One thing to watch out for: if you withdraw more than the actual qualified expenses from the Coverdell, the excess is subject to income tax PLUS a 10% penalty. I learned this the hard way when my son's scholarship situation changed mid-year after I'd already taken money out of his Coverdell ESA.

Based on my experience as a tax preparer who works with military families, you're absolutely right to be careful about the coordination rules. The key principle is that you cannot use tax-free educational assistance (like GI Bill benefits) and tax-free Coverdell distributions to pay for the same expenses - that would indeed be "double-dipping." Here's how it works in practice: If your daughter's actual housing costs are $1,200/month ($10,800 for 9 months) and she receives $1,500/month in GI Bill housing allowance ($13,500 total), she's actually receiving more in housing benefits than her actual costs. In this scenario, you couldn't take any tax-free distributions from the Coverdell for housing because her housing expenses are fully covered. However, if her actual costs exceed the GI Bill allowance, you can use Coverdell funds for the difference. The important thing is tracking actual expenses versus benefits received, not the school's published room and board figures. I always recommend keeping detailed records of all payments and benefits to ensure compliance with IRS rules. You might also consider using Coverdell funds for other qualified expenses like books, supplies, or equipment that aren't covered by the GI Bill to maximize the tax benefits.

Just a heads up that the mortgage insurance premium deduction is one of those "below-the-line" itemized deductions, so you only benefit if your total itemized deductions exceed the standard deduction. For 2025, the standard deduction is projected to be $13,850 for single filers and $27,700 for married filing jointly. For many people with smaller mortgages or who live in lower-cost areas, the standard deduction might still be better even with the PMI deduction added back. Do the math before getting too excited!

This is fantastic news! I've been following the legislative updates closely and was really hoping this would get restored. I'm in a similar situation - bought my first home 18 months ago with 8% down and have been paying about $180/month in PMI. One thing I'd add for anyone reading this - make sure you keep good records of all your PMI payments throughout the year. Your mortgage servicer should send you a Form 1098 that breaks down your mortgage interest and PMI payments, but it's worth double-checking those numbers against your monthly statements. I learned the hard way last year that sometimes the 1098 doesn't capture mid-year changes correctly. Also, if you're close to the income limits that others mentioned, remember that certain pre-tax contributions (like 401k, HSA, etc.) can help lower your AGI and potentially keep you eligible for this deduction. Every little bit helps when you're trying to maximize your tax savings as a new homeowner!

I've had 3 partnerships with negative basis issues. Your basis includes your share of partnership liabilities, so check if: 1) Your share of liabilities decreased significantly 2) You took distributions when profits were minimal 3) The partnership claimed large depreciation deductions

This is exactly why partnership taxation can be so tricky for investors who aren't familiar with the rules. Your situation is unfortunately quite common, especially in real estate partnerships or businesses that distribute cash from refinancing. The key thing to understand is that your $160,000 capital account and your tax basis are completely different numbers. Your capital account shows your economic rights in the partnership, but your tax basis determines the tax consequences when you exit. If you received distributions over the years (especially from that refinancing you mentioned), those distributions reduced your tax basis even if the partnership was showing losses on paper. Once your basis hit zero, any additional distributions created negative basis. When you sell your partnership interest with negative basis, that negative amount becomes taxable gain - even though economically you're walking away with less than you invested. It's essentially the IRS collecting tax on those prior distributions that exceeded your basis. The good news is that if you can reconstruct your basis properly, you might find some adjustments that could reduce the gain. Make sure your CPA has accounted for all debt allocations, any Section 754 elections, and properly applied loss limitations from prior years.

Don't forget about state taxes too! Depending on your state, you might face state-level AMT or simply income tax on the spread. California for example has both a state AMT and high income tax rates, which makes ISO exercises even more expensive.

Based on your numbers, you're looking at a substantial AMT hit - potentially $180K-250K as others mentioned. One critical timing consideration: since you're planning to leave in the next few months, make sure you understand your company's post-termination exercise window. Most companies give you 90 days after termination to exercise, but some are shorter. If you do decide to exercise and hold, consider making quarterly estimated tax payments starting immediately. The IRS expects you to pay taxes throughout the year, not just at filing time. With an AMT liability this large, you could face significant underpayment penalties if you wait until April to pay. Also worth noting - if your company stock price drops significantly between now and when you actually sell the shares (even if you hold for LTCG treatment), you could end up in a situation where you paid AMT on a higher spread than you ultimately realized. This is the dreaded "AMT trap" that caught many people during the dot-com crash. The AMT credit helps, but it doesn't fully offset this scenario. Consider consulting with a tax professional who specializes in equity compensation before making any moves. The cost of good advice here could save you tens of thousands.

Don't forget to check if either partner had a negative capital account before the final distribution! This can create unexpected tax consequences. If one partner's capital account went negative during operations (meaning they took out more than they put in plus their share of profits), that negative balance is treated as income to that partner when the partnership dissolves. Also, make sure you file Form 8594 (Asset Acquisition Statement) if the partnership is selling any assets as part of the dissolution. And don't forget to file Form 966 to formally dissolve the entity with the IRS.

One more thing - check if either partner had any unreimbursed business expenses (UBE) they paid personally. These can be reported on Schedule E of their personal returns rather than being treated as capital contributions on the K-1. This is often better tax treatment since capital contributions don't directly reduce tax liability but UBEs can.