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.

That's a really good point about the fair market value. I've been researching comparable workshop spaces in my area to make sure I'm charging a reasonable amount. Would you recommend getting some kind of formal appraisal to document the fair market rental value? I hadn't considered selling the garage space to the business - that seems complicated since it's on the same property lot. Wouldn't that create zoning issues or require subdividing the property?

A formal appraisal would be ideal for documentation, but even gathering 3-5 comparable rental listings from your area can serve as reasonable support for your rental rate. Save screenshots or printouts of similar workspace rentals to keep with your tax records. You're absolutely right about the complications with selling just the garage. Unless your property is already zoned for mixed use, you'd likely face zoning issues. Subdividing residential property to sell a portion to a business entity is possible but extremely complex and might trigger reassessment of property taxes or other consequences. The rental approach you're considering is likely simpler from a practical standpoint.

If you convert it to a legal ADU with living facilities, it would likely be considered a separate dwelling unit entirely. This could actually work in your favor for the Augusta Rule because each dwelling unit gets its own 14-day exemption. Just make sure the conversion is permitted and up to code, otherwise you could have issues with both the IRS and local authorities.

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.

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

Omg I didn't even think about workers comp! Do I calculate that the same way as the other payroll taxes? Is there a standard percentage for bakery workers?

You don't calculate workers comp the same way as payroll taxes. You'll need to contact an insurance provider who offers workers compensation insurance in Illinois. They'll assign classification codes based on the type of work (bakers might be code 9083) and give you a rate per $100 of payroll for each classification. The rates for bakery workers vary widely by state, but in Illinois, you might expect something around $1.50-$3.00 per $100 in payroll, depending on your claims history and other factors. So if you have $10,000 in monthly payroll, you might pay $150-$300 monthly for coverage.

I second this. I messed up some calculations and classified contractors incorrectly. Ended up with huge fines. A payroll service would have been so much cheaper!