That's a great point I hadn't considered! So even though I don't need to file taxes for these small amounts now, I should be keeping detailed records of all transactions for future basis calculations? Does your brokerage help with this or do you need to track it separately?

Most brokerages now track cost basis for acquisitions after 2011, so you'll have records available in their systems. However, I still recommend keeping your own spreadsheet or file with annual statements. This is especially important for dividend reinvestments which create tiny new tax lots every time they occur. While the brokerage tracks these, having your own backup documentation is valuable. Also, if you ever switch brokerages or when the account eventually transfers to your child, having your own complete history makes everything much smoother. Think of it as an insurance policy against future tax headaches!

Wow, I hadn't even thought about state taxes being different! I'm in Illinois - does anyone know what the threshold is here for custodial accounts and kiddie tax?

I don't know Illinois specifically, but many states either follow the federal guidelines or have their own thresholds. Your best bet is to check the Illinois Department of Revenue website or call them directly. Another option is to look at your tax software if you use any - most good tax software will alert you to state-specific filing requirements for dependents when you input their information. That's actually how I discovered the NJ requirement after initially missing it. Don't assume state and federal rules align, as that was the mistake I made!

Thanks for mentioning this! I notice there's also a section for "Fed MWT" with its own YTD column. I'm guessing that's federal withholding, right? Is that something we should be paying close attention to?

Yes, "Fed MWT" stands for Federal Mandatory Withholding Tax (sometimes just called federal income tax withholding). This is definitely something you should monitor carefully! This represents the federal income tax being withheld from each paycheck and sent to the IRS on your behalf. The YTD total for this column shows how much has been withheld for federal taxes so far this year. When you file your tax return, this amount will be compared against your actual tax liability to determine if you get a refund or owe additional taxes. If the YTD withholding seems too high or too low based on your expected tax situation, you can adjust it by submitting a new W-4 form to your husband's employer.

And Social Security has that annual wage base limit too ($160,200 for 2023, will be different for 2025), so once you hit that in the YTD earnings, you should stop seeing Social Security tax taken out of the remaining paychecks for the year. Medicare doesn't have a cap though.

Do you have any tips for finding a good CPA? I've never used one before and have no idea how to tell if someone is good or not.

Ask friends or family for recommendations first - personal referrals are usually the best way to find a reliable CPA. If that doesn't work, look for someone who specializes in individual taxes with real estate experience. Always check their credentials (make sure they're actually a CPA and not just a tax preparer) and ask about their experience with situations like yours. A good CPA will take time to explain things and not just rush you through the process. Many offer free initial consultations, which is a great way to see if they're a good fit before committing.

TurboTax charges for extensions though, right? I thought there were free options available.

You're right, TurboTax does charge if you want to e-file the extension through them. I forgot about that! The IRS Free File Fillable Forms mentioned by others is definitely the free way to go if you don't want to pay anything. I just found TurboTax easier since I was already using it for my returns.

That's a really good point I hadn't considered! The property is in Tennessee - do you know if they have a state capital gains tax there?

Tennessee is actually one of the better states for this situation. They don't have a state income tax that applies to capital gains from real estate sales. Your parents will only need to worry about the federal capital gains tax of 15% on their profit. This is quite different from states like California, New York, or Minnesota where you'd pay significant additional state taxes on the gain. So at least that's one less tax concern for your situation!

This is a really important point! If it was intended as a gift but the title was never transferred, there could be gift tax implications or questions about beneficial ownership. The IRS looks at substance over form in these situations.

Does Cash App Taxes handle investments well? I have some stock sales and crypto transactions. TurboTax charges extra for that but claims their system makes it easier.

Cash App Taxes handles basic investment reporting fairly well. It's fine for standard stock sales where you have clear purchase and sale information. However, for crypto transactions, it's more limited. If you have numerous crypto trades or complex situations, TurboTax's premium features might be worth the cost. Cash App Taxes requires more manual entry for crypto, which can be time-consuming if you have many transactions. FreeTaxUSA falls somewhere in the middle - better than Cash App for investments but still more affordable than TurboTax.

You can actually request tax transcripts directly from the IRS for free! Go to irs.gov and search for "Get Transcript" - they'll send you official records of previously filed returns. Saved me when I needed proof of income for an apartment application.