Is Credit Karma Tax still free? I used it last year and it was pretty straightforward even though I had some 1099 income and a W-2.

Credit Karma Tax is now called Cash App Taxes, but yes, it's still free for federal and state returns! It works well for most basic to moderately complex situations. Just be aware it doesn't support multiple state filings or some less common tax situations like foreign income or rental property depreciation.

I did get copies but honestly I don't understand half of what's on them. There are all these forms and schedules that don't make any sense to me. But I'll definitely go back and ask them to explain. Do you think they might have entered something wrong on purpose to make it look like I'd get a bigger refund? The guy kept talking about how he could "maximize" my refund which sounded good at the time.

It's unlikely they did something fraudulent on purpose (that could cost them their business), but they might have been sloppy or made assumptions without asking you proper questions. Sometimes preparers at those places work on commission based on how many returns they process, so they rush through them. When you go back, ask specifically about the "underreported income" mentioned in the IRS letter. They should be able to run a comparison between what they submitted and what the IRS has on file for you. Don't leave until you understand what happened - it's your money and your tax record at stake.

Thank you everyone for the advice! I checked my IRS transcript like you suggested and it looks like my return is still being processed. I think I'll try the Claimyr route to speak with someone before filing the amendment. One question - if I do end up needing to amend, should I wait until I receive my original refund first or can I submit the amendment while the original is still processing?

Definitely wait until your original return is fully processed and you receive your refund before filing an amendment. Filing an amendment while the original is still in process creates a high risk of the two filings conflicting with each other, which can lead to significant delays or even trigger unnecessary review flags. When you call the IRS, ask them to check if they're already planning to adjust your Recovery Rebate Credit automatically. Many taxpayers are finding that the IRS is fixing these stimulus payment issues without requiring an amendment. The agent should be able to tell you if you need to amend or if they can handle it on their end.

I had the same experience with my 2019 amended return. The tool showed "received" for almost 8 months before finally updating to "adjusted." If you need a more accurate status, you'll have better luck calling and speaking with a representative. They can see more detailed status info in their system than what shows on the public tracker.

Wait, so even if I paid for some of my books and supplies with my own money, I can't claim any education credits? Does that mean I should give my dad all my education receipts so he can claim them? Does this also affect financial aid for next year?

That's correct - if your dad claims you as a dependent, he gets all the education credits, even for expenses you paid yourself. So yes, give him all your education receipts (books, supplies, equipment) so he can maximize the American Opportunity Credit which can be up to $2,500. This doesn't directly affect your FAFSA or financial aid for next year. Your dependency status for tax purposes is different from your dependency status for financial aid purposes. For FAFSA, you're generally considered dependent on your parents until age 24 regardless of who claims you on taxes, with some exceptions like if you're married or have your own dependents.

That's a good point! I'm in California and found out there are some differences with the state return too. Does anyone know if there's a resource that compares all the state rules for dependents in one place? I'm helping my niece with this same situation.

I don't know of a single resource that compares all state rules, unfortunately. Each state's tax department website usually has their own publications explaining their dependent rules and credits. The best approach is to use good tax software that handles both federal and state returns. It will apply the right rules for your specific state once you enter all your information. That's what I did last year, and it caught a state-specific credit for college students that I would have missed otherwise.

Sometimes tax preparers use incorrect terminology with clients. A good CPA would never tell someone who's still legally married that they can file as "Single" - that's just wrong. But they might have been referring to Head of Household status, which is technically a separate filing status from both "Single" and "Married Filing Separately.

That's really important info - thanks for pointing this out! Do you know how long after a foreclosure a lender typically waits before sending a 1099-C? I'm trying to budget and plan for the worst-case scenario.

In my experience, lenders usually issue the 1099-C in January of the year following when they make the decision to forgive the debt. However, this can vary widely. Some lenders will issue it the same year as the foreclosure, while others might wait several years. The tricky part is that the decision to forgive the debt (and thus issue a 1099-C) is separate from the decision not to pursue a deficiency judgment. A lender might not seek a deficiency judgment but still keep the debt on their books for years before officially "canceling" it and triggering the tax consequences.

This is good info, but I'm confused about how to calculate the value of assets. Do I use market value? And do I include retirement accounts and other stuff I can't easily liquidate?