This is a really interesting angle I hadn't considered! We definitely have tons of texts and some emails where we specifically talk about everyone "investing" in the house and building equity together. We even had a spreadsheet we updated monthly showing everyone's contributions. Would those help establish this kind of arrangement?

Those texts, emails and especially that spreadsheet would be extremely helpful evidence! That's exactly the kind of documentation that can establish an equitable interest or informal partnership arrangement. The spreadsheet showing contributions is particularly valuable since it demonstrates an ongoing system of tracking "ownership" percentages. When I went through this, my accountant advised bringing all this documentation together, then drafting a simple letter documenting the original intent of the arrangement and how the proceeds distribution reflects each person's contributions. This creates a paper trail showing this isn't a random gift but rather the conclusion of a documented investment arrangement.

Wouldn't issuing 1099s mean they'd have to pay income tax on the money though? That seems worse than just filing a gift tax return where no actual tax is owed (assuming below the lifetime limit). Did your roommates have to pay taxes on those distributions?

8 Oh my gosh I think I made this exact mistake last year! I earned about $7,000 from my summer job and my campus job combined, and I thought that meant my parents couldn't claim me. But I was a full-time student... so does that mean they actually could have claimed me? Should we file an amendment?

22 You're right that you might have misunderstood the rules. For full-time students under 24, the income limit is much higher, and the $4,500 limit doesn't apply in the same way. Your parents likely could have claimed you if they provided more than half your support, regardless of your $7,000 earnings. Whether you should amend depends on several factors. First, check if your parents actually claimed you on their return last year. If they didn't, there might not be a conflict to resolve. If there is a discrepancy, you should consider amending if it would result in a meaningful tax benefit for your family overall. The lookback period for amendments is generally three years, so you have time to correct it if needed.

16 I used TurboTax last year for a similar situation (19, college student). Their questionnaire is decent but not great for more complicated situations. If your situation is straightforward, the free version will work, but they'll try to upsell you if you have education credits. Honestly, I'd recommend using the IRS Free File options instead - same questionnaire style but completely free. TurboTax charged me an extra $40 halfway through when I needed to add a form for my scholarship.

Is that really necessary? I've been combining all my gig work on one Schedule C for years and never had an issue...

Does this student loan interest deduction phase out at certain income levels? My son makes about $75k at his new job after grad school but still has tons of student loans.

Yes, the student loan interest deduction starts phasing out at $75,000 of modified adjusted gross income for single filers ($155,000 for married filing jointly) and completely phases out at $90,000 ($185,000 for married couples). If your son is right at the $75k threshold, he might still get a partial deduction. He should definitely look into it because every bit helps with those loan payments. Also worth noting that unlike some deductions, he can take this even if he doesn't itemize, which is really helpful for younger people who typically take the standard deduction.

The Tuition and Fees deduction has been gone for a while now, but the Lifetime Learning Credit was actually expanded in recent years. It's worth up to 20% of the first $10k in qualified education expenses.

1 I didn't pay for education this year, but I did put about $1500 in my 401k. Would that help with the Saver's Credit? Not sure if I qualify for that or how it works.

7 Yes, your 401k contributions might qualify you for the Saver's Credit! This credit is specifically designed for lower to moderate income taxpayers who are saving for retirement. With your income around $36k, you would likely qualify for a partial credit. The credit can be up to 50%, 20%, or 10% of your retirement contributions depending on your adjusted gross income and filing status. For single filers in 2024, the income limit is $36,500, so you're right at the threshold. The maximum contribution amount that can be considered for the credit is $2,000, so your $1500 would fall within that limit.

11 Good point! Some states have been adjusting their tax brackets and standard deductions recently. I'm in Illinois and was surprised when my state refund was way different than last year even though my income only changed a little.