Has anyone mentioned the American Opportunity Tax Credit? If you're eligible (and it sounds like you are) you can get up to $2,500 back - and up to $1,000 of that is REFUNDABLE even if you don't owe any taxes. That's probably why your parents want to claim it so bad. There's also the Lifetime Learning Credit which is less but still worth up to $2,000 (non-refundable tho). Your parents are probably used to getting this money every year while you were in school and don't want to give it up, but if you're paying your own way, that money belongs to YOU.

The key thing to remember here is that dependency status and education credits are linked. If your parents cannot legally claim you as a dependent (which sounds like the case since you're providing more than half your own support), then they also cannot claim your education expenses. At 23 with $32k income and paying all your own expenses, you're almost certainly not eligible to be claimed as a dependent. The "qualifying child" test requires you to be under 24 AND not provide more than half your own support. Since you're paying rent, food, tuition, everything - you're providing way more than 50% of your support. File your return claiming yourself and your education credit. If your parents still try to claim you, both returns will get flagged and the IRS will sort it out. Just make sure you have documentation of all the expenses you pay (rent receipts, tuition payments, grocery receipts, etc.) to prove you provide your own support. Don't let family pressure override tax law. The money from that education credit rightfully belongs to whoever actually paid the tuition expenses.

Does anyone know if it's normal to have a balance due if your employer was withholding taxes all year? I thought the whole point of withholding was to avoid owing at tax time?

Just to add another perspective - if you're dealing with multiple income sources like you mentioned (W-2, freelance, and investment income), it's really common to have a balance due situation. The withholding from your W-2 job only covers that specific income, but your freelance work and investment gains often don't have any taxes withheld at all. This is especially true if your freelance income was significant or if you had capital gains from investments. The IRS expects you to make quarterly estimated payments for this non-W-2 income throughout the year. If you didn't do that (which many people don't realize they need to), you'll likely see a balance due when you file. For next year, you might want to either increase your W-4 withholding at your main job to cover the additional income sources, or start making quarterly estimated payments. This will help you avoid that surprise balance due next April!

Wait, so if I'm understanding this right, we have to pay taxes QUARTERLY? I've been doing freelance graphic design for almost 2 years and have only been filing annually. Am I going to be in trouble? How do you even calculate how much to pay each quarter when your income varies so much month to month? This seems way more complicated than I realized!

You should look into filing as an S-Corp if your business continues to grow. I switched from sole proprietor to S-Corp once I was consistently making over $40K in profit, and it saved me thousands in self-employment taxes. You pay yourself a reasonable salary (which is subject to FICA taxes) and can take the rest as distributions (which aren't). There are additional costs like incorporation fees and more complex tax filings, but the tax savings can be substantial once you reach a certain income level.

I was wondering what kinda tax law lets Illinois hold onto your money for 3 months without paying interest. That's literally money you overpaid them that they're using interest-free. But whatever, glad you got it!

Same thing happened to me! Filed my IL return in February and the status page said "processing" for months. Then boom - refund showed up in my account last week with zero warning. The status STILL says processing even now. It's like their left hand doesn't know what their right hand is doing. At least we got our money but man, their system is completely broken. Would be nice to get some kind of notification when they actually send the refund instead of having to randomly discover it in your bank account!

I had this exact same confusion last year and it nearly cost me big time. To clarify the misunderstanding: your CPA might be confusing solo 401k rules with ESTABLISHING the plan itself. The plan needs to be established by Dec 31st, but only the employee contributions need to be completed by then. Employer contributions can definitely be made until your tax filing deadline (including extensions). I confirmed this with both the IRS and my provider (Vanguard in my case).

One thing nobody mentioned - if you're right against the deadline, consider doing an ACH transfer instead of a wire. With Schwab specifically (I have my solo 401k there too), they count the contribution based on when you initiate it, not when it settles. So even if it takes a couple days to process, as long as you start the transfer before the deadline, you're good. Just make sure to screenshot the confirmation page showing the date you initiated it, just in case there are ever any questions.