Another thing to consider - as a remote worker for a California company, make sure you're not having California state tax withheld from your paychecks! California only taxes non-residents on income physically earned while in California. If you haven't physically worked in California, you shouldn't be paying California income tax at all. This is separate from the 529 question, but many remote workers overlook this and end up filing unnecessary non-resident returns.

Just wanted to add some clarity on the Virginia 529 deduction limits since I see this question come up a lot. Virginia allows up to $4,000 per account per year for 529 contributions, and if you're married filing jointly, both spouses can deduct up to $4,000 each (so $8,000 total per account). Since you contributed $4,700, you can deduct $4,000 of that on your Virginia return this year. The remaining $700 doesn't carry forward for deduction purposes, but it's still a valid contribution toward your niece's education. Also, make sure you're contributing to a Virginia529 account or another qualifying state plan to get the deduction. The income source (California vs Virginia) definitely doesn't matter - what matters is your Virginia residency status when you file your state return.

Don't forget to place a fraud alert with the credit bureaus and check your credit reports too! If someone used your SSN to report fake income, they might have opened credit accounts in your name as well. You can get free reports at annualcreditreport.com. Also, file a police report about the identity theft - sounds silly but it creates an official record that can help with the IRS and other agencies. Bring copies of the IRS letters showing the income discrepancy.

Has anyone actually had success using the Taxpayer Advocate Service for this kind of issue? My sister's been dealing with something similar for like 3 years and nothing works.

I'm confused about something... do you need to claim the person as a dependent for THE ENTIRE tax year to deduct their medical expenses? My brother moved in with me in September and I paid for his LASIK in November. He'll qualify as my dependent for next year but not for the full current year. Any advice?

Just want to add some clarity on the dependency rules since there seems to be some confusion in the thread. For medical expenses, you can deduct costs paid for yourself, your spouse, and your dependents. The key dependency tests for adult relatives like siblings are: 1. **Gross Income Test**: Their gross income must be less than $4,400 for 2023 (this changes annually) 2. **Support Test**: You must provide more than 50% of their total support for the year 3. **Relationship Test**: They must be a qualifying relative (siblings qualify) 4. **Joint Return Test**: They can't file a joint return with a spouse (unless only to claim a refund) Emily, since your sister had the procedure done and you have receipts in your name, you're on the right track documentation-wise. The real question is whether she meets the dependency criteria above. If she works and earns more than $4,400, unfortunately you can't claim her medical expenses even though you paid for them. One more thing - don't forget that medical expenses are only deductible to the extent they exceed 7.5% of your AGI, and you must itemize to claim them. With the current high standard deduction ($13,850 single/$27,700 married filing jointly for 2023), many people find itemizing doesn't provide additional tax benefit.

Has anyone used TurboTax for reporting something like this? I'm in a similar situation (smaller amount though) and wondering if the software walks you through it properly or if I need to consult a tax professional.

I'm dealing with something very similar right now - helped fund a friend's rental property purchase with a 20% profit share agreement when they sell. After reading through all these responses, I'm leaning toward the "Other Income" approach on Schedule 1 since it was a one-time informal arrangement. One thing I'm curious about though - did anyone here keep specific documentation of their arrangement? I only have text messages between me and my friend discussing the terms. Is that sufficient, or should I create something more formal after the fact to document the agreement? I want to make sure I have proper backup if the IRS ever questions how I reported it. Also, for those who went the Schedule 1 route, did you include any additional explanation beyond the brief description line, or is "Investment return from private loan" or similar enough detail?

To offer a different perspective, I went from TurboTax to a CPA back to a hybrid approach. The CPA I found charged $1,800 annually (no crazy initiation fee) and honestly didn't provide much more value than TurboTax for my situation (2 rentals, W2 income, and some RSUs). What I do now: 1. Use TurboTax to prepare most of my return 2. Pay a CPA $350 for a 2-hour consultation to review it and suggest optimizations 3. Implement their suggestions myself in TurboTax I get 90% of the benefit at 25% of the cost. The one-time review catches things I miss while letting me maintain control of my filing. And I have documentation from a professional if questions ever come up. Whatever you decide, that $6500 "initiation fee" is absolutely outrageous and you should run far away from that particular CPA.

I switched from TurboTax to a CPA two years ago and it's been worth every penny, but that $6500 onboarding fee is absolutely ridiculous! I have a similar situation - multiple rental properties, RSUs from my tech job, ESPP participation, and various investment accounts. My CPA charges $1,800 annually with no initiation fee whatsoever. The biggest value I've gotten is proactive tax planning throughout the year. My CPA calls me before major RSU vesting dates to discuss tax withholding strategies, helps me time rental property improvements for maximum deduction benefit, and even suggested converting one of my properties to a short-term rental which qualified for different depreciation rules. Last year alone, she identified about $5,200 in additional deductions that TurboTax completely missed - mostly around rental property expense categorization and proper RSU cost basis reporting. TurboTax's "experts" kept giving me conflicting advice about whether certain rental expenses were repairs vs improvements. My advice: definitely make the switch to a CPA, but interview at least 3-4 who specialize in tech employees with real estate. Ask specific questions about RSU taxation strategies and rental property optimization. Anyone charging a massive upfront fee is probably not the right fit. Good CPAs earn their money through quality ongoing service, not gatekeeping fees.