Does this apply if the parents file separately too? My parents are divorced and I'm claimed on my dad's return, but does my mom's income matter for Form 8615?

If your parents are divorced, you only need the taxable income from the parent who claims you as a dependent. So in your case, you only need your dad's information, not your mom's. For married parents filing separately, you'd need to use the taxable income of the parent with the higher taxable income. The IRS has specific rules for different filing situations that determine whose rate applies to your unearned income.

You might need to file by paper instead of e-filing. TurboTax won't let you e-file without completing all required forms, but you could print your return and mail it in without Form 8615. Just know that this might trigger a letter from the IRS later if they determine you needed that form.

Thanks for the suggestion. Would they actually come after me though if I paper file without that form? I really don't have access to my parents' info and need to file my taxes somehow.

What if you've already maxed out all retirement accounts? Any other straightforward strategies that don't involve loans?

If you've maxed out traditional tax-advantaged accounts, there are still several options worth considering. Look into 529 plans if you have education expenses for yourself or family members. Many states offer tax deductions for contributions. Charitable giving is another straightforward strategy - donating appreciated securities can be especially efficient as you avoid capital gains tax and get the deduction. Tax-loss harvesting in your investment accounts can offset capital gains. If you're a business owner or have self-employment income, you might qualify for a SEP IRA or Solo 401k with much higher contribution limits than standard retirement accounts.

Yes, portfolio loans/margin loans can be tax-efficient. Interest is potentially deductible as investment interest expense (subject to some limitations - you can only deduct up to your net investment income). The big advantage is avoiding capital gains tax and not disrupting your investment strategy. Just be careful about margin calls if the market drops.

Do you scan everything or make physical photocopies? I'm wondering which is better for record-keeping purposes.

I do both actually. I make physical photocopies that I keep in a folder for the current tax year, but I also scan everything into a single PDF that I store on my computer with a backup on an external drive. Physical copies are good for quick reference and if you need to mail something to the IRS in response to a notice. Digital copies take up less space and can't get damaged by water or fire. The IRS accepts either one as proof if they question something on your return.

Paper returns are taking 6+ months to process this year, especially if there's anything unusual like a non-resident alien spouse situation. The IRS is still catching up from the pandemic backlog. As long as your return was filled out correctly, your refund should eventually arrive. You can try calling the IRS refund hotline at 1-800-829-1954, but be prepared for a long wait. The Taxpayer Advocate Service might be able to help if it's been more than 6 months, but they're also overwhelmed with cases.

Oh wow, I had no idea about the hobby loss rule. So even if I am legitimately reinvesting in my business, I need to show some profit occasionally? Does the amount of profit matter or just the fact that there is some?

The amount of profit doesn't have a specific threshold - it just needs to be genuine profit. The key is demonstrating that you have a profit motive, not just a tax reduction motive. Small profits are fine as long as they're real. What helps is having a business plan that shows your reinvestment strategy is part of a long-term growth plan that will eventually result in greater profits. Documentation is your friend here - keep records showing how your business decisions are commercially reasonable and aimed at eventual profitability.

What kind of business do you have? I'm wondering because different industries probably have different standards for what counts as a necessary expense.

Wow, I think you just solved it! I just checked my W2 again and Box 12 with code D shows $7,200, and there's another $800 or so in health insurance premiums that were pre-tax. That pretty much accounts for the entire "missing" amount. I feel kind of silly now, but I really appreciate everyone's help. My coworker is checking hers too to see if that explains her situation. Is this something I should have known? I've had this job for three years but never noticed this before.

Don't feel silly at all! This is a very common confusion that happens to lots of people. The W2 doesn't exactly make it obvious that Box 1 isn't your total earnings but rather your taxable wages after certain pre-tax deductions. It's actually good news - those retirement contributions are lowering your taxable income now while helping you save for the future. Your full salary is still reflected elsewhere on the W2 (like in Box 3 and Box 5 for Social Security and Medicare wages, though these might also have some differences based on other pre-tax items). This is exactly why it's always good to check your final paystub against your W2 when you get it each year. Glad we could help solve the mystery!

The money isn't really "missing" - it's just reported differently depending on what it is. Pre-tax deductions like 401(k) contributions appear in Box 12 with various codes. Health insurance premiums aren't explicitly shown on the W2 in most cases. Box 1 shows "taxable wages" - what you're actually taxed on after certain pre-tax items are subtracted. Box 3 shows your wages subject to Social Security tax (might be different from Box 1). Box 5 shows wages subject to Medicare tax (often matches Box 3). If you add Box 1 + any pre-tax deductions (retirement, some health insurance, HSA, etc.), you should get close to your actual gross pay. The system is confusing, but it's working as designed!