Is the amended return process complicated? I think I might have missed claiming this for 2022 and 2023 but I'm worried about messing something up and triggering an audit.

Filing an amended return is definitely more involved than a regular return, but it's not terribly complicated if you're only changing one thing like adding the Retirement Savings Contribution Credit. You'll need to file Form 1040-X along with a new Form 8880 for each year you're amending. The key is to be very clear about what you're changing and why. In the explanation section of the 1040-X, simply state that you're claiming the Retirement Savings Contribution Credit that you were eligible for but didn't claim on your original return. Include documentation of your IRA contributions for that year if you have it. The typical processing time for amended returns is 16-20 weeks, so be prepared to wait a while for your refund.

Yes, the Saver's Credit does phase out completely at certain income levels. For 2024, if you're married filing jointly, the credit phases out completely if your AGI is above $73,000. With your combined income of around $70k, you should still qualify for the 10% credit rate. For married filing jointly in 2024, the brackets are: - 50% credit if AGI is $43,500 or less - 20% credit if AGI is $43,501-$47,500 - 10% credit if AGI is $47,501-$73,000 - No credit if AGI is above $73,000 So at $70k income, you'd get a 10% credit on up to $4,000 in combined retirement contributions, meaning a maximum credit of $400. Definitely worth claiming!

I used the IP PIN option last year when I had this same issue. You can request one through the IRS website, but it takes about 2-3 weeks to arrive by mail. Once you have it though, it bypasses the AGI verification completely. Worked perfect for me!

Thanks for the info! Did you have to verify your identity to get the IP PIN? I tried making an IRS account before and couldn't get past their verification steps.

Just tried logging into last year's TurboTax account and they do actually show the "IRS Accepted AGI" which is different from what's on my PDF by about $200! Apparently there was an adjustment made. Going to try filing again with this number - fingers crossed!

7 This is super important info - I had no idea! If you have existing Traditional IRA money, is there any way to still do a backdoor Roth without triggering this pro-rata rule? I've got about $30k in an old Traditional IRA.

19 Yes, there's a workaround! If your employer's 401(k) plan accepts rollovers from IRAs, you can roll your existing pre-tax IRA funds into your 401(k) before doing the backdoor Roth. Since 401(k)s don't count in the pro-rata calculation, this effectively zeroes out your pre-tax IRA balance. This only works if your 401(k) plan allows for incoming rollovers from IRAs, so you'll need to check with your plan administrator. If this is possible, you could roll the $30k into your 401(k), then do a clean backdoor Roth conversion without pro-rata tax consequences. Timing matters though - you'd need to complete the rollover to the 401(k) before December 31 of the tax year you're doing the conversion.

4 You can file amended returns (Form 1040-X) for the previous years where this mistake was made. You'll also need to include Form 8606 for each of those years to establish your non-deductible basis. The statute of limitations for amending returns and claiming refunds is generally 3 years from the original filing date, so your 2021-2023 returns should all still be eligible for amendment.

Wait, really? Does that mean I could potentially reduce what I owe? The notice does include something about an early withdrawal penalty. What kind of documentation would I need to prove it was for our home purchase?

Yes, if you're being charged the 10% early withdrawal penalty and you qualify for the first-time homebuyer exception, you could reduce your bill by that amount. For a $40,000 withdrawal (just guessing based on your tax amount), that could be around $4,000 in savings! You'll need documentation showing you used the funds for home purchase expenses within 120 days of the withdrawal. This could include your closing statement, purchase agreement, and records showing the money transfer from your 401k to your bank account and then to the closing. Submit these along with a letter explaining you qualify for the exception under IRC Section 72(t)(2)(F).

This is great advice! I did the same thing when I got hit with penalties for underpayment. Called and politely explained it was my first mistake, and they waived all penalties. They won't offer this unless you specifically ask for "first-time penalty abatement." You'll still owe the taxes and interest, but removing penalties can make a big difference.

Thank you both! I'll definitely ask about this. I've never had any tax issues before, so hopefully I'll qualify. Even if they just remove the penalty portion, that would be a huge help.

I had no idea about university tax assistance programs. I'll definitely look into that! One question though - can I still claim education tax credits if I'm being claimed as a dependent on my dad's taxes? And would those credits go on my return or his?

If you're claimed as a dependent on your dad's tax return, then HE would claim any education tax credits based on your expenses, not you. The American Opportunity Credit and Lifetime Learning Credit would go on his return, which could help offset some of the family's overall tax burden. Your father should definitely look into claiming these credits since they can be substantial. The American Opportunity Credit can be up to $2,500 per eligible student, with 40% of it potentially refundable. Just make sure he has documentation of your qualified education expenses.

I work in a university financial aid office, and this is definitely worth trying. Many students don't realize we often have flexibility in how we structure aid packages. We can sometimes designate more of your aid specifically for qualified educational expenses rather than living expenses, which can help with the tax implications.