Do you know if there are any major changes to the 2023 version? I heard something about some states changing their credit reduction status but wasn't sure if that would affect the actual form layout.

Based on the draft version, the core form layout is practically identical to 2022. The main differences are in Schedule A where they updated which states have FUTA credit reductions. California has been added to the reduction list this year, and I believe Connecticut's reduction percentage has changed. If you don't have employees in those states, the form will be essentially the same as last year for you.

I switched from QuickBooks to Gusto last year and they're much faster with form updates. Their payroll system automatically calculates your FUTA liability throughout the year and they usually have the new forms implemented within days of IRS releases. Little more expensive but worth it for the peace of mind.

Thanks for the suggestion about FreeTaxUSA! Do they handle everything else TurboTax does? I'm already halfway through my return on TurboTax but maybe I should switch for next year. And is there any downside to skipping Form 1116 when the amount is under the threshold?

FreeTaxUSA handles all the same forms as TurboTax for federal filing at a fraction of the cost. Their interface isn't quite as polished but it gets the job done. Their deluxe version is only about $7 and includes priority support and audit assistance. State returns are extra though. There's no real downside to skipping Form 1116 when you're under the threshold. The only limitation is you can't carry forward unused foreign tax credits, but with just $3, that's not an issue for you. If your foreign investments grow significantly in future years, then you'll want to start using Form 1116.

Is Cash App Taxes actually reliable? I've heard mixed things. Anyone used it for investment stuff? Seems sketchy to trust a free app with complicated tax situations...

Thank you for bringing this up! My divorce was finalized in May 2024 so I should be good for the 2025 filing. But that's definitely something important I didn't think about. Did the IRS charge you any penalties or just make you pay the difference?

They only made me pay the difference in taxes between HOH and Married Filing Separately, plus a small amount of interest since I paid after the filing deadline. No penalties since they determined it was an honest mistake rather than deliberate evasion. The IRS actually has a "considered unmarried" provision that might apply in some situations even if you're technically still married on December 31st, but my situation didn't qualify. If your spouse didn't live in your home for the last 6 months of the year, you might still qualify for HOH even if not technically divorced yet.

Absolutely right. The rules for "qualifying person" for HOH are really specific. For a child to qualify, they generally need to be your son, daughter, stepchild, foster child, brother, sister, or a descendant of one of these (like a grandchild or niece/nephew). Just having a child live with you isn't enough unless you're related by blood, marriage, or adoption in most cases.

Thanks for mentioning the mileage deduction! Do you know if I should be tracking mileage for all business-related driving? And what app do you use to track it?

Yes, you should absolutely track mileage for all business-related driving - going to client meetings, picking up supplies, driving to business meals, etc. Just remember that commuting to a regular workplace isn't deductible. I use MileIQ for tracking, but there are several good options like Everlance and Hurdlr too. Most of these apps automatically detect when you're driving and let you swipe to categorize trips as business or personal. Super simple and creates the documentation you need for tax time.

That receipt tip is gold! Do you just write directly on the physical receipt or do you scan it first and add notes digitally?

Hadn't even considered the retirement account implications. Do you know if this affects 401k contributions as well? My employer matches up to 6% and I wouldn't want to lose that benefit.

Your 401k contribution limits actually aren't affected by filing status - you can still contribute the full amount ($23,000 for 2025, plus catch-up contributions if you're eligible) and get your employer match regardless of whether you file jointly or separately. The issue is specifically with IRAs, particularly Roth IRAs where the income limits are drastically lower for MFS. If you're currently doing backdoor Roth IRA conversions, which many high-income professionals do, you'll face additional complexities with MFS status due to the pro-rata rule calculations being done separately, but it's still doable with proper planning.

Yeah it depends on if they're in a community property state or not. In non-community property states, you generally split based on who paid. In community property, it's usually 50/50 regardless of who paid. Gets complicated fast.