Just wanted to add another perspective here - I went through a similar visa transition (F-2 to F-1) a couple years ago. One thing that really helped me was getting a copy of my complete I-94 travel history from the CBP website before trying to figure out my residency status. The substantial presence test calculations can get really complex with visa changes, especially when you're trying to figure out which days count as "exempt" vs "non-exempt." Having the exact entry/exit dates made it much easier to work through the math. Also, since you mentioned you've been here since December 2019, you're probably still within the 5-year exempt period for F-1 students (which started when you switched to F-1 in March 2024). But the F-2 time might have different rules depending on your spouse's/parent's visa status during that period. Given the amount of money you're planning to invest, it's probably worth getting professional advice from a tax attorney or CPA who specializes in international tax issues. The wrong classification could cost you way more in taxes than the consultation fee, especially with the dividend withholding differences others mentioned.

This is such a complex topic! I've been following this thread as someone who went through a similar situation (H-4 to F-1 transition). One thing I want to emphasize is that even though several people have mentioned helpful tools and services, the IRS Publication 519 is actually your best free resource for understanding the substantial presence test and exempt individual rules. It has specific examples for different visa transitions that might apply to your F-2 to F-1 situation. Also, since you mentioned setting up a trading account, make sure to ask your brokerage specifically about their process for updating your tax status if it changes in the future. I had to update mine mid-year when my exemption period ended, and some brokers handle this transition better than others. Given that you've been here since 2019 and just switched to F-1 in March 2024, you're likely still in exempt status for now, but it's worth planning ahead for when that might change. The tax implications for your investment strategy could be quite different depending on your residency status, especially with the dividend withholding rates others mentioned. Good luck with your investments!

Just wanted to add one more important point that I learned the hard way - make sure to keep detailed records of WHY your spouse qualified as a DEB at the time of inheritance. I'm dealing with this exact situation now where my husband has been on SSDI for years and inherited his father's IRA last year. The financial institution initially set up the account correctly as a DEB inherited IRA, but during a recent review, they questioned whether his SSDI status was sufficient documentation. Even though SSDI recipients generally qualify under IRC Section 72(m)(7), having a complete paper trail made all the difference. I recommend keeping copies of: the original SSDI award letter, recent benefit statements showing payments were active at the time of inheritance, and any medical documentation that was used in the SSDI determination process. This documentation package will save you headaches if the IRS or financial institution ever questions the DEB status. Also, regarding the Roth conversion question - we decided against it in our case because the RMD would push us into a higher tax bracket. Make sure to run the numbers on the tax impact before making that decision!

Great question about partial conversions! Yes, you can absolutely do partial Roth conversions over multiple years to manage the tax impact. In our case, we calculated that converting the full RMD would have pushed us from the 22% bracket into 24%, so instead we're doing smaller conversions each year to stay within our current bracket. For the documentation timing - it's much better to provide the DEB documentation upfront when establishing the inherited IRA. Most financial institutions will ask for it during the account setup process if you indicate the beneficiary qualifies as a DEB. However, if you didn't provide it initially, you can submit it later, but you'll want to do this before taking any distributions to ensure you're following the correct RMD schedule (life expectancy vs. 10-year rule). The key documents to have ready are: the SSDI award letter showing the disability determination date, benefit verification letters showing active payments at the time of inheritance, and Form SSA-1099 showing the benefits received. Having these ready upfront prevents any delays or complications with the account setup. One strategy we're using is taking the required RMD early in the year, then doing a separate Roth conversion later in the year when we have a better sense of our total tax picture. This gives us more control over the timing and tax impact.

I'm facing a very similar situation with my grandson who's been living with me for over a year now. Reading through all these responses has been incredibly helpful, especially the detailed explanations about the "qualifying relative" rules versus "qualifying child" rules. What really struck me is how many of us grandparents are dealing with this exact scenario - providing full financial and emotional support while the legal custodial parent claims the tax benefits. It seems like there should be clearer guidelines for these situations since they're becoming so common. I've started keeping detailed records after reading the advice here about documentation. One thing I'm curious about - has anyone successfully worked out an arrangement with the other parent where you alternate years claiming the child? Or is it typically an all-or-nothing situation? Also, for those who went through the IRS review process, did having a tax professional represent you make a significant difference in the outcome, or were you able to handle it successfully on your own with proper documentation? Thanks to everyone who's shared their experiences - it's reassuring to know we're not alone in navigating these complex family tax situations.

This is such a complex situation that many grandparents face, and I really appreciate everyone sharing their experiences and advice here. As someone who works in tax preparation, I wanted to add a few important points that might help clarify things. First, Ruby, you're absolutely right to feel frustrated about this situation. The fact that you're providing all the financial support while the legal custodial parent claims the tax benefits is unfortunately very common. The key issue here is that your granddaughter would need to qualify as your "qualifying relative" rather than a "qualifying child" since you're not her parent. For this to work, you need to meet several tests: 1. **Support Test**: You must provide more than 50% of her total support for the year 2. **Gross Income Test**: Your granddaughter must have made less than $4,700 in 2023 (which at age 8, she obviously meets) 3. **Relationship Test**: As her grandparent, you meet this 4. **Joint Return Test**: She can't file a joint return (not applicable here) 5. **Citizen Test**: She must be a U.S. citizen or resident The tricky part is that if your son could claim her as his qualifying child (due to the court's custody arrangement), then she can't be your qualifying relative - even if your son doesn't actually file a return. This is called the "qualifying child tie-breaker rule." My advice would be to consult with a tax professional who can review your specific documentation and circumstances. The penalties for incorrectly claiming a dependent can be significant, so it's worth getting professional guidance before proceeding. Keep documenting everything - you're on the right track with that approach!

Something nobody mentioned yet - if you're a high-volume gambler, you might qualify as a "professional" gambler for tax purposes, which changes everything. Instead of deducting losses on Schedule A, you'd report gambling as a business on Schedule C. The key requirements: you gamble regularly, treat it like a business (keep detailed records), genuinely try to make a profit, and have significant time/effort invested. You don't need to make your living entirely from gambling. The big advantage: your losses and expenses become business deductions rather than itemized deductions. This means you can take the full standard deduction AND deduct gambling losses. But beware - this also means paying self-employment tax and potential audit scrutiny.

This is exactly why I always tell people to have taxes withheld from their jackpots if they're recreational gamblers. The casino will typically withhold 24% federal tax on winnings over $5,000, but you can request withholding on smaller jackpots too. Here's what most people don't realize: even if you itemize and can deduct your full $65,000 in losses against your $25,000 in winnings, you're still stuck with the complexity and documentation requirements. Plus, if you get audited, the IRS scrutinizes gambling loss deductions very heavily. For next year, I'd recommend either having taxes withheld upfront or setting aside money from each jackpot to cover the tax bill. Also, start keeping that detailed gambling log everyone mentioned - it's absolutely crucial if you want to claim losses. The IRS has specific requirements about what constitutes adequate records, and "I remember losing a lot" doesn't cut it. Unfortunately, there's no magic solution for this year's situation. You're stuck reporting those W-2Gs as income and can only offset with losses if itemizing makes sense for your overall tax situation.

Another option worth considering is FreeTaxUSA Business - they offer W2 preparation for small businesses at a pretty reasonable one-time fee (I think it was around $25 total for unlimited W2s when I used it last year). Much better than monthly subscriptions when you only have a few employees. The interface is clean and walks you through each step. Plus, if you're already using FreeTaxUSA for your business tax return, the W2 data automatically flows into your return which saves time during tax season. That said, the SSA Business Services Online route that others mentioned is definitely the best free option if you can wait for the verification process. I'd recommend starting that process now even if you use a paid service this year - you'll have it ready for next year!

I went through this exact same frustration last year! Here's what I learned after trying multiple approaches: The SSA Business Services Online is definitely your best bet for a completely free solution, but the mail verification is painfully slow. If you're in a rush, I'd recommend calling the SSA directly at 1-800-772-1213 early in the morning (like 8 AM) when hold times are shorter. Sometimes they can expedite the verification process over the phone. For a quick paid solution this year, I ended up using TaxAct Business for about $35 total. It handled both federal and state W2 filing, and I could print professional-looking copies for my employees. Way cheaper than those monthly subscription services. One thing that caught me off guard - make sure you're also prepared for Form 940 (FUTA) and your state unemployment forms if you haven't filed those yet. Many small business owners forget about these until the last minute! Also, pro tip: Once you get your SSA account set up, bookmark it and test logging in periodically throughout the year. I've heard horror stories of people whose accounts get locked right before W2 season because they haven't used them in months.