something ppl overlook - make sure ur nephew isn't counting on claiming educational tax credits himself!! if u pay tuition directly to school as a gift, he cant claim the lifetime learning credit or tuition deduction on that amount even if he meets income requirements. had this happen in my family and my cousin lost out on like $2000 tax credit bc grandpa paid tuition directly to school.

Great question! I went through this exact situation when helping my daughter with her master's program. The educational expense exclusion under IRC Section 2503(e) absolutely applies to graduate school tuition - there's no distinction between undergraduate and graduate levels. However, I'd strongly recommend considering the tax credit implications that others have mentioned. For your nephew's MBA, you might want to explore a hybrid approach: pay a portion directly to the school (to take advantage of the unlimited exclusion) and gift him some funds directly (within the $17,000 annual limit) so he can potentially claim education credits. Also, make sure to keep detailed records of any direct payments to the institution. I always request a receipt showing the payment was made directly for tuition on behalf of the student - this documentation has been helpful for my own tax records. The $35,000 you mentioned is substantial, so definitely worth running the numbers on which approach maximizes the overall tax benefit for your family!

Just checked my account too and wow, what a difference! The site is actually working properly for the first time in forever. I'm seeing the same $0.00 balance across all years that everyone else is reporting. What's really encouraging is how responsive the system is now - no more timeout errors or that spinning wheel of death we've all been dealing with. The fact that we're ALL seeing identical results after this maintenance period definitely feels like more than just coincidence. I know we shouldn't read too much into it, but between the major system improvements and everyone having the same $0.00 balance experience, it really does seem like they might be actively processing returns behind the scenes. That disclaimer about "recently filed or processing returns" not being reflected yet is starting to make a lot more sense now. Fingers crossed this means we're finally going to see some real movement on our refunds! At minimum, it's just nice to be able to log in without wanting to throw my computer out the window 😅

As a newcomer to this community, I just wanted to add that I'm experiencing the exact same thing! Just logged into my IRS account about an hour ago and was shocked to see it actually working properly - no error messages or endless loading screens like I've been dealing with for the past few weeks. My account balance page is showing $0.00 across all tax years (2022-2024) just like everyone else is reporting. What really caught my attention reading through these comments is that literally EVERYONE is having the identical experience after this maintenance period. That can't be a coincidence, right? The system performance improvement is honestly night and day. Usually I'd get frustrated and give up after multiple timeout errors, but today everything loaded instantly. Combined with that disclaimer about recently processed returns not being reflected yet, I'm starting to think they might actually be working through our returns in the background. I know we shouldn't get our hopes up too much given past disappointments, but the timing of system maintenance + universal $0.00 balances + major performance improvements really does feel like they're making actual progress. At minimum, it's just nice to be able to check my account without wanting to scream at my computer! Anyone else feel like this might finally be the breakthrough we've been waiting for? 🤞

This is really helpful information! I'm dealing with a similar situation but with a twist - my lock-off condo is part of a hotel rental program where the management company can rent either unit when I'm not using it. From what I'm reading here, it sounds like I should still calculate personal vs rental days for each unit separately, even though I don't control when the management company rents them out. Is that correct? And for the days when the management company has both units available for rent but neither gets rented, do those count as "available for rent" days or just vacant days? Also, has anyone dealt with the situation where the management company pools rental income from multiple units? I get a percentage of the total pool rather than specific rental amounts for my individual units, which makes the expense allocation even more confusing.

I've been reading through all these responses and wanted to add something that might help others avoid a costly mistake I made. When you have a lock-off unit and use one portion while renting the other, make sure you're tracking utilities separately if possible. I was allocating my electric and water bills based on square footage, but during an audit, the IRS agent pointed out that the studio portion I was renting actually used disproportionately more electricity (separate AC unit that ran constantly for guests) compared to the main suite where I controlled usage. The agent required me to install separate meters for a full year to establish actual usage patterns, then apply those percentages retroactively. It ended up costing me about $3,000 in additional taxes because my square footage allocation was significantly understating the rental portion's actual utility costs. Now I keep detailed records of utility usage for each portion, which actually increased my deductible rental expenses substantially. Just something to consider for anyone in a similar situation - the square footage method is a good starting point but isn't always the most accurate for every expense category.

I went through a very similar situation when I moved from Germany to the US for my doctoral studies! One thing that caught me off guard was the PFIC (Passive Foreign Investment Company) rules that can apply to certain European mutual funds and ETFs. If you have any investments in German or EU-domiciled funds, these might be subject to punitive US tax treatment even if they seem like simple index funds. The PFIC rules can result in much higher tax rates and complex reporting requirements (Form 8621), so you might want to consider liquidating European fund holdings before establishing US tax residency. US-domiciled ETFs tracking the same indices are usually much more tax-efficient for US taxpayers. Another practical tip: if you're planning to continue investing while in the US, many German brokers will actually restrict your account once you become a US tax resident due to compliance issues. So you might be forced to switch to a US broker anyway. Interactive Brokers is popular among international students because they handle multi-currency accounts well and have reasonable international wire transfer fees. One last thing - don't forget about the Foreign Bank Account Report (FBAR) requirements. If your German accounts exceed $10,000 at any point during the year, you'll need to file FinCEN Form 114. The penalties for missing this are severe, so it's worth setting up calendar reminders.

This thread has been incredibly enlightening! As someone who's been through the US tax system as an international student, I wanted to add a few practical points that might help @Anastasia Popov and others in similar situations. One thing I learned the hard way is that the timing of when you establish US tax residency can significantly impact your investment strategy. If you're planning to hold investments for the long term, consider whether it makes sense to realize some gains in Germany before you potentially become a US tax resident after 5 years on your J-1 visa. Also, regarding cryptocurrency taxation - while the IRS treats crypto as property, the reporting can get complex if you're trading frequently. If you're just buying and holding Bitcoin or other cryptocurrencies, the long-term capital gains treatment is straightforward. But if you're doing any crypto-to-crypto trades, each transaction is a taxable event that needs to be tracked in USD terms. For record-keeping, I'd strongly recommend starting a detailed spreadsheet or using software like Koinly or CoinTracker from day one. Include dates, amounts in both currencies, exchange rates, and the purpose of each transaction. The IRS expects very detailed records for crypto transactions, and recreating this information years later is nearly impossible. Finally, don't underestimate the value of getting professional advice early. The cost of a consultation with an international tax professional who understands both German and US systems will likely save you much more than their fees in avoided mistakes and optimized tax planning.

I want to add another important consideration that hasn't been fully discussed - the impact on beneficiary distributions after the 645 election period ends. Once you transition to filing separate trust returns, any distributions to beneficiaries will carry out different types of income than they did under the combined entity. This can affect the beneficiaries' personal tax situations, especially if the trust has accumulated significant capital gains or other investment income. Also, if you're concerned about timing and documentation, consider having your attorney prepare a formal distribution resolution that clearly states the date and terms of any final distributions. This creates a paper trail that's much stronger than just relying on bank transfer dates or cancelled checks. One more tip - if you do end up going past the deadline, make sure to file Form 1041 for the trust using a new EIN. Don't try to continue using the estate's EIN, as this will cause processing issues with the IRS and potentially delay any refunds the trust might be entitled to.

Based on all the discussion here, it sounds like you need to weigh the actual tax impact against the stress of rushing distributions. The key insight from everyone's responses is that there's no direct penalty for going past the 2-year deadline - the main consequence is having to file separate returns with higher trust tax rates. Here's what I'd recommend: calculate the approximate additional tax cost of missing the deadline by a month. If your trust doesn't generate much income, the extra cost might be minimal and worth the peace of mind of doing distributions properly rather than rushing. But if you have significant investment income or business income like some others mentioned, those compressed trust tax brackets could cost thousands. The documentation points raised by Santiago and others are crucial either way. Make sure you have clear paper trails for whenever you do complete distributions - formal resolutions, bank records, everything dated properly. One thing I didn't see mentioned - have you considered doing partial distributions now to reduce the trust's income-generating assets, then completing the rest after the deadline? This could minimize the tax impact of the higher trust rates while giving you more time to handle the final distributions properly.