Reading all these replies reminds me how RIDICULOUS the healthcare system is in this country. Form 8962 is stupidly complicated for no reason... why should we need special services just to figure out how to tell the IRS "my parents already claimed this"??

Hey @Annabel Kimball! I went through this exact same situation last year and it's really not as complicated as it seems once you understand the basic concept. Since your parents claimed 100% allocation on their Form 8962, you essentially need to file your own 8962 to show the IRS that you're claiming 0% of the premium tax credit. Think of it as officially "passing" on your share. Here's what you need to do: 1. Get a copy of the 1095-A from your parents (make sure it's the exact same one they used) 2. Fill out Form 8962 with your personal info in Part 1 3. In Part 2, enter zeros for all months since you're not claiming any premium tax credit 4. In Part 4, show that your parents are taking 100% allocation while you're taking 0% The key thing is that the IRS computers need to see that 100% of the premium tax credit has been accounted for between all the tax returns filed. Your parents claimed 100%, so you need to officially claim 0% to balance it out. Make sure to send it certified mail with your 1095-A copy, and don't stress too much - this is a very common situation for young adults on their parents' plans who file independently!

Don't forget about state taxes in all of this! Some states have their own additional self-employment taxes or different rules for retirement plan contributions. I made this mistake a few years ago and ended up with a surprise state tax bill because I only focused on federal tax planning.

This is exactly the kind of complex tax situation where having all the details straight is crucial. Based on what everyone has shared, it sounds like your brother is in a good position to significantly reduce his tax burden through the Solo 401k strategy. One additional consideration - since he's dealing with both severance income and new consulting income, make sure to factor in the timing of when the consulting payments were actually received versus earned for cash accounting purposes. If some of the $168,750 was invoiced but not yet received by year-end, that could affect both his self-employment tax calculations and his available contribution room for the Solo 401k. Also, with that level of income, he might want to consider whether a SEP-IRA could be more advantageous than a Solo 401k in his specific situation. While Solo 401k generally offers more flexibility, the administrative requirements can be more complex, especially if he's planning to continue growing his consulting business. The advice above about getting direct IRS clarification is spot on - with this much money involved and the complexity of mixed income sources, having official confirmation of the calculations could save him from costly mistakes down the road.

Has anyone used TurboTax for this situation? I'm in a similar spot with increasing income and decreasing refunds and wondering if the software can help me understand what's happening.

I've been through this exact same situation and it can be really frustrating! What you're experiencing is completely normal tax behavior, but I know it doesn't feel that way when you're used to getting larger refunds. Here's the key thing to understand: your refund isn't actually "shrinking" - what's happening is that you're getting your money throughout the year in your paychecks instead of as one lump sum refund. When you claim your children on your W4, you're essentially telling your employer "I have dependents, so withhold less tax from each paycheck because my final tax liability will be lower." The periods where they stopped withholding federal taxes entirely likely happened because your W4 indicated you'd have little to no tax liability based on your dependents and income at that time. But as your annual income grew, you ended up owing more than initially calculated. Here's what I'd recommend: use the IRS withholding calculator on their website (it's free!) to figure out exactly how much should be withheld based on your current income and family situation. You can then adjust your W4 accordingly - whether you want smaller paychecks with a bigger refund, or keep things as they are with more money in each paycheck. Remember, ideally you want to break even or get a small refund - that means you kept your money working for you all year instead of giving the government an interest-free loan!

I went through this exact same situation two years ago and it was incredibly stressful! Here's what I learned: definitely try to stop that direct debit through your bank first - that's your best bet to avoid the double charge altogether. If you can't stop it in time, the IRS will process it as an overpayment, but you'll need to be proactive about getting your money back. I found that calling early in the morning (around 7-8 AM) gave me the best chance of getting through to someone without waiting hours. One thing that really helped me was keeping a detailed log of every call I made, including date, time, who I spoke with, and what they told me. The IRS representatives sometimes give conflicting information, so having that record was invaluable when I had to call back. Also, don't be afraid to escalate if you're not getting results. After about 6 weeks of getting nowhere, I asked to speak with a supervisor and that's when things finally started moving. Got my refund about 3 weeks after that call. Hang in there - I know it feels overwhelming right now, but this absolutely can be resolved. The IRS deals with overpayments regularly, so you're not asking them to do anything unusual.

I feel for you - this is such a stressful situation! I actually went through something similar last year when I accidentally set up both electronic withdrawal and mailed a check for the same tax payment. Here's what worked for me: First, definitely call your bank ASAP to stop that scheduled direct debit if possible. Even if it's the weekend, many banks have 24/7 customer service lines that can help with stop payments. If both payments do end up processing, the IRS will recognize it as an overpayment, but you'll need to be proactive. I had success using Form 843 (Claim for Refund and Request for Abatement) rather than Form 8888 that was mentioned earlier - my tax preparer said 843 is specifically designed for situations like this where you've made an erroneous payment. The waiting is definitely the hardest part. In my case, it took about 7 weeks to get the refund check, but I called every 2 weeks to check status which seemed to help keep things moving. Also, if you have a local Taxpayer Assistance Center, they can sometimes help expedite these situations better than the phone lines. Don't lose hope - I know it's scary to have that much money tied up, but the IRS really does handle overpayments routinely. Just document everything and stay persistent!

Make sure you look into the Innocent Spouse Relief options too. If your ex-husband did anything fishy with taxes during your marriage, you might qualify. I found out my ex had been underreporting income for years, and I got relief from those joint tax liabilities after our divorce.

I went through something very similar when my divorce was finalized in late December a few years ago. That year-end filing status rule is brutal and catches so many people off guard. A few things that might help beyond what others have mentioned: 1. **Check if you qualify for Head of Household** - This is huge. Since your kids lived with you 70% of the time, you very likely qualify even though your ex claims them as dependents. The tax savings between Single and HOH could be $3,000-5,000 in your income range. 2. **Look into estimated tax payments for 2025** - Set up quarterly payments now to avoid this happening again. The IRS has a safe harbor rule where if you pay 110% of last year's tax liability (since you make over $150K), you won't owe penalties even if you end up owing more. 3. **Payment plan options** - The IRS has gotten much more flexible with payment plans. You can set up an online payment agreement for up to 72 months if needed. The setup fees are lower if you do it online vs. calling. 4. **Consider amending your 2024 return** if you discover you qualify for HOH after filing as Single - you have up to 3 years to amend and get a refund. The financial hit is awful, but you do have options. Don't let this crush you - it's fixable, just takes some time and planning.