This is good advice. FreeTaxUSA actually has pretty detailed explanations if you click the info buttons. Last year it told me exactly why I didn't qualify for a credit I thought I should get (turned out I had checked a box wrong).

This is what I do every year! I always run my taxes through at least 2 different programs to compare results. Caught a $1200 difference last year because one program missed a deduction. I just file with whichever one gives me the best refund (assuming it's correct!

That's actually a really good idea, I didn't know Cash App did taxes! I'll try that tonight and see what it says about the education credits. Hopefully it'll help clear this up. Taxes shouldn't be this complicated for someone making under 10k a year lol

This is so true. My CSED was approaching and they suddenly filed a levy against my bank account after 2 years of no contact. The IRS collection system flags accounts approaching CSED for "last chance" collection attempts.

Exactly. They have automated systems that flag accounts as the CSED approaches. If the amount is substantial enough, they'll allocate resources to make one final collection attempt. They're particularly interested in retirement accounts, real estate equity, and investment portfolios. They sometimes even check social media for signs of lifestyle inconsistent with someone claiming inability to pay. Best to maintain a low profile during these final months and be prepared for possible levies on known assets.

Bankruptcy might discharge income taxes if they meet certain criteria - generally they need to be from returns filed at least 2 years before bankruptcy, for tax years at least 3 years old, and assessed at least 240 days before filing. With a CSED 7 months away, these taxes might qualify. However, bankruptcy is a nuclear option that affects credit for years. If OP can wait 7 months for the CSED to expire naturally, that's probably cleaner than bankruptcy. Also, tax liens on property sometimes survive bankruptcy depending on equity and exemptions.

Thanks for the detailed explanation. I didn't realize the timing requirements were so specific for tax debt discharge. Sounds like waiting out the 7 months is probably less disruptive if OP can manage it without the IRS taking aggressive collection action. Makes sense about the property liens too - I've heard those can be complicated even after bankruptcy. Seven months isn't that long in the grand scheme of things.

Do these calculators take into account things like income phase-outs and other limitations? Sometimes I worry those online tools are oversimplified and miss the details.

Most of the good ones do factor in phase-outs and limitations! The Virginia one specifically asks for your income and filing status, then applies any phase-outs automatically. I've found them to be pretty accurate. The one limitation I've noticed is that some calculators don't handle multiple beneficiaries well. So if you're contributing to 529 plans for multiple people and your state allows credits for each, you might need to do some additional calculations yourself.

Great point! I misunderstood this for years and was excited about my state's "$5,000 529 benefit" until I realized it was a deduction, not a credit. At my tax rate that's only saving me about $250, not $5,000!

Exactly! The terminology makes a huge difference. I've found that states with deductions often allow much higher amounts ($10,000+ in some cases) while states with credits usually have lower limits but they're worth more dollar-for-dollar. It's also worth checking if your state allows carryforward of excess contributions. Some states let you carry forward contributions beyond the annual limit to get the deduction/credit in future years.

That's a really good point I hadn't considered! My property taxes are around $8k, and with state income tax on top of that, I'm definitely hitting that $10k SALT cap. Maybe that's partly why my mortgage interest doesn't seem to be helping at all with my taxes. Would you say it made sense for you to keep your mortgage or are you considering paying it off too?

I'm in a similar position to you - considering whether to keep or pay off my mortgage. For me, the math works out that I'm getting very minimal tax benefit from the mortgage interest. I'm getting maybe a $1,000 extra deduction from itemizing versus taking the standard deduction. At a 24% tax bracket, that's saving me about $240 in taxes while I'm paying far more in interest. I'm actually planning to pay off a significant chunk of my mortgage this year. Not the whole thing, but enough to reduce my interest to the point where I'll just take the standard deduction going forward. The psychological benefit of having a much smaller mortgage outweighs the tiny tax advantage for me.

That's actually a really good point about inflation. I never thought about it that way. $300k today will be worth a lot less in purchasing power 20 years from now, but you're still paying it back with those cheaper future dollars.

Do student loan interest and the lifetime learning credit work together too? Or is that a different thing entirely?

Student loan interest deduction and the Lifetime Learning Credit are separate tax benefits and yes, you can claim both in the same year if you qualify for both! The student loan interest deduction allows you to deduct up to $2,500 in interest paid on qualified student loans, and it's also an "above-the-line" deduction that you can take regardless of whether you itemize or take the standard deduction. So potentially, you could take the standard deduction, deduct student loan interest, AND claim the Lifetime Learning Credit all on the same return.

I used FreeTaxUSA last year and it handled my Lifetime Learning Credit perfectly fine without trying to upsell me. They have a totally free federal filing option that includes education credits. You only pay if you want state filing.