One important thing nobody mentioned: Even with an ITIN, as a non-resident alien, you should look into filing a 1040-NR (Non-Resident) tax return for any US-source income, including that property sale. Just having an ITIN doesn't fix everything - you still need to file the right forms. Also, if the money you're transferring from your home country was already taxed there, make sure you keep documentation proving the source. Large transfers get reported by banks via FinCEN, but that doesn't automatically make them taxable.

As someone who went through a similar situation as a non-resident, I'd strongly recommend getting that ITIN before you receive the $31,500 payment. The application process can take 6-11 weeks, so don't wait. A few key points from my experience: **On the $31,500 payment:** Yes, your US bank will likely report this to the IRS, especially if it's from a US source or if it triggers any reporting thresholds. Having an ITIN ensures proper tax identification when this gets reported. **On property sale timing:** Don't rush to sell before marriage just for tax purposes. The FIRPTA withholding (15% of gross sales price) applies regardless of when you sell. However, being married to a US citizen might give you more options for how you file and potentially better treatment of capital gains. **On international transfers:** There's no limit that makes transfers "income" - it depends on the source. Money you've already earned and paid taxes on in your home country isn't US taxable income just because you move it to a US account. Just keep good documentation showing the source of funds. **Practical tip:** Consider consulting with a tax professional who specializes in international taxation before making any major moves. The interplay between non-resident status, property ownership, and potential future residency can be complex. Get that ITIN application started now - you'll need it for the property sale anyway, and it's better to have it ready than to be scrambling later.

Anyone else notice that the IRS interest rate for underpayment keeps going up? I swear it was like 5% a couple years ago during covid, and now it's closer to 8%. Makes a huge difference when calculating these penalties on large underpayments.

The underpayment penalty calculation can definitely be confusing! To clarify what others have mentioned - it's not a flat 5% hit on your total underpayment. The IRS uses a quarterly system where they calculate how much you should have paid each quarter (based on either 25% of this year's liability or the safe harbor amounts), then charge interest on any shortfall from each quarterly due date until paid. For your $135k situation, the actual penalty depends on when during the year you fell short. If most of that underpayment was due to Q4 capital gains, your penalty might be much lower than if you were short all year. The current rate is around 8% annually (about 2% per quarter). One important thing to check - if your AGI last year was under $150k, you only need to pay 100% of last year's tax to avoid penalties, not 110%. That could make a big difference in whether you actually owe any penalty at all!

Can someone explain the QBI calculation in simple terms? If I made $48,000 from contract work and had $13,000 in business expenses, how much QBI deduction would I get? Still trying to wrap my head around this.

Just wanted to add another important point about QBI - make sure you understand the difference between business income and investment income. Only your actual business profits count toward QBI, not things like interest, dividends, or capital gains from investments. Also, if you're married filing jointly, your spouse's income counts toward that threshold calculation even if they don't have any business income. So if your spouse has a high W-2 salary, you might hit those income limits faster than you'd expect. It's worth running the numbers both ways to see how filing status affects your QBI deduction. One last tip: if you're close to those income thresholds, consider timing some business expenses or income to stay below the limits if possible. The difference between getting the full 20% deduction versus having it phase out can be substantial!

I've been following this discussion closely since I'm in the exact same boat with my daughter starting at UMass Amherst this fall! Her orientation fee is also $375 and I was completely lost on how to handle it. After reading through everyone's experiences and doing some quick math based on our tax situation, I'm convinced that using the orientation fee toward the American Opportunity Tax Credit is the way to go. Getting close to the full $2,500 credit value versus maybe $90-120 in tax savings from a 529 withdrawal is a no-brainer for our family. I'm definitely going to call UMass's student accounts office tomorrow to get that written confirmation that the orientation fee is mandatory. It sounds like most schools provide this documentation pretty quickly when you explain it's for tax purposes. One thing I'm curious about - for those who went the AOTC route, did you find it straightforward when filing taxes? I want to make sure I'm not creating extra complexity by mixing this approach with our other education expenses. We'll likely have tuition payments from 529 funds and now this orientation fee from regular checking, so I want to make sure the record-keeping stays clean. Thanks to everyone who shared their experiences - this thread has been incredibly helpful for navigating first-year college expenses!

I just wanted to add my perspective as someone who's been through this with three kids now! All three had mandatory orientation fees at different schools (ranging from $250-$450) and I've handled it different ways each time. For my first two kids, I used 529 funds for the orientation fees without any issues - kept good records, got documentation from the schools confirming the fees were mandatory, and never had any problems with the IRS. The fees definitely qualify as long as they're required by the institution. But after reading through this thread, I realize I probably left money on the table! For my youngest who's starting college next year, I'm definitely going to follow the AOTC strategy that so many of you have outlined. The math is just too compelling - getting nearly full credit value back versus the modest tax savings from 529 withdrawals. One practical tip I'd add: if you're unsure about your family's AGI and whether you'll qualify for the full AOTC, you might want to wait until later in the tax year to decide which approach to take. That way you can see where your income is tracking and make the optimal choice based on your actual tax situation rather than estimates.

I'm in a very similar situation and have been researching this extensively! Just wanted to confirm what others have said - yes, you can absolutely both file as Head of Household from the same address. The IRS doesn't have any rule limiting HOH status by address. The key is that you each need to independently meet the three main requirements: 1. Be unmarried (or considered unmarried) at the end of the tax year ✓ 2. Pay more than half the cost of keeping up a home ✓ 3. Have a qualifying person (your children) live with you for more than half the year ✓ Since you're splitting household expenses and each claiming a different child, you should be fine. Just make sure to keep good records of how you divide expenses in case you ever need to justify your filing status. One tip: consider documenting your expense split in writing (even just a simple spreadsheet) showing who pays what percentage of rent, utilities, groceries, etc. This way if there are ever questions, you can clearly show that you each pay more than 50% of the household maintenance costs. Good luck with your filing! The HOH status will definitely save you both money compared to filing as single.

Just wanted to jump in here as someone who went through this exact situation last year! You're absolutely right to look into both filing as Head of Household - it can save you a significant amount compared to filing as single. The good news is that the IRS does allow two people at the same address to both claim HOH status, as long as you each meet the requirements independently. Since you have two children and are splitting household responsibilities, you should be fine. One thing I'd recommend is being very clear about how you're dividing expenses. Even though you contribute "equally," make sure you can each show that you're paying more than half of the household costs for yourself and your qualifying dependent. This might mean one of you pays a bit more toward rent while the other covers more utilities and groceries - just ensure the split works out mathematically. Also, keep detailed records! Bank statements, receipts, rent payments, utility bills, etc. The IRS rarely questions HOH status, but if they do, you'll want to be able to clearly demonstrate your expense split and that each child primarily lives with their respective parent. The tax savings from HOH vs. single status is definitely worth getting this right. You're smart to research it thoroughly before filing!