That formula is super helpful, thank you! Does the HSA provider typically issue any special tax form for the earnings on the excess that I need to watch for next year? I want to make sure I report everything correctly.

Yes, you'll receive a 1099-SA from your HSA provider that shows the distribution, and there should be a code indicating it was an excess contribution removal. The earnings portion will need to be reported as "Other income" on your tax return for the year you take the distribution (so likely 2025 tax return if you're handling this now). Also, your HSA provider should send you a Form 5498-SA showing your total contributions for the year, but this typically doesn't reflect the removal of excess contributions in a way that's immediately clear. You'll need to keep good records of the excess removal to reconcile everything when you file.

This gets tricky. When you remove excess contributions, you're technically removing the most recent contributions first. If you've spent HSA funds on qualified medical expenses, those distributions are considered to have come from your valid contributions first, not the excess. So even if you've spent money from your HSA, you still need to remove the full excess amount (plus earnings). You'll need available funds to do this. If your current HSA balance is less than the excess amount you need to remove, you may need to add funds back temporarily just to facilitate the removal.

Our daughter lives with me about 70% of the time, and I'm the custodial parent according to our divorce decree. My ex was supposed to claim her last year because we verbally agreed to alternate years, but apparently he never did. We don't have anything formal like Form 8332 filed. Does that mean I should definitely file the amendment then?

Yes, you should definitely file the amendment. Since you're the custodial parent with the child living with you 70% of the time, and you didn't sign Form 8332 to release the claim, you have the legal right to claim your daughter as a dependent. Without Form 8332, a non-custodial parent cannot claim the child regardless of verbal agreements. The IRS follows the documentation, not verbal agreements between parents. You're potentially leaving significant money on the table by not claiming her, especially with the expanded Child Tax Credit.

I used TurboTax to amend my return last year when I forgot to claim my son's college expenses. It was surprisingly easy - you just start an amended return and it walks you through what you want to change. For something like adding a dependent, it should recalculate everything including any credits you might be eligible for.

Is there any truth to the idea that filing super early (like January 24th this year) actually takes longer because the IRS systems are "warming up" or whatever? My neighbor swears by filing in mid-February for the fastest refund.

That's actually a misconception. The IRS systems are fully operational from day one of tax season. However, there is some truth that certain early filers might experience delays, but it's not because of "warming up." What's actually happening is that many early filers claim refundable credits like the Earned Income Tax Credit or Additional Child Tax Credit, which by law cannot be issued before mid-February regardless of when you file. So your neighbor might be seeing a pattern based on this particular timing issue rather than IRS systems being slower early in the season.

Yes! The recovery rebate credit is definitely causing delays. I filed with that too and waited 11 weeks. Try checking your transcript on the IRS website instead of Where's My Refund - it gives more detailed codes that might explain the hold. For me, code 570 showed up which means they were reviewing it.

Can 529 plans only be used for college? My kids might want to do trade school or something non-traditional. Would a different savings vehicle be better in that case?

Great question! 529 plans have actually become much more flexible in recent years. They can be used for a wide range of education options beyond traditional four-year colleges, including vocational schools, trade programs, technical schools, and even apprenticeship programs registered with the Department of Labor. If you're still concerned about flexibility, another option to consider is a Coverdell Education Savings Account, which allows for more diverse qualified expenses including K-12 costs. However, Coverdells have much lower contribution limits ($2,000 annually) and income restrictions that 529s don't have. Some families also use UGMA/UTMA accounts which have no education restriction but do transfer to the child's control at age of majority (18-21 depending on state), and they don't have the tax advantages of education-specific accounts.

Kiddie tax typically doesn't apply to 529 plans since the earnings grow tax-free and aren't taxed when withdrawn for qualified education expenses. Are you thinking of UGMA/UTMA accounts maybe?

Does the timing of salary changes matter? Like if I start with $60k in January but business is booming by June, should I give myself a mid-year raise or wait until the following year?

Yes, you can absolutely give yourself a mid-year raise if circumstances warrant it. Many S-Corp owners adjust their salaries as the year progresses and business performance becomes clearer. Just document your reasoning thoroughly - note the increased business performance, expanded responsibilities, or whatever factors led to the adjustment. What the IRS doesn't like to see is erratic salary patterns that appear to be manipulating payroll taxes rather than reflecting actual changes in the business. For example, artificially keeping salary low all year then taking a massive "bonus" in December looks suspicious. A clean mid-year adjustment with clear business justification is perfectly acceptable.

Is that 1/3 of profit BEFORE or AFTER your salary is deducted? Because that makes a huge difference in the calculation.