That's interesting! So if the bonds had only been in my name without the "OR my mom" part, I could have qualified for the exclusion myself? Do you happen to know if there's any way to change the registration on existing bonds to make them solely in my name?

That's not quite right - I think I confused things. Even if the bonds are solely in your name, you still need to have been 24 or older when they were issued to qualify for the Form 8815 exclusion yourself. What I meant was that my grandmother had them in her name only (she was over 24), then used them for my education expenses. As for changing registration, you can reissue savings bonds in some circumstances, but changing ownership to qualify for tax benefits would likely be considered tax avoidance by the IRS. The registration needs to reflect the original intent of purchase. You're better off having your mom claim the exclusion if she paid for your education, as the other commenters suggested.

Do those income limits apply to the person who cashed the bonds or the person claiming the exclusion? Like if the mom is claiming the exclusion but the student cashed the bonds, whose income matters?

The income limits apply to the person claiming the exclusion on their tax return. So if your mom is claiming the exclusion (because she meets the age requirement and paid for your education), then it's her income that matters for the phase-out limits. In this situation, it doesn't matter who physically cashed the bonds. What matters is who's claiming the tax benefit. The IRS looks at the modified adjusted gross income on the tax return where Form 8815 is being filed.

This is interesting! I do have an HSA actually. Would I still need to get that breakdown of what portion is strictly medical, or can the entire travel medical insurance premium be paid from the HSA if it includes some non-medical components?

You would still need the breakdown showing what portion is strictly medical. HSA funds can only be used for qualified medical expenses, so the same rules apply - only the medical evacuation and emergency treatment portions would qualify, not things like trip cancellation or baggage loss coverage. I recommend contacting your HSA administrator first before purchasing. Some are more strict than others about documentation requirements. Mine required a letter from the insurance company stating what percentage of the premium was for qualified medical expenses. Once I had that, I was able to use my HSA card for just that percentage of the premium amount.

I got audited in 2022 and had deducted adventure travel medical insurance for a mountaineering expedition. The IRS actually didn't question it at all because I had proper documentation from the insurance company specifying the medical portion of the coverage. They were much more interested in my home office deduction lol.

That's really helpful to know, thanks! Guess I'll focus on getting good documentation from the insurance company. Funny they went after the home office instead - those always seem to trigger scrutiny.

Oh man, I didn't even think about state taxes! They're in Pennsylvania - any idea what the rate would be there?

Pennsylvania has a flat income tax rate of 3.07% that applies to capital gains too. So your in-laws would pay that on top of the federal 15%. It's lower than many states, but still adds up. Make sure they account for both state and federal taxes in their calculations. There's no special capital gains rate in PA - it's just treated as ordinary income at the state level. They'll need to report it on both their federal and state tax returns next year.

Wait that's super helpful! I sold my cabin last year and my accountant never mentioned adding the original closing costs to my basis. Can I still amend my return from last year to include those?

That's actually a really good point that I hadn't considered. We've been together for three years and have talked openly about finances, but I don't want her to feel like she's losing her independence. Maybe we should establish a more formal agreement about expectations during this period. Do you have any specific suggestions for how to structure this kind of temporary support without creating weird dynamics?

In my experience, having a specific timeframe and budget helps a lot. Maybe sit down together and create a temporary "support plan" with an end date or specific milestone (like when she finds a new job). For the actual mechanics, consider a joint account specifically for shared expenses that you both have access to, rather than just depositing into her personal account. That way it feels more like a shared resource than "your money." And definitely have regular check-ins about how you both feel about the arrangement - these things can create resentment if not discussed openly.

This is a really important point. I'm a bookkeeper and I've seen self-employed clients get in trouble for poor cash withdrawal documentation. Make sure you're recording these as owner's draws or distributions, not as business expenses!

10 How did the IRS know you were only using it 30% for business? Did they just look at your mileage log, or did they have other ways of figuring it out?

22 The IRS asked for my mileage log during the audit, and I had only kept sporadic records. They compared the total miles on the vehicle to the business miles I could document, and it came out to around 30%. They also looked at my appointment calendar and client locations to verify whether my claimed business trips were legitimate. The auditor explained that without a contemporaneous mileage log (meaning one kept at the time of travel, not created later), they default to assuming more personal use. The burden of proof is entirely on you as the taxpayer to demonstrate business usage. Without proper documentation, you'll lose the deduction every time.

2 Bonus depreciation is different from Section 179 in a few key ways. For 2024, bonus depreciation is at 60% (down from 80% in 2023), and will drop to 40% in 2025. Unlike Section 179, bonus depreciation CAN create a loss for your business, which might be beneficial depending on your situation. For vehicles above 6,000 lbs, you could potentially get a larger first-year deduction using a combination of Section 179 (up to $27,000) and bonus depreciation on the remaining basis. For vehicles under 6,000 lbs, the luxury auto limits still apply even with bonus depreciation.