Is there an income threshold where you have to pay back the entire premium tax credit? I heard something about 400% of the federal poverty level but not sure if that's still accurate.

Yes, there is a threshold, but the rules have changed recently. Previously, if your income exceeded 400% of the Federal Poverty Level (FPL), you would have to repay the entire Premium Tax Credit amount. This was often called the "subsidy cliff." However, the American Rescue Plan temporarily eliminated this cliff, and this provision has been extended through 2025. Now, regardless of income, no household is required to pay more than 8.5% of their income toward benchmark marketplace coverage. This means even if your income ends up higher than expected, you're still eligible for some amount of Premium Tax Credit if your insurance premiums exceed 8.5% of your household income.

This! My husband's employer insurance wanted $650/month to add me, but I got a marketplace plan with Premium Tax Credit for $175/month. Just make sure your dad's plan is considered "affordable" for him only - if it is, and it only covers him (not dependents), you and your sister can still qualify for PTCs.

Exactly! The "family glitch" fix that went into effect means that affordability for family members is now calculated separately. So if adding dependents to the employer plan is expensive (which it often is), the dependents may qualify for Premium Tax Credits even if the employee has affordable coverage through work.

Thank you for this insight! Yes, the donation is well over $250, which is exactly why I'm concerned about having proper documentation. If I ultimately can't get them to correct the receipt, would my certified mail receipt combined with their incorrect-year receipt be sufficient for IRS purposes if I'm audited?

Your certified mail receipt showing a 2022 postmark date should be sufficient evidence if you're audited. The key is that you can prove the donation was made (delivered according to tax law) in 2022. The charity's receipt confirms the donation amount and that no goods or services were provided, even if the year is incorrect. I'd recommend writing a brief memo to keep with your tax records explaining the situation and attach both the charity's receipt and your certified mail tracking proof. If you're still concerned, you might consider asking them for a letter simply acknowledging they received your 2022 donation in 2024 due to mail delays, without necessarily changing their receipt date. Most organizations should be willing to provide that documentation.

This is definitely a situation where I'd also recommend keeping a clear paper trail. I've heard from friends who work in the IRS that donation timing disputes are common, especially with year-end contributions. Sometimes the organizations just don't understand the tax rules that apply to donors.

Thanks for the suggestion! I'm hesitant to start over with new software since I'm pretty far along in TurboTax, but it might be worth it to avoid mailing. Did you have to manually re-enter everything when you switched to FreeTaxUSA or is there some way to transfer the information?

Unfortunately, you do have to re-enter everything manually when switching between tax software platforms. There's no universal transfer system between different companies. It's definitely a pain, especially if you're already far along in TurboTax. One shortcut though - if you have last year's tax return PDF (even from TurboTax), most software can import some basic information from it like personal details and employer information. You'd still need to enter this year's specific numbers manually, but it saves some time on the setup.

I second this! In my case it was vehicle expenses for my delivery gig. When I changed from "actual expenses" to "standard mileage rate" it suddenly allowed e-filing. The tax amount was basically the same but for some reason one method triggered paper filing and the other didn't.

Oh wow, I didn't realize it actually changed the amount! I thought it was just an information field. Now I'm definitely going to file that amendment ASAP. Does that mean I'll owe more when I fix this?

Yes, you'll likely owe the tax difference between your original filing and the corrected amount. Since the legally blind status gives an additional $1,850 to your standard deduction, removing that will increase your taxable income by that amount. The actual tax impact depends on your tax bracket, but if you're in the 10% bracket, it would be about $185 additional tax. If you're in the 12% bracket, around $222. You'll also probably owe some interest on the unpaid amount, but since you're amending quickly, that should be minimal.

Can confirm this is super important! I made a mistake a few years back and didn't realize interest was accruing the whole time. Make the payment when you send in the amendment.

Can you explain more about these different classes of stock? How exactly would that help with the tax distribution problem? My LLC is thinking about restructuring and this could be useful.

Different classes of stock or membership interests can have different rights and characteristics, including how distributions are treated. For example, some operating agreements specifically define "tax distributions" as mandatory distributions made solely for the purpose of covering tax liabilities, separate from discretionary profit distributions. This doesn't necessarily change the tax treatment at the federal level, but it does provide clarity in the operating agreement about the purpose and handling of these distributions. It can also affect how these distributions are treated for accounting purposes and in any member disputes. For your LLC restructuring, consider having your operating agreement specifically address tax distributions - when they're calculated, how they're calculated (including which tax rate to use), and the timing of payments. This clarity can prevent future disagreements.

In an LLC taxed as an S-Corp, you're mixing up a couple of concepts. For an S-Corp (or LLC taxed as one), you as the owner pay taxes on your share of the company's profits regardless of distributions. The distributions themselves aren't what create the tax liability - the company's profits do. So if your S-Corp makes $100,000 in profits, you'll pay tax on your portion of that $100,000 whether you take distributions or not. Distribution A isn't creating a new tax liability - you already have the tax liability from the profits. Distribution B is just giving you more cash from the company, not creating additional taxable income. This is different from C-Corps where distributions (dividends) themselves are taxable events.