Has anyone used both the American Opportunity Credit and the Lifetime Learning Credit in the same year for different kids? I have one in his 5th year (so no longer eligible for AOC) and one sophomore. Trying to figure out if I can use LLC for one and AOC for the other.

I've been in a similar situation with the MAGI phaseout issue. One strategy that worked for us was timing certain deductions strategically. If you have any business expenses, unreimbursed employee expenses (if you qualify), or can accelerate certain deductible expenses into this tax year, that might help lower your MAGI. Also, don't forget about HSA contributions if you have access to one - you can actually contribute up until the tax filing deadline and it still counts for the previous year. For 2024, that's $4,300 for individual coverage or $8,550 for family coverage if you're 55 or older. Another thing to consider: if you're self-employed or have any side income, you might be able to set up a SEP-IRA which allows much higher contribution limits than traditional IRAs. Even small consulting work or freelance income could open up this option. The dependent vs. non-dependent strategy is tricky because of the support test as others mentioned, but if your kids genuinely provide more than half their own support, it could work. Just make sure you document everything carefully since the IRS can audit these claims.

Just a heads up - make sure none of that $1,260 was for state taxes! Everyone here is talking about federal, but depending on what state you live in, you might have state income tax too. Some states don't have income tax (like Texas and Florida) but if you're in a state that does, the rules might be different.

@Victoria Scott - Based on your situation, you should definitely get most of that $1,260 back! Since your income is under $12,000 and well below the standard deduction, you won't owe federal income tax. Just keep in mind that part of what was withheld might be FICA taxes (Social Security and Medicare) which are about 7.65% of your income - so roughly $918 if you made exactly $12,000. Those aren't refundable. But any federal income tax withheld should come back to you. Also, don't forget to check if you qualify for the Earned Income Tax Credit (EITC) - with your income level, you might actually get back MORE than what you paid in! The EITC is a refundable credit that can result in a larger refund than your withholding. For timing, definitely file electronically with direct deposit as others mentioned. 21 days is typical, but early in tax season (January-February) it's often faster.

Just adding my experience - I did a voluntary disclosure in 2023 for unreported income from freelance work I did while living abroad. The key factor that saved me from major penalties was proving that my failure to report was genuinely non-willful. I wrote a detailed statement explaining how I misunderstood the foreign earned income exclusion rules and thought my income was fully covered. I included evidence of seeking tax advice (albeit bad advice) from a local accountant who wasn't familiar with US tax requirements. The IRS accepted my explanation and I qualified for the Streamlined procedures. I paid the back taxes plus interest, but avoided the massive FBAR penalties that could have applied. The peace of mind is worth it - I sleep much better now knowing I'm not at risk of a scary IRS letter showing up someday.

I'm currently dealing with a similar situation and this thread has been incredibly helpful! I've been putting off addressing some unreported foreign account income because I was terrified of the potential penalties, but reading everyone's experiences gives me hope that voluntary disclosure might not be as scary as I thought. One question I haven't seen addressed yet - does anyone know if there's a statute of limitations on how far back the IRS can look for unreported foreign income? I'm worried they might want to go back more than the typical 3-6 years because of the international component. Also, for those who went through the process, did you have to provide documentation from foreign banks in English, or were certified translations required? My account statements are in German and I'm not sure what level of documentation the IRS expects. Thanks to everyone who shared their experiences - it's really helping me work up the courage to move forward with this instead of continuing to lose sleep over it!

Has anyone tried adjusting their W-4 to handle RSU/ESPP taxes instead of relying on the default withholding? I've had good results claiming "0" allowances and adding an additional dollar amount to each paycheck, but I'm wondering if there's a better approach with the new W-4 format.

I went through this exact same situation last year and ended up owing about $12K more than expected due to RSU vesting. One thing that really helped me was setting up quarterly estimated tax payments for this year to avoid the underpayment penalty. Since you mentioned you're good at handling your own taxes, you might not need a CPA for the actual filing, but it could be worth a one-time consultation to review your withholding strategy going forward. They can help you calculate exactly how much extra to withhold on your regular paychecks to cover future equity compensation. Also, don't forget to check if you qualify for any deductions you might have missed - things like state and local tax deductions (up to $10K), charitable contributions, or if you itemize, mortgage interest. Sometimes there are small things that can help offset the bill. The good news is that once you adjust your withholding strategy, this becomes much more manageable in future years. It's really just a timing issue where the withholding doesn't match your actual tax rate.

just wanna point out - the person with higher income isn't always the best choice! when i was making less than my bf, i got way more back from earned income credit when i claimed our daughter. we got almost $2k more by having me claim her even tho he made like $15k more than me that year. the credit phases out at higher incomes. so sometimes the lower earner actually gets more benefit. definitely worth checking both ways!

One thing I don't see mentioned here yet is that if your partner can file as Head of Household (which they likely can if they claim your daughter), that filing status alone can save a significant amount compared to filing Single. The HOH standard deduction is much higher and the tax brackets are more favorable. Also wanted to add - make sure whoever claims your daughter also claims any childcare expenses if you're paying for daycare. The Child and Dependent Care Credit can be worth up to $1,050 for one child (20% of up to $5,250 in expenses). This credit has to go with whoever claims the dependent, so factor that into your calculations too. Given your income levels ($42k vs $58k), I'd definitely recommend running the numbers both ways like others suggested. The Earned Income Credit phases out around $50k for someone with one child, so there's a good chance you claiming her might actually result in a better overall refund for your household, especially if you're paying for daycare.