Can you explain more about the Head of Household thing? I thought you needed to have a qualifying child for that, and if a cousin doesn't count as a qualifying child for EIC, would they count for Head of Household?

Good question! The Head of Household rules are slightly different. You can qualify with a "qualifying person" who lived with you more than half the year. A qualifying person can be your qualifying child OR any relative (including a cousin) that you can claim as a dependent. So even though your cousin doesn't meet the relationship test to be a qualifying child for EIC purposes, they CAN be your qualifying person for Head of Household purposes if you provided more than half their support, they lived with you the whole year, and you paid more than half the cost of keeping up the home. This filing status can save you quite a bit compared to filing as Single.

I used H&R Block software last year for a similar situation with my cousin. When I selected "Other Relative" it walked me through additional questions to make sure I understood which credits I qualified for. The software was pretty clear that I wouldn't get EIC but would still get the dependent deduction. Maybe try H&R Block instead?

Thanks so much for this info! The farm is indeed an S Corp. Would setting up a QSST require getting everyone in the family on board? And how exactly would it help with our tax situation? Sorry if these are basic questions, this farm tax situation is completely outside my experience.

Setting up a QSST would only involve your wife's shares, not the entire family structure. It creates a trust that holds her shares, which can sometimes provide more flexibility in how and when income is recognized. The main benefit would be potential income timing advantages and possibly some estate planning benefits as well. However, it does require proper setup by someone familiar with both trust law and agricultural tax issues. It's not a DIY solution, but depending on the value of the shares and ongoing income, it might be worth the setup costs.

My family uses income averaging and it's saved us thousands. But remember it only helps the active farmers (her brothers who run it), not passive shareholders. The original poster and his wife would still get the K-1 with the same amount of pass-through income regardless.

Is it normal for tax preparers to charge so much? I've been filing my S-Corp taxes with TurboTax for $170. Am I missing something by not using a professional?

It depends entirely on your business complexity and comfort level with tax regulations. TurboTax works well for straightforward businesses with minimal special situations. Where professionals provide value is with tax planning, specialized deductions, complex allocations, and having someone to represent you if questions arise. If you're confident in your understanding of business tax rules and your return is relatively straightforward, software might be sufficient. But many business owners find professionals help identify deductions and planning opportunities that more than offset their fees. Also, having representation during notices or audits can be invaluable for complex business structures.

Do you think its worth getting a lawyer involved? My cousin is an attorney and said I could have him send a letter for free.

In my experience, involving a lawyer should be your absolute last resort, not your first step. A strongly worded attorney letter might get immediate attention, but it also immediately creates an adversarial relationship that can make an amicable resolution harder. I'd recommend following the escalation chain first - preparer → office manager → corporate customer service. Most tax preparation chains have established protocols for handling errors and want to preserve their reputation. Save the legal approach for if they flatly refuse to address the issue after you've exhausted normal channels. Even a free lawyer letter from your cousin changes the dynamic significantly.

Does anyone know if the education expense has to be related to your current job? I work in retail but I'm taking IT certification courses to change careers. Can I still claim those?

For the Lifetime Learning Credit, the education doesn't have to be related to your current job. It can be for career change or just to improve your skills in general. So your IT certification courses would qualify as long as they're at an eligible educational institution. This is different from the tuition and fees deduction (which is no longer available) or business expense deductions which did require the education to be related to your current work.

Thank you SO MUCH for the step-by-step instructions! I was clicking around FreeTaxUSA for ages trying to find where to enter this. Just followed your directions and found it right away. It was exactly where you said and let me enter my pharmacy tech program expenses without a 1098-T. You're a lifesaver!

States often have different thresholds. In California specifically, you need to make estimated tax payments if you expect to owe at least $500 in state tax after subtracting withholding and credits. So it's a lower threshold than the federal $1,000 requirement. FTB website has all the details.

This is genius! How much extra should you withhold though? Is there some formula to figure out how much self-employment tax you'll owe?

For a rough estimate, take your expected annual self-employment income and multiply by about 15% for self-employment tax, then add whatever your marginal income tax rate is (probably 10-12% if your income is relatively low). So maybe 25-30% total. If you're making $800 a year in self-employment income, that's roughly $200-240 in additional tax. You could just have an extra $20 withheld from your paycheck each month to cover it. Much easier than filing quarterly payments!