Regarding transferring funds from custodial accounts to parent-owned 529s to improve FAFSA treatment - this is actually a complex area that requires careful consideration. Since custodial account assets legally belong to the child, you can't simply transfer them to a parent-owned account without potential tax and legal implications. However, there are legitimate strategies to consider. You can use custodial account funds to pay for the child's current qualified education expenses (like tutoring, educational camps, or even some high school costs), which reduces the custodial account balance. Alternatively, when your child reaches the age of majority and gains control of the account, they could choose to gift money to you to contribute to a parent-owned 529, though this would be subject to annual gift tax exclusion limits. Another approach is to simply spend down the custodial accounts first during the early college years, saving the parent-owned assets for later. Since FAFSA is filed annually, reducing student assets between filing years can help with aid eligibility for subsequent years. The key is planning several years ahead since the FAFSA base year creates a two-year lag between asset levels and aid calculations. Given that your kids are still young, you have plenty of time to develop a strategy that maximizes both investment returns and eventual financial aid eligibility. I'd recommend consulting with both a tax professional and a financial aid specialist as your kids get closer to high school to fine-tune the timing.

This has been an incredibly thorough discussion! As someone who just went through opening CDs for my kids' custodial accounts last year, I wanted to add one practical tip that might save you some time. When you go to open the CDs, bring a printed copy of each child's birth certificate along with their Social Security cards. Some banks require the birth certificate to verify the child's age for custodial account purposes, especially if it's your first CD with that bank. I had to make a second trip because I only brought the SS cards initially. Also, if you decide to go with the staggered opening approach that others mentioned, ask your bank about "rate protection" periods. Some banks will honor a promotional CD rate for 30-60 days after you first inquire, which means you could open the first CD immediately and still get the same 5.15% rate when you open the second one a few weeks later. The financial aid planning discussion really resonates with me too. We're using a similar strategy of prioritizing custodial account spending for current educational expenses (my daughter does competitive math programs and science camps) to gradually reduce the balances before college applications. It's amazing how much you can legitimately spend on education-related activities when you start looking for opportunities!

One thing to consider that I haven't seen mentioned yet - the IRS has been dealing with massive backlogs and staffing shortages since COVID. While getting your case back from CBE Group might give you access to better resolution options, it could also mean your case sits in limbo for months before anyone actually works on it. I had a similar situation with about $60k in back taxes. When I requested my case back from the collection agency, it took nearly 6 months before the IRS actually assigned someone to work on it. During that time, interest and penalties kept accruing. The upside was that once they did assign someone, I was able to get into a partial payment installment agreement that the collection agency couldn't offer. My advice would be to have a clear plan for what type of resolution you're seeking before requesting the transfer. If you just want a basic payment plan, the collection agency might actually move faster. But if you need hardship consideration, Currently Not Collectible status, or want to explore an Offer in Compromise, then definitely get it back to the IRS despite the potential delays.

I've been through this exact situation with $62k in tax debt that went to CBE Group. Here's my take after dealing with both sides: The main advantage of getting it back to the IRS is access to programs like Currently Not Collectible status if you're facing genuine financial hardship. CBE Group literally cannot put your account into CNC status - they can only offer payment plans or temporary delays. However, timing matters. If you're ready to move quickly on an Offer in Compromise or have all your financial documentation ready for a hardship determination, then request the transfer immediately. But if you're still getting your finances organized, the collection agency might actually buy you time since they tend to be less aggressive than IRS revenue officers. One tip that helped me: when you request the transfer back to the IRS, include a brief statement about what type of resolution you're seeking (installment agreement, OIC, hardship status, etc.). This can help prioritize how your case gets assigned once it's back with them. The whole process took about 8 weeks for me, but I ended up qualifying for a partial payment installment agreement that reduced my monthly payment by almost half compared to what CBE was demanding.

Those negative numbers actually mean money coming to you! Its backwards from normal math lol

Just went through this same confusion last month! The key thing that helped me was realizing that on IRS transcripts, negative amounts (-) mean money owed TO you, not money you owe. So your -$6,755 total refund is actually $6,755 coming your way. Since you got $2,700 already, you should expect $4,055 more. The transcript formatting is definitely counterintuitive - took me forever to figure that out too!

I had a similar situation last year where my refund was about $6k less than expected. The IRS doesn't always show the specific adjustments clearly on the transcript - sometimes credits get disallowed during their automated review process without generating obvious "adjustment" lines. Since you mentioned having a Schedule C business, one possibility is that your Earned Income Credit or Additional Child Tax Credit calculations were affected by changes to your self-employment income or AGI during processing. The IRS computer systems sometimes recalculate these credits based on their own review of your business income. You should definitely request a complete account transcript (not just the return transcript) which might show more detail about any adjustments. You can also call the Practitioner Priority Service line if you have a tax professional, or use the regular taxpayer line - though like others mentioned, wait times are brutal right now. The fact that both your taxpayer figures and computer figures match suggests this wasn't a simple data entry error, but rather a systematic recalculation of your credits during processing.

This is incredibly frustrating - I feel for you! The $7k difference with no visible adjustments on your transcript is maddening. One thing that might help explain this: sometimes the IRS makes what they call "soft adjustments" during processing that don't show up as obvious line items on transcripts. Since you have a Schedule C, here's what I'd check: your original return likely claimed refundable credits (like Additional Child Tax Credit or Earned Income Credit) based on your reported business income and AGI. But if the IRS's computer systems flagged anything about your Schedule C during processing - even minor calculation differences - they might have recalculated your entire AGI, which would then cascade down and reduce those refundable credits. The really annoying part is that these adjustments often happen without generating the detailed adjustment codes you'd expect to see. Your transcript showing $0.00 for Additional Child Tax Credit when you probably claimed thousands is the smoking gun here. My suggestion: definitely try calling, but also consider filing Form 911 for Taxpayer Advocate Service if you can't get answers. They're specifically designed to help when the normal IRS channels aren't providing clear explanations for significant refund differences like this.

Has anyone else noticed that tax software seems to mess up these calculations a lot? I've used TurboTax, H&R Block, and FreeTaxUSA over the years and ALL of them have made mistakes with excess Social Security calculations when I have multiple W-2s.

As a CPA, I see this exact issue every tax season. The excess Social Security tax calculation is one of the most commonly botched calculations by tax software, especially when you have multiple employers with high wages. Here's what likely happened: FreeTaxUSA correctly identified that you had excess withholding based on your combined W-2s, but it may have miscalculated the actual excess amount. This often occurs when one employer made mid-year adjustments, had unusual wage types (bonuses, stock compensation, etc.), or when there are timing differences between when wages were earned versus paid. The IRS has sophisticated systems that cross-reference all your W-2s and recalculate the excess using the exact wage base limits. They're usually right when they make these adjustments. My advice: Wait for the CP12 notice which will show their math step-by-step. Then compare it against your Schedule 3, Line 11 and the Social Security wages (Box 3) and taxes (Box 4) from all your W-2s. This will help you understand exactly where the discrepancy occurred and avoid the same issue next year.