Careful with the "under $5,000" automatic exemption that some people mentioned. That only applies if you're ALWAYS going to stay under $5,000 in annual gross receipts. If you think you might exceed that amount in the future, you should file for formal exemption within 27 months of formation to have it apply retroactively. Also, don't forget to check if your state has separate requirements for nonprofit status! Federal 501(c)(3) status doesn't automatically exempt you from state taxes in all states.

As someone who went through this exact situation with my campus volunteer organization last year, I'd strongly recommend starting with your university's student activities office. Most schools have streamlined processes for recognized student groups to operate under the university's tax-exempt umbrella. Here's what worked for us: We got official recognition from the school (sounds like you already have this), then applied for our own EIN using Form SS-4, clearly stating we were a student organization affiliated with [University Name]. We included documentation from student activities confirming our official status and charitable purpose. This allowed us to open a bank account without paying the $600 filing fee, and we operate tax-exempt through the university's status. We still file basic reports with the school annually, but no federal tax returns required. If that doesn't work out, definitely look into Form 1023-EZ ($275) as others mentioned, but try the university route first - it's often the simplest and cheapest option for legitimate student service organizations.

3 Another thing to consider - your son should definitely start making quarterly estimated tax payments for his self-employment income. The deadline for Q1 2025 payments is April 15th. This spreads out the tax burden throughout the year AND helps avoid underpayment penalties that the IRS can charge! For a rough estimate, he should set aside about 30% of his self-employment profit for taxes (15.3% for self-employment tax plus income tax). The IRS Form 1040-ES has worksheets to calculate this more precisely.

4 Your son might also qualify for the Qualified Business Income (QBI) deduction, which could reduce his taxable income by up to 20% of his net business profit. This only applies to income tax though, not self-employment tax. Make sure your tax software is calculating this - it can make a significant difference!

Just wanted to add some practical advice from someone who's been through this process. Make sure you understand the income limits for these credits too - the AOTC starts phasing out at $80k for single filers ($160k for married filing jointly) and completely phases out at $90k/$180k. Also, since you mentioned you're military, double-check how your housing allowance (BAH) and other military pay affects your adjusted gross income calculation. Some military benefits are tax-free and won't count toward those income limits, but your base pay will. One more thing - if you're using the GI Bill in addition to Tuition Assistance, that can complicate things further since GI Bill payments are generally tax-free. You can't claim credits for expenses that were paid with tax-free education benefits. Keep detailed records of everything: your laptop receipt, program requirements stating a computer is needed, documentation of which expenses were covered by military benefits versus out-of-pocket, and any correspondence with your school about technology requirements. The IRS loves documentation if they ever question your claim.

One thing I want to emphasize from my experience as a tax professional - be very conservative with your laptop purchase amount if you're claiming it as an educational expense. The IRS has been scrutinizing expensive technology purchases more closely in recent years. For a computer science program, a laptop in the $1,200-$2,000 range is much easier to defend than a $5,300 gaming laptop. Even if your program requires specific software, the IRS will look at whether the specs you chose were reasonable for educational purposes or if you went overboard for personal use. Also, keep a usage log for the first few months showing how you use the laptop for coursework. If you're audited, being able to demonstrate that 80%+ of your usage was for required school activities strengthens your case significantly. The education credits are legitimate and valuable, but they're also frequently audited precisely because people try to push the boundaries on what qualifies as "required" educational expenses.

Has anyone tried using FreeTaxUSA for prior year returns? I heard they let you do previous years for a lot cheaper than TurboTax.

Another option worth considering is H&R Block's online tax software - they also keep prior year versions available and often have promotions that make it cheaper than TurboTax. I used their 2021 version last year when I was in a similar situation and found it pretty user-friendly. If you're really trying to save money though, I'd definitely check out the IRS Volunteer Income Tax Assistance (VITA) program. They offer free tax preparation help for people with moderate incomes, and they can definitely handle prior year returns. You might be able to find a local VITA site that's still operating even though we're past the main tax season. Just search "VITA tax help" on the IRS website with your zip code.

For married filing separately (MFS) folks looking at backdoor Roth, remember this isn't just about income limits. The contribution deductibility for traditional IRAs is also affected by your MFS status and whether you're covered by a retirement plan at work. If you're MFS and covered by a workplace retirement plan, the income limit for deducting traditional IRA contributions is VERY low (under $10,000 for 2022). This is why many MFS filers end up with non-deductible traditional contributions anyway, making backdoor Roth often a good strategy regardless.

Great question about backdoor Roth with MFS! I went through this exact process last year and want to share a few key points that helped me: First, you're correct that this is a conversion, not a recharacterization. The process is: make non-deductible traditional IRA contribution → convert to Roth IRA. You'll owe taxes only on any earnings that occur between contribution and conversion (usually minimal if done quickly). For MFS filers, the backdoor Roth is often the ONLY way to get money into a Roth since the income limits are so low. Make sure you understand that even though you're MFS, you still use the same Form 8606 to report the non-deductible contribution and conversion. One thing that tripped me up initially: if you have ANY existing traditional IRA balances (including old 401k rollovers), the pro-rata rule applies to the entire balance across all your traditional IRAs. This can create unexpected taxes on the conversion. The key is proper documentation - keep records of your contribution being non-deductible and file Form 8606 both for the contribution year and conversion year (if different). I'd strongly recommend running through the numbers with a tax professional if you have multiple IRA accounts or complex situations.