Anybody know if there's a specific IRS form for requesting penalty abatement for Form 8938 penalties? Or do you just write a letter explaining the reasonable cause?

I've handled several similar cases with international students, and your approach sounds solid. One thing I'd add - make sure to document the timeline carefully. When did she receive the bad advice, when did she discover the requirement, and when is she coming forward? The IRS likes to see that taxpayers acted promptly once they became aware of their obligations. Also consider having her write a personal statement (in her own words) explaining her situation as a student, her reliance on university advisors, and her good faith intent to comply. Sometimes these personal narratives carry more weight than just the technical reasonable cause arguments. The fact that there's no actual tax due is huge in your favor. The IRS is generally much more forgiving when it's purely a reporting issue without tax avoidance. I'd be optimistic about getting the penalties waived, especially if you present it well.

My accountant told me it's usually cleaner to just form a new LLC for real estate investments rather than repurposing an old one, especially if the old one was ever used for active business operations. The filing fees aren't that expensive compared to the headache of explaining the transition to banks, insurance companies, etc.

I'd lean toward forming a new LLC specifically for your real estate venture. While reusing your old LLC is technically possible, you'll need to consider several factors that could make it more trouble than it's worth: 1. **State compliance**: Check if your dormant LLC has missed any annual reports or franchise taxes. Many states require these even for inactive entities, and you might face penalties or need to pay back fees. 2. **Clean slate benefits**: A new LLC gives you a fresh start with an operating agreement tailored specifically for real estate holding, without any language or history tied to your consulting business. 3. **Lender preferences**: While most banks will work with existing LLCs, some commercial lenders prefer entities with clear, single-purpose histories for real estate loans. It just eliminates questions during underwriting. 4. **Future complications**: If you ever need to explain the entity's history to partners, investors, or in legal situations, having a straightforward "formed for real estate" story is much cleaner. The cost difference between reactivating/repurposing your old LLC versus forming a new one is usually minimal when you factor in potential compliance catch-up costs. I'd recommend getting quotes for both options from your state filing office and making the decision based on total cost and complexity.

Don't forget about foreign tax complications if your ETFs or index funds hold international stocks! My Vanguard VXUS generates foreign taxes that I can claim as either a deduction or credit.

Great question! I was confused about this exact same thing when I started investing. Yes, you absolutely still owe taxes on those reinvested dividends - the IRS treats them as if you received the cash and then immediately used it to buy more shares. Since you mentioned you're holding VTI and VXUS, most of those dividends will likely be "qualified dividends" which get the favorable capital gains tax treatment (0%, 15%, or 20% depending on your income level) rather than being taxed as ordinary income. Your brokerage will send you a 1099-DIV that breaks down qualified vs. non-qualified dividends. One silver lining - those reinvested dividends do increase your cost basis in the funds, so when you eventually sell, you'll have less capital gains to pay taxes on since your purchase price will include all those reinvestments you already paid taxes on. $780 in dividends isn't too bad for your first year! Just make sure to save some cash for the tax bill if you haven't been setting aside money for taxes on your investment gains.

Is it possible your parents are trying to claim the American Opportunity Tax Credit? That one requires the student to be pursuing a degree and enrolled at least half-time. But even for that, they don't need your transcript - just the 1098-T and maybe an enrollment verification.

I went through this exact situation last year! My parents were convinced they needed my transcript for tax purposes, and it caused a lot of unnecessary stress. After doing some research and speaking with a tax professional, I learned that for education tax credits (American Opportunity Credit, Lifetime Learning Credit), the IRS only requires: 1. Form 1098-T (which shows tuition and fees paid) 2. Proof of enrollment status (available from your registrar) 3. Receipts for qualified expenses like textbooks Your transcript with grades is NOT required for any federal tax credit or deduction. If your parents are using a 529 plan, they might need to verify that withdrawals were used for qualified education expenses, but again, this doesn't require your grades - just proof of enrollment and expense receipts. I'd suggest offering to provide them with an enrollment verification letter from your school's registrar office instead. This shows your enrollment status without revealing your personal academic performance. Most schools can provide this online or you can request it in person. This should satisfy any legitimate documentation needs they have while protecting your privacy.

Has anyone here used 1031 exchanges for inherited property? I know OP mentioned using funds for personal residence and debt, but just wondering if that's an option for deferring gains if they wanted to remain in real estate investing?

One important consideration that hasn't been mentioned yet - since you've held this inherited property for 8 years, make sure to check if you've been claiming depreciation on it as a rental property on your tax returns. If so, you'll owe depreciation recapture tax on that amount (taxed at 25%) in addition to the capital gains tax on the appreciation. Also, regarding your debt payoff strategy - while paying off $85K in debt is generally smart, consider the interest rates. If your debt is low-interest (like a mortgage under 4%), you might be better off investing some of those proceeds rather than paying it all off, especially since you'll be taking a tax hit on the sale anyway. For the new home purchase, financing vs. paying cash won't affect your capital gains tax liability from the inherited property sale - that tax is based solely on the sale transaction itself. Choose your financing based on current interest rates, your cash flow needs, and other investment opportunities.