Omg I didn't even think about that! I don't know much about tax credits tbh. Is there an income limit for the Earned Income Credit? And do I need any special documentation to claim it beyond what I'd need for claiming my nephew as a dependent?

Yes there's an income limit but at $42k with a qualifying dependent you should be under the threshold. For 2025 filing season the limit is around $46,000 for Head of Household with one qualifying dependent. You don't need any additional documentation beyond what you'd already gather for claiming your nephew as a dependent. The same proof that he lives with you and that you provide more than half his support works for both. Just make sure when you file your amended return you complete Schedule EIC along with your 1040-X. The credit could be worth anywhere from $1,500-$3,500 depending on your exact income and situation.

This is great advice! And another thing - amended returns can't be e-filed. You have to print and mail them, which means they take forever to process (like 4+ months minimum). Just be prepared for a wait.

Are home internet and cell phone plans included in this? My company gives me $100/month for internet since I WFH but it shows up as taxable income on my paystub. Should I ask them to change how they're reporting it?

Home internet and cell phone reimbursements can be partially tax-free if used for work purposes. However, the employer needs to document the business use portion versus personal use. If they can't or don't want to track this split, they'll often just report the whole amount as taxable to be safe. You could definitely ask your payroll department about it. They might be able to reclassify some portion as a working condition fringe benefit if you can document that it's used primarily for work. Some companies have policies requiring documentation showing the business percentage use.

Employee discounts can be tax-free but only up to certain limits. The discount can't exceed the employer's gross profit percentage on the merchandise, and for services, the discount can't exceed 20%. Anything beyond that becomes taxable income.

Has FreeTaxUSA worked well for you with multi-state filings? I'm definitely looking for cheaper options if they can handle my situation correctly. My biggest worry is missing something important with the IRA withdrawal and state allocation.

I've used it for filing in multiple states (California and Washington) for three years now and never had an issue. The interface walks you through each state separately and makes sure you're allocating income properly. For your IRA withdrawal, they have specific questions about the reason for withdrawal and will tell you if you qualify for any penalty exceptions. The medical expense exception is definitely covered in their questionnaire. Their help articles are really detailed too, so you always know why you're answering certain questions.

Not all preparers are the same though. Some have higher overhead if they're at a physical office vs working from home. Location matters too - prices in big cities are WAY higher. And some firms charge by form rather than by situation.

Does the FBAR thing apply if I don't have my name on any foreign accounts but I'm still sending/receiving money to family abroad? My parents in the Philippines use their local account but sometimes send me money from it.

FBAR filing requirements typically apply when you have a financial interest in or signature authority over foreign financial accounts that exceed $10,000 in aggregate at any time during the calendar year. If the account is solely in your parents' names and you don't have signature authority, you generally wouldn't need to file an FBAR just for receiving transfers from their account. However, you still need to report any income you receive from abroad on your tax return, regardless of FBAR requirements. The nature of the transfers matters - if they're genuine gifts from your parents, different rules apply than if they're income or business distributions.

Absolutely this! I had a similar setup with my uncle's business in Brazil and it turned into a nightmare during an audit because we had nothing in writing. The IRS ended up treating all the money I sent as gifts (which hit gift tax limits) and all returns as pure income. Documenting everything properly from the start would have saved me thousands.

Thank you all for the amazing advice! I definitely need to formalize the arrangement with my grandfather. I hadn't considered that without proper documentation, the IRS might interpret our arrangement differently than intended. I'll work on creating a written agreement that clearly specifies my contribution is an investment and outlines the expected returns. I've started tracking all transfers in a detailed spreadsheet as suggested. Would it be better to classify this as a loan with interest rather than an equity investment to simplify the tax treatment? I'm wondering which approach would be cleaner from a reporting perspective.

Thank you so much for this clear explanation! So I should download the current form labeled "2024" to report my 2023 non-deductible contributions, correct? And then do I just mail it in by itself, or do I need to include anything else with it?

Yes, you should use the current form labeled "2024" for your 2023 non-deductible contributions. You can mail just the completed Form 8606 by itself to the same IRS address where you'd normally send your tax return. No need to include a 1040 or other paperwork since this is a standalone form for your non-deductible IRA contributions. Just make sure to sign and date it, and keep a copy for your records. The IRS may assess a small penalty for filing it late, but it's much better to file late than not at all.

I had to file 3 years worth last year. I sent them all in separate envelopes to make sure they wouldn't get confused or lost together. Each year needs the correct form (so 2022 form for 2021 contributions, 2023 form for 2022 contributions, etc). I also wrote the tax year very clearly at the top of each form to avoid confusion.