Has anyone had experience with using 529 funds for required technology purchases? My program requires us to have specific software and a laptop meeting certain specifications. Are these definitely qualified expenses?

Just wanted to add another important consideration for your 529 planning - make sure you understand the "enrolled at least half-time" requirement for room and board expenses. The IRS requires you to be enrolled at least half-time at an eligible institution for housing and food costs to qualify as 529 expenses. Also, regarding your security system question - while utilities like water and electricity are generally accepted as part of housing costs, security systems fall into more of a gray area since they're not essential utilities. I'd be conservative with that one unless you can show it's required by your lease or building management. For meal expenses, stick to reasonable grocery costs and occasional dining out. The key word is "reasonable" - the IRS looks at whether your food expenses align with what a typical student would spend in your area. Keep your receipts organized by month so you can track whether you're staying within your school's meal allowance limits.

Honestly, don't touch your retirement money if you can avoid it. I withdrew $15k from my 401k for school 5 years ago and I MASSIVELY regret it. That $15k would be worth almost $25k now with market growth. Plus I paid about $5k in taxes and penalties, so the real cost was like $30k for my $15k tuition. I'm now playing catch-up with my retirement and it sucks. Look into Pell grants, scholarships for returning students, payment plans, or even a 0% intro APR credit card if you can pay it off within the promo period.

Michael, before you make any withdrawals, I'd strongly recommend checking with your school's financial aid office first. Many universities have emergency aid funds, work-study programs, or payment plans that could help bridge the gap without touching your retirement savings. Also, since you're 29 and returning to school, you might qualify for the Lifetime Learning Credit which can give you up to $2,000 back on your taxes for qualified education expenses. If you do end up needing to access your 401k, the rollover to IRA strategy mentioned above is definitely the way to go to avoid that 10% penalty. One more thing - have you looked into whether your state offers any grants for adult learners returning to school? Many states have programs specifically for people in your situation that don't require repayment.

These codes got me stressing so hard I started dreaming in numbers 🤣 The IRS needs to make this stuff easier to understand for regular folks istg

Been dealing with these codes for months and finally figured it out! Code 290 = they're adding tax/adjustments to your account (bad news usually), Code 291 = they're reducing/removing previous assessments (good news!). If you see both, it means they made an adjustment then partially or fully reversed it. The key is looking at the dates and amounts to see the timeline. Pro tip: the cycle dates next to these codes tell you when each action happened, so you can follow the story of what the IRS did to your return 📊

This is a great point about framing the negotiation properly. I'd add that your friend should also consider the timing element here - if the business continues operating with losses, that sweat equity partner will keep receiving negative K-1s that could complicate their personal tax situation. Another angle to consider: since this partner never contributed cash, they likely don't have sufficient "basis" to deduct all the losses that have been allocated to them anyway. This means they may have suspended losses on their personal return that they can't currently use. A clean exit might actually be more valuable to them than continuing to accumulate unusable tax losses. Your friend might want to get a tax professional to calculate what the partner's actual tax basis is versus their capital account balance. These are often very different numbers, and the basis calculation might show that the partner's economic position isn't as strong as the capital account balance suggests. The key is documenting everything properly so the buyout is structured in a way that's defensible to the IRS and fair to all parties involved.

I've dealt with this exact situation multiple times, and the suspended loss angle is absolutely critical leverage that most people miss. In one case, we had a sweat equity partner with a $85k negative capital account who was demanding full payment. When we calculated their actual tax basis (which was essentially zero since they never contributed cash), we discovered they had over $70k in suspended losses sitting on their personal return that they couldn't use. We presented this analysis showing that continued partnership ownership would likely generate more unusable losses, while a buyout - even at a significantly reduced amount - would allow them to trigger some of those suspended losses as a capital loss on the sale of their partnership interest. The partner ended up accepting a $15k settlement because they realized the alternative was continuing to receive K-1s with losses they couldn't deduct, plus the complexity of tracking suspended losses for potentially years. The key is getting a tax professional to run the numbers on both the capital account AND the tax basis/suspended loss calculation. Often the partner's actual economic position is much weaker than the capital account suggests, especially when they never contributed actual capital but have been allocated years of losses. This analysis completely changes the negotiation dynamic and often leads to much more reasonable settlement amounts.

Just want to point out that for 2024, the threshold for payment apps to send 1099-Ks is $5,000, not the $600 threshold they were initially planning. So depending on how much you paid your babysitter, they might not even get a 1099-K from Venmo at all. Also, make sure your payroll service marked these payments as household employee wages, not independent contractor payments. That classification makes a big difference in how everything is handled tax-wise.

Does anyone know if this impacts household employees who didn't receive a W-2? I paid my house cleaner through Venmo all year (about $6,000 total) but didn't use a payroll service. Now I'm worried they'll get a 1099-K and have to pay self-employment taxes when they're technically a household employee.