience with similar cases being successfully defended in audits is also reassuring. The key now is documentation. Make sure you keep copies of your job description, MBA course catalog showing how the coursework relates to your management duties, your employer's tuition reimbursement policy, and any approval emails or forms. This will be crucial if the IRS ever questions the classification. You don't need to report the reimbursement anywhere on your tax return since it's already been excluded from your W2. Just file normally and keep those records safe!

Let me tell you what happened to me last year - got my state refund in February while my federal was under review, then in JULY the IRS finally processed my federal with adjustments. Had to amend my state return and ended up owing them money! Plus penalties! The worst part was I'd already spent the refund on home repairs (sounds familiar?) and had to scramble to pay it back. Now I always wait until both are finalized before spending any refund money. Lesson learned the hard way!

This is such a common concern for new filers! Yes, you can absolutely receive your state refund while your federal return is under review. As others have mentioned, these are completely separate systems. I've been through this situation twice - once in 2022 and again last year. Both times my state refund arrived within 2-3 weeks while my federal took 8+ weeks to clear review. However, I want to echo what Omar and Chloe mentioned about potential complications. If the IRS makes adjustments to your federal return that affect your state taxes (like changing your AGI or deductions), you may need to file an amended state return later. This could mean owing money back to the state, sometimes with interest. My advice: Go ahead and expect your state refund to process normally, but maybe hold off on spending it until your federal review is complete. That way you're covered if any adjustments are needed. Good luck with your home improvements - hopefully both refunds come through smoothly!

I've been using QuickBooks for my online business, and they actually have a feature to help with inventory adjustments like this. If you're using QuickBooks or similar software, you might want to check if they have a specific process for handling inventory count corrections. In my case, I was able to make an inventory adjustment entry that clearly documented the reason for the change. This created a paper trail showing exactly what happened and when I discovered the error. My tax software then helped me address Line 35 appropriately with the correct wording.

I went through something very similar with my small retail business last year. One thing I'd add to the great advice already given here is to make sure you're prepared for potential follow-up questions if the IRS does review your return. In addition to the Line 35 explanation, I kept a simple spreadsheet showing the original count vs. corrected count for each affected item, along with the unit cost and total value difference. I also noted the date I discovered the error and what caused it (in my case, I had double-counted some items that were stored in two different locations). My CPA recommended keeping this documentation for at least 3 years in case of questions. She said having this level of detail ready actually reduces the chance of extended scrutiny because it shows you're being thorough and transparent about the correction. Also, since you mentioned you're behind on your inventory count - this might be a good time to implement a more systematic counting process for future years. I started doing quarterly spot checks on my highest-value items, which has helped me catch errors much earlier. Good luck with your filing!

One thing nobody's mentioned - make sure you keep REALLY good records about your caregiving arrangement. My cousin got audited last year specifically about her 2014-7 exempt income, and the IRS wanted to see: - Documentation from the agency showing it's a Medicaid waiver program - Proof that the person you're caring for lives with you (same address) - Medical documentation showing the family member requires care - Your certification or training as a caregiver (if applicable) - A log of care hours provided The IRS is definitely looking at these exemptions more carefully now. Even though the income is exempt, they want to make sure people actually qualify for the exemption.

I'd recommend keeping those records for at least 7 years, especially for something as specific as the 2014-7 exemption. While the IRS generally has 3 years to audit most returns, they have 6 years if they suspect you've understated income by more than 25%. Since caregiver income exemptions are relatively uncommon and the IRS is scrutinizing them more closely, having documentation readily available for the extended period gives you better protection. Also, state tax agencies might have different audit timelines than the federal IRS, so the longer retention period covers you there too. Digital copies work fine - just scan everything and keep it organized by tax year. It's much easier than trying to recreate documentation years later if questions arise.

I went through something very similar last year with a $55k gift from my uncle. I was absolutely terrified it would trigger some kind of investigation, but it was completely uneventful! Here's what I learned that might help ease your mind: **For the bank deposit:** - Call ahead like others suggested - it really does make a difference - The teller will ask about the source, just say "gift from [relationship]" - Bring a simple gift letter if you have one, but don't stress if you don't - Expect a hold period (mine was 5 business days) **For IRS concerns:** - Gifts to recipients are NEVER taxable income to you - The IRS doesn't audit people for receiving documented legitimate gifts - Since your giver is filing the lifetime exclusion form, everything is properly handled **What actually happened:** - Smooth deposit process with routine questions - Funds available after the hold period - Zero contact from IRS (it's been over a year now) - No issues whatsoever The anxiety beforehand was honestly 100x worse than the actual experience. Your CPA is absolutely right - you have nothing to worry about. This is a normal transaction that happens thousands of times every day across the country. Congratulations on your gift, and try to enjoy it rather than stress about it!

I just wanted to add my experience from depositing a $62k gift last month - your situation sounds almost identical to mine! The anticipation was definitely the worst part. I spent weeks worrying about potential red flags, audits, account freezes, you name it. But the actual process was incredibly straightforward. Here's what worked for me: - Called my bank 3 days ahead and simply said "I'll be depositing a large gift check this week" - They made a note and explained their standard hold policy for large amounts - Brought a one-page gift letter (the giver wrote it without me even asking) - Deposit took about 15 minutes with basic questions about the source - 6-day hold period, then funds were fully available - Absolutely zero contact from the IRS (and it's been 2 months now) Your CPA is spot-on - recipients of gifts have no tax obligations. The giver handles everything on their end with the lifetime exclusion form, just like in your case. One thing that really helped my peace of mind was keeping digital copies of the gift letter and check in a cloud folder, just in case I ever needed them. But honestly, based on everyone's experiences here, it seems like the IRS rarely if ever follows up on properly documented gifts. Try to relax and enjoy this generous gift! The financial system handles these transactions every single day - you're going to be just fine.