As someone who's been through this exact situation, I'd recommend focusing primarily on your mother's passing. A death in the immediate family is one of the few explanations the IRS consistently accepts for penalty abatement. The mail delay from Canada is more subjective and harder to prove without a receipt. Make sure you're using Form 843 for your abatement request and attach a detailed letter explaining both factors. I'd also recommend calling the IRS Taxpayer Advocate Service at 877-777-4778 - they're actually helpful (shocking, I know) and can sometimes expedite these requests when there are extenuating circumstances like a death in the family.

Don't overlook the fact this is your first year filing Form 5500EZ! The IRS has a First-Time Penalty Abatement (FTA) policy that's separate from reasonable cause abatement. You qualify if you: 1) Didn't have to file 5500EZ before 2) Have no penalties in the past 3 years 3) Are compliant with all filing and payment requirements So you actually have THREE strong arguments: bereavement, international mail delay, AND first-time penalty abatement. The FTA is almost automatically granted if you qualify, so definitely lead with that in your request!

I messed up on this last year. If your mini split cost $13,500, the credit isn't automatically $2,000. The calculation is 30% of your cost, so 30% of $13,500 = $4,050. But since the max credit is capped at $2,000, you'll get the full $2,000. Make sure you're claiming this on Form 5695. In TurboTax, I found it in the deductions section under energy credits. Don't get confused by the old Nonbusiness Energy Property Credit - for 2023, it's now the Energy Efficient Home Improvement Credit which is much better!

I went through this exact same situation last year with my mini split installation. One thing that really helped me was making sure I had the manufacturer's certification statement that shows the SEER and HSPF ratings - TurboTax actually asks for these efficiency numbers when you're entering the heat pump information. Also, if you're still having trouble finding the right section in TurboTax, try searching for "Form 5695" directly in the software. It should take you right to the Residential Energy Credits section where you can enter your mini split as an "Energy efficient heat pump." Keep all your documentation including the invoice, installation receipts, and the manufacturer specs. The IRS has been pretty strict about verifying that systems actually meet the efficiency requirements, so having everything organized will save you headaches if they ever question the credit.

Quick question - does anyone know how this works if the partnership owns mostly real estate? My dad wants to sell his partnership interest to me and my sister, but the partnership's main assets are three commercial properties.

One thing that hasn't been mentioned yet is the importance of getting a proper valuation of the partnership interest before the sale. The IRS requires that sales between family members be at fair market value to avoid gift tax implications. If your cousin sells below market value, the IRS could treat the difference as a gift to the buyers. For a partnership that trades stocks and bonds, the valuation might seem straightforward since you have liquid assets, but you also need to consider factors like marketability discounts for minority interests, any built-in gains or losses in the portfolio, and the partnership's operating agreement restrictions. I'd also recommend checking if your partnership agreement has any buy-sell provisions or right of first refusal clauses that might affect the transaction. These provisions could impact both the sale price and the tax treatment.

Wait I'm still confused. So if my wife and I file separately, does that mean our combined standard deduction is LESS than if we filed jointly? Like do we lose money by filing separately?

I can definitely understand the confusion! As several others have mentioned, you get the full $13,850 standard deduction each when filing separately - you don't split it. The math works out to the same total as joint filing ($27,700). But here's something I haven't seen mentioned yet: if you're considering MFS because you think it's simpler or safer, be aware that it actually makes your tax situation more complex in many cases. You'll need to coordinate with your spouse on certain decisions (like whether to itemize), and you might need to file in the same state if you live in different states. Also, one practical consideration - if you use tax software, most programs will automatically calculate both MFJ and MFS scenarios for you and show the difference. This can be really helpful to see the actual dollar impact of the credits and deductions you'd lose with MFS. Sometimes seeing those numbers side by side makes the decision much clearer than trying to figure it out from IRS publications alone.

Has anyone had success claiming both the American Opportunity Credit AND having a child with partially taxable PELL grants? My tax software is giving me warnings about "double-dipping" but doesn't explain how to fix it.

Just wanted to add my experience dealing with this exact situation last year. My son received a PELL grant that covered his tuition plus gave him about $3,000 extra for living expenses. The tricky part was that even though he's my dependent and I provide all his support, HE had to file his own tax return to report the $3,000 as taxable income (since it wasn't used for qualified education expenses). This was confusing at first because I thought dependent income always went on the parent's return. What helped me understand it: The PELL grant belongs to your son, not you. So any taxable portion is his income to report. You still get to claim him as your dependent though, which means he can't claim his own personal exemption. Also, make sure to get Form 1098-T from his college - it shows the tuition paid and grants received, which helps you figure out what portion of the PELL grant was used for qualified vs non-qualified expenses. This form is crucial for both his return and yours if you're claiming education credits.