The IRS will absolutely NOT apply refunds from outside the statute of limitations to current debt. I learned this the hard way. Spent $800 on an accountant to amend 3 years of returns, and they only processed the ones within the 3-year window. Complete waste of money for the older ones.

I've been dealing with a similar situation for years and wanted to share what I learned from working directly with the IRS on this. The key thing everyone's touched on is correct - the 3-year statute is pretty firm, but there are a few nuances worth mentioning. First, definitely focus on any returns still within the 3-year window. The IRS will absolutely apply those refunds to outstanding balances, and it happens automatically in most cases. Second, if your dad is truly struggling with the $16,000 payment plan, don't overlook the hardship options. I ended up qualifying for Currently Not Collectible status when my income dropped, which paused my payments entirely. The IRS also has the Fresh Start program that can reduce penalties and interest significantly. One thing I wish someone had told me earlier - if he's been making consistent payments on the installment agreement, he might be able to renegotiate the terms to lower the monthly amount. The IRS is surprisingly flexible when you've shown good faith effort. The amended returns are definitely worth pursuing for the eligible years, but don't let that be the only strategy. Sometimes the bigger savings come from restructuring the existing debt rather than trying to reduce the principal balance.

Has anyone mentioned the potential estate tax benefits? If (god forbid) something happened to either of you, married couples can pass unlimited assets to each other without estate taxes. Plus you get a doubled lifetime gift/estate tax exemption when married. Obviously you hope to never need to worry about this but it's another financial protection.

As someone who works in tax preparation, I can confirm that marriage would likely provide significant tax benefits in your situation! With one spouse having no income and two children, you'd almost certainly benefit from filing jointly. The key advantages would be: - Access to the married filing jointly tax brackets, which are more favorable than single filer rates - Nearly doubled standard deduction ($29,200 for married vs $14,600 single in 2025) - Potentially better positioning for child-related credits like the Child Tax Credit and Earned Income Credit One important consideration though - make sure to check how marriage might affect any state benefits you're currently receiving for the children (like state healthcare programs). Sometimes the tax savings can be offset by loss of other benefits, so it's worth doing a complete financial analysis. You might also want to run some numbers using tax software to see the actual dollar impact before making any decisions. Every situation is unique, but yours sounds like a textbook case where marriage would be financially beneficial from a tax perspective.

Has anyone considered that the student loan situation might actually make MFS worth it despite paying more in taxes? My husband and I are in a similar situation with his medical school loans on SAVE plan, and we save about $9000 per year in loan payments by filing separately, even though we pay about $3500 more in taxes. OP should really calculate the full picture - if wife's loans are substantial and she qualifies for forgiveness in 4 years, filing separately and paying more in taxes might still be the better financial decision overall.

I went through almost the exact same situation last year - dual high incomes, mid-year job change, and a shocking $8k tax bill! Here's what I learned that might help: First, don't panic about the underpayment penalty. Since your wife started her job in May, you likely qualify for the "annualized income installment method" which can reduce or eliminate penalties when income is uneven throughout the year. File Form 2210 with your return. Second, regarding MFJ vs MFS with student loans - run the numbers both ways. We found that even though MFS cost us about $2,800 more in taxes, it saved us $8,400 annually in student loan payments under REPAYE (now SAVE). The net savings of $5,600 per year made it a no-brainer. For next year's withholding, definitely use the IRS withholding calculator or consider having extra tax withheld from the higher earner's paycheck. We now have an additional $300/month withheld to avoid surprises. One last tip - if you can't pay the full $10k by the deadline, set up an installment agreement immediately to minimize penalties and interest. The IRS is surprisingly reasonable about payment plans if you're proactive.

2 As someone with Chinese parents living abroad, one other thing to consider: check if you qualify for education credits like the American Opportunity Credit. Filing as independent means you can claim these credits yourself rather than your parents claiming them (which they couldn't do anyway if they don't file US taxes).

I'm in a very similar situation with my parents living in the UK - they're British citizens who don't file US taxes but support me financially while I'm in college here. Based on what everyone's saying, it sounds like I should also file as independent since they can't claim me on a US return that doesn't exist. One thing I'd add is to make sure you keep good records of any money transfers from your parents. I learned this the hard way when I got a letter from the IRS asking about a large deposit in my account. Even though it was just my parents sending tuition money, having documentation showing it was a gift/support payment (not income) was really important. A simple letter from your parents explaining the transfers can save you headaches later. Also, definitely look into those education credits that were mentioned - as an independent filer, you can claim them yourself and they can be substantial!

Has anyone had issues with TurboTax's handling of K-1 dispositions? When I selected "Complete disposition" last year, it didn't seem to prompt me for all the necessary information about calculating basis and gain. I'm considering switching to a different tax software this year because of this.

I went through a similar partnership disposal situation last year and can confirm that "Complete disposition" is the right choice for your brewery sale. Since you received a lump sum and completely transferred your ownership interest, that's exactly what complete disposition means. One thing to watch out for - make sure you're properly accounting for your share of any partnership liabilities you were relieved of as part of the sale. This gets added to your amount realized for calculating gain/loss, even though you didn't receive it as cash. Also, if the brewery had any depreciated assets, inventory, or unrealized receivables, part of your gain might need to be reported as ordinary income rather than capital gains. The key is getting your adjusted basis calculation right. You'll need your original investment plus your cumulative share of partnership income, minus any distributions you received over the years, plus/minus other basis adjustments. If your K-1s over the years didn't clearly track this, you might need to reconstruct it from your records or contact the partnership's accountant.