Don't forget you can also spread the income from a qualified disaster distribution over 3 years! So if you qualify for the disaster exception, you could include just 1/3 of the distribution in your income this year, and the rest in the next two years. Helps with the tax hit.

The 3-year income spreading option is still available for qualified disaster distributions, not just COVID-related ones! This applies to distributions from retirement plans due to federally declared disasters. You can elect to include the distribution in income ratably over the 3-year period beginning with the year of distribution. To do this, you'll need to file Form 8915-F (Qualified Disaster Retirement Plan Distributions and Repayments) along with your return. This form lets you specify how much of the distribution to include in each year's income. Since you withdrew $13,500, you could potentially include $4,500 in income each year for three years instead of taking the full tax hit this year. Just make sure your hurricane situation qualifies as a federally declared disaster in your area before electing this option. The IRS has specific requirements about timing and geographic areas that qualify.

Has anyone actually gotten an IRS penalty for HSA over-contributions before? I'm wondering how strict they are about this stuff. I think I might have over-contributed last year but never fixed it and haven't heard anything.

I went through something very similar last year! You're absolutely right that you can still contribute that $150 to get back to your maximum allowable contribution for 2024. As others mentioned, you have until April 15th, 2025 to make 2024 HSA contributions. One thing I'd add is to keep really good records of all these transactions. I created a simple spreadsheet tracking: original contributions, the excess amount, withdrawal date and amount, and then the corrective contribution. This made tax filing much easier and gave me peace of mind if the IRS ever had questions. Also, don't stress too much about the "return of excess contributions" form you already filed - that was correct for the portion that was actually excess. The additional $150 you're putting back in is just you using up your remaining contribution room for 2024, which is totally separate and allowed. Just make sure when you contribute that $150 with Fidelity, you explicitly designate it as a 2024 contribution in their system. Their interface makes this pretty clear during the contribution process.

Having dealt with a similar situation between Texas and California, I can't stress enough how important it is to establish clear, unambiguous residency rather than cutting it close. The 10-day shortage you mentioned puts you in exactly the kind of gray area that can trigger additional scrutiny. One thing I learned during my residency determination process is that consistency across all your records matters enormously. Beyond just counting days, make sure your voter registration, driver's license, bank statements, insurance policies, and even subscription services all point to your owned home as your primary address. Any inconsistencies can raise red flags. For your vacation day question - the general rule is that vacation days count toward your established "home base" at the time of travel. So if your primary residence was the rental when you took the vacation, those days would typically count toward the rental location, not the owned home. Given the potential city tax savings you're looking at, the financial stakes are probably high enough to justify making those extra trips to clearly hit the day count. The cost and stress of an audit, even if you ultimately prevail, usually far exceeds the inconvenience of a few additional trips. Better to have an iron-clad case than one that requires explaining or defending.

I went through a very similar situation last year with properties in Nevada and California. The advice everyone's given here is spot-on - being 10 days short of the threshold is exactly the kind of situation that can invite scrutiny. One thing I'd add that hasn't been mentioned much is to pay attention to your utilities usage patterns at both locations. During my residency review, they looked at electricity and gas bills to see which property showed consistent daily usage versus sporadic usage. High utility bills at your owned home during winter months (heating) or summer months (AC) can be strong evidence that it's where you actually live day-to-day. Also, if you have any recurring services like lawn care, house cleaning, or regular maintenance at your owned home, keep those records too. These show ongoing commitment to maintaining the property as your primary residence rather than just a place you occasionally visit. The fact that you already have your driver's license and voter registration at the owned home is great - that shows intent to establish residency there. Combined with making those extra trips to hit the day count clearly, you should be in a much stronger position. The peace of mind is definitely worth the inconvenience of a few additional trips.

I've held TCEHY and other Chinese ADRs for years, and I've always had them treated as non-qualified dividends. From my research and conversations with my tax professional, there are actually a couple of other factors at play: 1. The China-US tax treaty has a "Limitation on Benefits" clause that many Chinese companies don't satisfy 2. For ADRs specifically, there's the question of whether the underlying shares are "readily tradable" on the Hong Kong exchange (which the IRS may not recognize as "established" for this purpose) 3. The entity actually paying you the dividend is often the US depositary bank, not the foreign corporation directly If you really want to fight this, you could potentially take a position on your tax return that they are qualified dividends and include a disclosure statement explaining your reasoning, but be prepared for potential pushback from the IRS.

The Hong Kong Stock Exchange situation is particularly frustrating because it highlights how narrow the IRS interpretation can be. While Hong Kong is indeed a major financial center, the IRS has historically been very strict about what constitutes an "established securities market" for qualified dividend purposes. The key issue is that for the "readily tradable" test, the IRS generally only recognizes major US exchanges (NYSE, NASDAQ) and a very limited list of foreign exchanges. Even though Hong Kong has sophisticated trading infrastructure and high liquidity, it doesn't automatically qualify under US tax law. This is why many investors end up switching to US-listed ETFs that hold these same foreign companies - you get similar exposure but with qualified dividend treatment. For example, instead of holding TCEHY directly, you might consider something like VWO or ASHR that include Tencent in their holdings but structure the dividends to qualify for the lower tax rate. It's one of those situations where the tax code hasn't kept up with modern global markets, leaving investors with perfectly legitimate foreign investments facing higher tax rates simply due to technicalities in how the securities are structured and traded.

This is really valuable information about the audit risk! I'm curious about the documentation requirements - when you say your parents couldn't prove some of the work, was it because they didn't have receipts, or were there other documentation issues? I'm trying to figure out the best way to organize everything from day one. Also, did they have any luck with getting credit for improvements where they had receipts but maybe not before/after photos? I'm wondering if contractor invoices alone are sufficient or if visual documentation is really necessary for every project.

As a new homeowner going through this process, I wanted to share what I've learned about documentation. My real estate attorney advised me to create a "home improvement file" right from closing day, and it's already proving valuable. Here's my system: I photograph everything before any work begins, save all contractor bids (even the ones I don't accept), keep receipts for both materials and labor, and take photos when work is completed. I also started a simple spreadsheet with columns for date, description, cost, and whether it's a repair vs. improvement. One thing that surprised me - my accountant said to keep records of even small improvements because they add up over time. Things like new light fixtures, upgraded outlet covers, or better cabinet hardware might seem minor but can total thousands over the years. The key insight from this thread is that good record-keeping from day one is much easier than trying to reconstruct everything years later during a sale or audit. Thanks everyone for the great advice about the roof situation - it really helps to understand how seller improvements work!