Thanks for bringing this up! You're absolutely right. I've been so focused on whether I could be at risk that I haven't really pushed him enough on addressing his own situation. Do these payment plans usually require some kind of initial payment? He literally has almost no money right now.

Most state tax agencies do require some initial payment to establish a payment plan, but the amount can often be negotiated based on financial circumstances. For someone with extremely limited income, some states will accept as little as $25-50 to start a plan. The key is documentation. Your nephew should gather proof of his current financial situation - bank statements showing low balances, unemployment documentation, job search records, etc. Many states have hardship programs specifically for people in dire financial situations. Some might even temporarily place the account in "currently not collectible" status if he can prove he has no ability to pay anything right now.

This is actually a really good point that I hadn't considered. When I worked at an accounting firm, we definitely saw increased audit rates for returns with adult dependents who had their own tax compliance issues. Doesn't mean you shouldn't claim them if they legitimately qualify, but worth being aware of.

This! I live in NY and they're just as aggressive as the feds about taxing foreign income. Double check your state tax laws.

This happened to me with a much smaller amount ($150k) from selling property overseas. My account got frozen for like 2 weeks while they verified everything. Super annoying.

Yes, it's become extremely common even with smaller amounts. The banking regulations have tightened significantly under anti-money laundering laws. I recommend contacting your bank before the transfer to ask about their specific documentation requirements and procedures for large incoming international wires. Some banks handle it much better than others. I've seen people have funds held for up to 30 days during verification, which can be a serious problem if you need access to the money. Having all your documentation organized in advance and possibly even working with a private banker at your institution can make the process go much more smoothly.

That's a great point! I don't think I saved my last paystub, but now I'm going to check my email to see if they sent electronic copies. I vaguely remember getting emails when a new paystub was available, but I usually just checked the deposit amount. If I can find that last one from December it would solve everything! Thanks for the suggestion!

Happy to help! Even if you can't find the December one, any paystub from late in your employment might be useful since it would have the year-to-date totals up to that point. You could then estimate the additional earnings for your remaining time there. And don't forget to check your spam folder - payroll emails often end up there.

I had to use Form 4852 two years ago and had zero issues. The IRS actually processes these pretty routinely. As long as your estimates are reasonable and you document your attempts to get the W2, you should be fine. My refund wasn't delayed at all. The employers are the ones who typically get in trouble, not you.

Do you need specific forms from your school to claim the Lifetime Learning Credit? My university gave me a 1098-T but it doesn't show all the details I think I need.

Yes, you should receive Form 1098-T from your US university which shows your qualified education expenses. Sometimes it doesn't include everything that's actually eligible though! For example, my form didn't include my required course materials, but those are qualified expenses I could add. If you're missing information on your 1098-T, contact your university's bursar or financial office - they can usually provide an itemized statement of your expenses. Keep receipts for things like textbooks and required supplies too, since those count but might not appear on your 1098-T.

I used TaxAct last year and it asked clear questions about my education history that helped determine I was only eligible for Lifetime Learning Credit. It specifically asked if I had completed 4 years of post-secondary education before, not just if I had claimed AOTC before.

Thanks for the recommendation! I'll check out TaxAct. The software I was using just kept asking if I'd claimed AOTC for 4 years already, not whether I'd completed 4 years of college, which was confusing since I never claimed it before (wasn't in US during undergrad).

Do you have to have a certain amount of tax debt to qualify for the Fresh Start stuff? I owe about $8,500 from 2022 and 2023... is that even enough to bother with these programs?

There's no minimum debt requirement for the Fresh Start provisions, so your $8,500 definitely qualifies. For smaller debts like yours, you might especially benefit from the streamlined installment agreement option, which has simplified application requirements for debts under $50,000. With $8,500, you might also consider whether you have any means to fully pay the debt, such as a personal loan with a lower interest rate than the IRS charges. The IRS interest and penalties continue to accrue even while you're on a payment plan, so sometimes it makes financial sense to pay it off another way if possible. But if that's not an option, definitely look into the streamlined installment agreement.

This sounds like you're advising tax evasion which is literally a crime. You should ALWAYS file your tax returns even if you can't pay. Not filing is way worse than filing and setting up a payment plan.