One detail no one has mentioned yet: Coverdell ESAs have an annual contribution limit of $2,000 per beneficiary. If your CD is maturing and you want to add more money beyond just reinvesting the existing balance, that $2,000 annual limit will apply. 529 plans, on the other hand, have much higher contribution limits - technically up to the projected cost of education in your state, which is usually $300,000+ per beneficiary. So if you're planning to add more funds for future education expenses, the 529 might give you more flexibility there. Also worth noting that Coverdell contribution eligibility phases out based on your income (starts phasing out at $190,000 for joint filers), while 529s have no income limitations.

Another consideration that hasn't been mentioned is state tax benefits. Many states offer tax deductions or credits for contributions to their 529 plans, but not for Coverdell ESAs. Since you're looking at potentially rolling over $7,200, you should check if your state offers any tax incentives for 529 contributions. For example, some states allow you to deduct up to $10,000 or more annually from your state taxes for 529 contributions. Even though this would be a rollover rather than a new contribution, some states still allow the deduction. This could provide immediate tax savings that might outweigh keeping the money in the Coverdell. Also, since your son is in 10th grade, you have time to take advantage of multiple years of potential state tax benefits if you do decide to make additional contributions to a 529 plan after the rollover.

Has anyone dealt with digital nomading after establishing domicile? I'm in a similar situation but plan to travel constantly rather than settle in one foreign country. I established Florida domicile last year but now I'm worried about maintaining it while having no fixed address internationally.

This is a great question and you're smart to think about this timing! From my experience working with clients in similar situations, the 183-day rule is a good baseline, but I'd actually recommend staying a full calendar year if possible before moving abroad, especially if you're coming from a high-tax state like California or New York. The reason is that aggressive tax states often look at the "totality of circumstances" and a longer physical presence really strengthens your case. Beyond the practical steps you've mentioned (which are excellent), consider also: - Filing your next federal tax return from your new state address - Establishing medical/dental providers in your new state - Joining local professional or social organizations if relevant to your work - If you have kids, enrolling them in local schools Once you're abroad, the key is maintaining those ties to your no-tax state while NOT creating new domicile elsewhere. Keep that driver's license current, maintain your voter registration, and try to return at least once a year if feasible. Document everything - keep records of when you left the US, your foreign addresses, and any steps you take to maintain your state domicile. Also remember that while you're establishing state domicile, you'll still need to comply with federal tax obligations as a US citizen abroad, including FBAR filings and possibly FATCA reporting depending on your foreign account balances.

For your $1,350 donation, here's what you need to know: 1. Keep the receipt in your records (don't send it in) 2. You'll need to fill out Form 8283 Section A (since it's over $500 but under $5,000) 3. Make sure your receipt has: - Name of the charity - Date of donation - Description of items - Statement that you received no goods/services in return 4. If your receipt is missing any information, go back to the charity and ask for a complete one I volunteer as a tax preparer and this trips up a lot of people. The biggest mistake is not getting a proper receipt at the time of donation.

Don't forget that you can only claim these deductions if you itemize on Schedule A! If you take the standard deduction (which is $13,850 for single filers in 2023), you can't also claim your donations. A lot of people miss this and try to claim both.

One thing nobody's mentioned yet - make sure you're actually charging significantly below FMV if you're treating this as a "not for profit" rental. IRS might question if you're only $50-100 below market rates. In my experience, they generally look for rentals that are at least 20% below market to qualify for the "not for profit" classification. If you're too close to market rates, they might consider it a regular rental activity where different rules apply. Also, keep good records of comparable rentals in your area to support your FMV determination in case of questions.

I just want to clarify one thing that might be confusing people. Even if you can't deduct losses from a below-FMV rental, you can still potentially deduct expenses that OFFSET the rental income you receive (up to that amount). So if you collect $11,400 in rent annually, you can deduct up to $11,400 in eligible expenses (in that specific order others mentioned - mortgage interest, property taxes, then insurance, etc). This might mean you have zero taxable rental income after deductions, but you can't create a rental loss to offset other income.

Has anyone tried just increasing withholding on their W-2 job to cover the interest income? Seems simpler than backup withholding or quarterly payments.

I've been dealing with this same issue! With rates this high, the interest income really adds up fast. I ended up going with voluntary backup withholding last year and it worked out well for me. The 24% rate did mean I got a decent refund since my actual tax rate is lower, but honestly the peace of mind was worth it. No more scrambling to come up with a big tax payment in April. My bank (Chase) made it really easy - just had to fill out a simple form requesting voluntary backup withholding. One thing to keep in mind is that if you have multiple accounts at different banks, you'll need to set it up with each one separately. Also, make sure to keep good records of how much was withheld throughout the year since you'll need that info when filing your return. The quarterly payment route that others mentioned is probably more tax-efficient, but backup withholding is definitely the "set it and forget it" approach if you prefer simplicity over optimization.