Has your cousin checked her mail carefully for the past 2 years? The IRS would have sent a CP79 notice if they disallowed her EIC. Sometimes these letters look like junk mail and people throw them away. Also, did she move in the last couple years? The notice might have gone to an old address.

I went through this exact same situation with my sister two years ago! The Form 8862 requirement caught us completely off guard too. What we learned is that the IRS has automated systems that can flag and adjust EIC claims months after you've already received your refund. Here's what I'd recommend: First, have your cousin create an online account at irs.gov and check her transcript. This will show any adjustments or notices from previous years that she might have missed. Second, when filling out Form 8862 in FreeTaxUSA, be extra careful with the qualifying child requirements - the IRS is very strict about things like the residency test (child must live with her more than half the year) and making sure the SSNs are valid for work. Don't panic about the 10-year ban someone mentioned - that's only for intentional fraud cases. As long as your cousin answers truthfully and has legitimate qualifying children, she should be fine. Keep good records though - school enrollment forms, medical records, anything that proves the kids lived with her. The IRS may audit EIC claims more closely after a Form 8862 is filed. Also, make sure she hasn't claimed these same children on previous years' returns where someone else (like their father) also claimed them. That's a common reason for EIC disallowance that people don't realize happened.

18 I'm a bit confused - why would an employer even issue multiple W2s like this? Seems like it just creates confusion. Is this some kind of weird tax optimization strategy or just an accounting quirk?

I had a similar situation last year and found the FreeTaxUSA help chat to be really useful for this exact scenario. When I explained that I had multiple W2s with one marked "TOTAL," the support agent walked me through it step by step. The key is to look at each box individually across both forms. If a box appears on both the TOTAL W2 and the detailed W2 with the same value, only enter it once (from the TOTAL). But if a box only appears on one form or has different values, you need to enter both W2s separately to capture all the information. In your case, since box 18 (state income tax withheld) only appears on the second W2, you definitely need to enter both forms. The warnings in FreeTaxUSA should clear up once you have all the information entered correctly. Don't worry about the system thinking you're double-counting - it's designed to handle these multi-locality situations.

Everyone's talking about complex structures, but don't overlook 529 college savings accounts if your kids have children (or might in future). You can frontload 5 years of gift tax exclusions at once ($90,000 per beneficiary in 2025), the money grows tax-free for education, AND you maintain control of the account. We did this for our grandkids and it was way simpler than property transfers. Just another option if education funding might be part of your wealth transfer goals.

This is such a comprehensive discussion! As someone who recently went through estate planning with my parents, I wanted to add a few practical considerations that might help with your decision-making process. One thing that really surprised us was how much the timing of transfers matters beyond just the tax implications. We found that staggering different types of asset transfers over multiple years gave us flexibility to adjust our strategy based on changing tax laws, market conditions, and family circumstances. For your crypto holdings specifically, consider that the IRS has been increasing scrutiny on cryptocurrency transactions. Make sure you have detailed records of your original purchase dates and costs - this documentation becomes crucial whether you gift during your lifetime or your kids inherit it later. Also, don't underestimate the emotional and relationship aspects of wealth transfer. We started with smaller gifts to see how each of my siblings handled the responsibility before moving to larger transfers. Some were better equipped to manage rental properties, while others preferred liquid assets they could invest according to their own risk tolerance. One final thought - consider having a family meeting to discuss your plans openly. My parents did this and it prevented a lot of potential confusion and conflict later. Your kids might have preferences about which assets they'd rather receive, and their input could actually help optimize your tax strategy. The tools and services others have mentioned sound helpful for running the numbers, but don't forget the human element in all of this!

Anyone know if this foreign qualified dividends stuff affects the standard deduction vs itemized deduction decision? I usually take the standard deduction but wondering if having foreign dividends might change that calculation.

I went through this exact same confusion last year! Your accountant is asking for the foreign-sourced portion of your qualified dividends because it affects your foreign tax credit calculation. Here's what I learned: ADR dividends are often subject to foreign withholding tax (usually 10-15% depending on the country and tax treaty). When you receive these dividends, the foreign country takes their cut first, then you get the remainder. But you can claim a credit for that foreign tax to avoid being taxed twice. The key is looking at your 1099-DIV carefully. Most brokers will show: - Box 1a: Total ordinary dividends - Box 1b: Qualified dividends (this includes both US and foreign) - Then somewhere (usually in supplementary pages) they'll break down how much of your qualified dividends came from foreign sources and how much foreign tax was withheld If your broker's statements are unclear, try logging into your account and looking for a "Tax Center" or "Tax Documents" section - sometimes they have more detailed breakdowns there than on the printed 1099. You can also call their tax department directly and ask them to walk you through finding the foreign dividend information. This info is crucial for your accountant to properly calculate your foreign tax credit on Form 1116, which could save you money!

Don't forget about the Qualified Business Income Deduction (Section 199A) which can give you a deduction of up to 20% of your qualified business income! This is separate from your business expenses on Schedule C and can really help reduce your tax bill as a 1099 worker. Also, make sure you're tracking and deducting your self-employment tax payments. You can deduct 50% of your self-employment tax on your 1040, which helps offset some of the extra tax burden from being self-employed.

You might also want to look into setting up a SEP IRA or Solo 401(k) for retirement. As a 1099 contractor, you're eligible for these self-employed retirement accounts which let you put away WAY more than regular IRAs. This won't help with last year's taxes, but could significantly reduce your tax bill going forward. With a Solo 401(k), you can contribute up to $22,500 as an "employee" for 2023 PLUS an additional 25% of your net self-employment earnings as the "employer" (up to combined limits). These contributions are tax-deductible and reduce your taxable income.