Anyone know if Form 8396 applies when you do a cash-out refinance? I did one last year and now my tax software is asking me about it too. I'm pretty sure I never got any kind of certificate but now I'm wondering if I should have asked for one?

I went through the exact same confusion last year after refinancing! The software suddenly asking about Form 8396 really threw me off too. Like others have mentioned, this form is specifically for people who have a Mortgage Credit Certificate (MCC) from a state or local housing program. Since you mentioned you've been filing for 4-5 years without seeing this question, it's almost certainly because the tax software is responding to you entering information about your refinance. The software is just being thorough and checking if your refinance might have affected an existing MCC. If you never received any paperwork specifically called a "Mortgage Credit Certificate" when you originally bought your home, you can confidently answer "no" to this question. These certificates are pretty uncommon and are usually only available through specific state housing finance agency programs for qualifying first-time buyers or buyers in certain areas. Don't worry - you didn't mess up anything in previous years or in your current tax prep. This is just the software doing its job by asking about potential credits that could be affected by major mortgage events like refinancing.

Dont forget about getting on a payment plan if you end up having to pay! The IRS fresh start program lets you set up monthly payments and sometimes they'll even reduce penalties. My brother owed like $7k and got on a plan for like $120/month. Just make sure to respond to the notice within the timeframe they give you or it gets worse.

I had a very similar situation in 2021 with an acquisition payout that got me a 1099-NEC. What really helped my case was getting a letter from the acquiring company's HR department that explicitly stated the payment was a "transaction bonus" related to the sale, not compensation for services I provided to them directly. The IRS initially wanted about $3,800 in self-employment tax from me, but after I submitted documentation showing: 1) The payment was outlined in my original employment contract as a potential acquisition bonus 2) I never performed any work directly for the acquiring company 3) The payment was made weeks after the sale closed and my employment ended 4) It was a one-time event tied to the transaction, not ongoing compensation They reversed their position and reclassified it as "other income" not subject to SE tax. The key was having clear documentation that separated this payment from regular compensation. Your "stakeholder bonus" language sounds promising - definitely get a copy of your employment agreement and any communications about how this payment was structured. Also, if you can get something in writing from either company clarifying the nature of the payment, that would be gold for your case. Don't just pay without fighting this - acquisition bonuses are frequently misclassified on 1099 forms because payroll departments aren't always sure how to handle them.

I'm confused about something slightly different but related. If my ISOs were underwater when I exercised them (like yours), but then I hold them and they go up in value later, does that somehow trigger AMT retroactively? Or is AMT only based on the value at the exact time of exercise?

You're absolutely right to be confused about this - the ISO/AMT rules are pretty complex! But the good news is that when your ISOs have a negative spread (exercise price higher than FMV), you don't need to worry about AMT at all for those specific exercises. The AMT adjustment for ISOs only applies when there's a positive "bargain element" - meaning you're getting shares worth more than what you paid. Since your shares were worth less than your exercise price when you exercised, there's no bargain element to report. You should definitely keep your Form 3921 for your records though, as you'll need it when you eventually sell the shares to calculate your capital gains/losses. Your cost basis will be whatever you actually paid (the exercise price), not the lower FMV at exercise time. So no Form 6251 needed for these underwater ISOs specifically, unless you have other AMT-triggering items in your tax situation!

Has anyone noticed if having tax fees taken out of your refund affects the timing? I'm wondering if that extra step with the tax preparer's bank might cause delays compared to people who paid their filing fees upfront.

I'm with Brinks too and have a 3/15 DDD - still waiting as of this morning. Based on what I'm seeing here, it sounds like Brinks is pretty reliable about hitting the exact date rather than depositing early like some other banks. @Amina Bah, thanks for confirming you got yours today with the same DDD! That gives me confidence mine should hit soon. I'm curious though - for those who've used Brinks for multiple tax seasons, have you noticed any pattern with what time of day the deposits typically show up? Some banks seem to process these overnight while others do it during business hours.

Question about the property value - has anyone considered the potential for further appreciation during the 2-year rental period? If the property is already worth $1.8M and continues to appreciate while being rented, wouldn't that affect the calculations?

Great discussion everyone! I'm dealing with a similar situation and wanted to add a few considerations that might be helpful. One thing I learned from my tax attorney is that the "step transaction doctrine" mentioned earlier can be tricky with family arrangements. The IRS might look at the entire sequence - converting to rental, renting to family, then selling and exchanging - as one integrated transaction rather than separate steps. To avoid this, your parents should establish clear business motivations for each step. Also, regarding the depreciation point that Carmen mentioned - this is crucial. Once your parents start renting the property, they'll be required to take depreciation deductions (even if they don't claim them, the IRS assumes they did). This creates "depreciation recapture" that must be paid even in a 1031 exchange - it can't be deferred like capital gains. For the gift situation, consider having your parents charge you market rent but then help you in other ways that are clearly separate from the rental relationship - maybe contributing to a down payment fund for your future home purchase, but do this well before or after the rental period to avoid any appearance of connection. Finally, make sure to document everything meticulously. Keep records of comparable rents in the area, maintain the property like any other rental (repairs, maintenance, etc.), and treat it as a true business relationship even though it's family.