For married couples, you almost always come out ahead filing jointly rather than separately. Filing separately comes with a lot of limitations and usually results in paying more tax overall. In 2023, if filing separately, each spouse gets a standard deduction of $13,850 (not the full $27,700 joint amount). Plus, if one spouse itemizes, the other MUST itemize too - even if that results in a higher tax bill. You lose a bunch of tax benefits when filing separately too.

Great point about the student loan repayment plans! There are definitely exceptions to the "married filing jointly is always better" rule. Income-driven repayment plans, potential eligibility for certain tax credits, and situations involving significant medical expenses or casualty losses can sometimes make married filing separately worthwhile. For the original poster though, with only $15,000 in business income and likely no major itemized deductions, married filing jointly would probably be the way to go. You'd get the full $25,900 standard deduction (or $27,700 for 2023) which would eliminate your income tax liability entirely. Just make sure to factor in that self-employment tax that Ashley mentioned - that's going to be your main tax burden here, not income tax.

Don't forget to consider state taxes too! Federal estate taxes might not apply if the estate is under the exemption amount (currently over $12 million), but some states have much lower thresholds. I learned this the hard way with my mother's estate in Oregon, which has a $1 million exemption. We focused so much on the federal aspects that we missed significant state tax implications. Might be worth checking your state's rules.

Connor, I'm sorry for your loss. You're absolutely right to be concerned about the estate income tax implications - this is a common trap that catches many people off guard. The key insight you've discovered is correct: distributing the IRA and brokerage assets to the heirs within 2024 can indeed help you avoid the compressed estate income tax brackets (which top out at 37% on income over $15,200 for 2024). When you distribute these assets, the income gets "passed through" to the beneficiaries and is taxed at their individual rates instead. A few critical points to consider: 1. **Timing is everything** - The distributions need to actually happen in 2024, not just be authorized. This means completing all the paperwork and transfers before December 31st. 2. **Documentation matters** - Make sure you're properly tracking the "income in respect of a decedent" (IRD) amounts. The beneficiaries will need this information for their personal tax returns. 3. **Consider a partial strategy** - You don't have to distribute everything at once. You could do a partial distribution this year to reduce the estate's income, then continue distributions in 2025 based on what works best for each heir's tax situation. I'd strongly recommend getting both an estate attorney and a tax professional involved before making these distributions. The potential savings are significant, but you want to make sure you're executing this properly to avoid any complications down the road.

This is exactly what happened to me last year! The frustrating part is that the IRS notices are so cryptic - they don't clearly explain what "TP TAX FIGURES" and "IMF TOTAL TAX" actually mean or why there's a difference. In my case, the $200+ discrepancy turned out to be related to how I calculated the Additional Child Tax Credit. I had used the worksheet correctly, but there was a limitation based on my earned income that the IRS computer caught that I missed. One thing that helped me was getting the Account Transcript (not just the Return Transcript) - it shows more detailed transaction codes that can help you pinpoint exactly where the adjustment occurred. You can request it online through your IRS account or by calling. Don't give up if you're confident in your calculations. Sometimes the IRS makes mistakes too, and you have the right to challenge their correction if you can provide supporting documentation.

I went through this exact same situation about 6 months ago and it was incredibly stressful! The difference between TP TAX FIGURES and IMF TOTAL TAX on my transcript was about $340, and like you, I was convinced the IRS had made an error. After weeks of trying to figure it out, I discovered the issue was with how I had calculated my Earned Income Tax Credit. I had used the correct income figures, but I missed a subtle rule about how investment income affects EITC eligibility. The IRS computer system caught this automatically when it cross-referenced my 1099-INT forms. My advice: Don't assume you made the error, but also don't assume the IRS did. Get your hands on every piece of documentation - your Account Transcript, all your tax documents, and any third-party reporting forms (W-2s, 1099s, etc.). Compare line by line what you reported versus what third parties reported to the IRS. The good news is that if you can prove your calculation was correct, the IRS will absolutely reverse their adjustment. I've seen it happen. But you need solid documentation to support your position. Keep pushing for answers - that $287 difference could very well be rightfully yours!

This is exactly why I love this community - seeing real people help each other navigate complex tax situations! Sofia, I'm really glad you got the clarification you needed. Your CPA was definitely wrong about losing grandfathering status from a simple rate refinance. I went through something similar a few years ago and it's frustrating when even tax professionals don't fully understand these nuanced rules. The mortgage interest deduction changes from the Tax Cuts and Jobs Act created so much confusion, especially around the grandfathering provisions. For anyone else reading this thread, the key takeaway is: if you had a mortgage before December 15, 2017, and you refinanced without increasing the principal balance (other than rolling in closing costs), you keep the $1M limit. It's that simple, but apparently not widely understood even among tax preparers. Thanks to everyone who shared their experiences and resources - this thread is going to help a lot of people!

As someone who's been lurking in this community for a while but never posted, this thread convinced me to finally join the discussion! I'm a mortgage loan officer and I see this confusion ALL the time - both from borrowers and their tax preparers. The grandfathering rules are actually pretty straightforward once you understand them, but the Tax Cuts and Jobs Act created so much confusion that even seasoned CPAs sometimes get it wrong. I've started including a simple one-page explanation of the mortgage interest deduction rules with my refinance packages because of situations exactly like Sofia's. What really bothers me is when borrowers miss out on legitimate deductions because their tax preparer doesn't fully understand these rules. The difference between the $750K and $1M limit can be thousands of dollars in tax savings for people with larger mortgages. Sofia, definitely push back on your CPA with the specific Publication 936 references that Aaron mentioned. And for anyone else reading this - if you're refinancing a pre-2017 mortgage, make sure to discuss the grandfathering rules with your tax preparer BEFORE they file your return!

This is exactly the kind of detailed discussion I was hoping to find! Thank you everyone for sharing your experiences and insights. Based on all the advice here, I think my action plan is: 1. Get formal documentation from my employer confirming each repayment amount and date (as suggested by several of you) 2. Calculate both the deduction and credit methods for each year's repayment to see which gives better tax savings 3. Make direct payments rather than payroll deductions to keep cleaner documentation 4. Consult with a tax professional for at least the first year to make sure I'm doing the calculations correctly The point about state tax conformity is something I hadn't considered at all - I'm in Texas so no state income tax to worry about, but that's definitely something others should check. One follow-up question: For those who have been through this process, how far in advance of tax season did you start gathering documentation and doing the calculations? I want to make sure I'm not scrambling at the last minute, especially since this involves comparing multiple calculation methods. Also, has anyone had experience with the IRS questioning these types of deductions during an audit? I want to make sure my documentation is bulletproof.

This has been an incredibly informative thread! I'm dealing with a similar bonus repayment situation and wanted to add one more consideration that I learned about recently. If you're making repayments over multiple years like the original poster, be aware that the tax benefit you receive might vary significantly between years depending on your other itemized deductions. Since the IRC 1341 repayment is claimed as an itemized deduction (when using the deduction method), you need to exceed the standard deduction threshold to get any benefit. For 2024, the standard deduction is $14,600 for single filers. So if your only itemized deduction is the $33,750 bonus repayment, you'll get the full benefit. But in years where you have fewer itemized deductions, you might hit situations where the credit method becomes more attractive even if the raw numbers suggest otherwise. I'd also recommend keeping a spreadsheet tracking all your repayment-related expenses (certified mail costs for sending payments, any bank fees for wire transfers, etc.) as these might be deductible as well, though they're usually small amounts. The documentation advice from everyone here is spot-on. I created a dedicated folder with copies of everything - original W-2 showing the bonus, employment contract sections about repayment obligations, payment confirmations, employer letters, etc. Better to have too much documentation than not enough if the IRS ever has questions.