Thanks for breaking it down like this! I definitely meet all those tests. I live at home, mom pays for most everything, and I'm 16. I'm pretty sure I checked the right box on my return, but is there any way to double-check or fix it if I didn't?

You can double-check by looking at a copy of your filed return - it's on the first page of Form 1040. If you filed electronically, you should be able to log back into the tax software you used and view your completed return. If you did make a mistake and didn't check that box, you can file an amended return (Form 1040-X) to correct it. But honestly, even if you messed that up, it doesn't prevent your mom from claiming you - it might just cause the IRS to send a notice asking for clarification. The actual eligibility for being claimed as a dependent is what matters, not whether you checked the box correctly.

Our family tax guy says that the only time this becomes an issue is if the kid claims themselves as a dependent on their OWN return. Did your daughter have to specifically mark something on her return to show she was a dependent?

Thank you for bringing this up! They don't have long-term care insurance unfortunately. They looked into Medicaid but were told they have too many assets to qualify right now. They're spending down their retirement savings at an alarming rate with these nursing home bills. Do you know if the medical expense deduction applies to withdrawals from retirement accounts that are used to pay for the nursing home?

Yes, you can still claim the medical expense deduction even if the money comes from retirement account withdrawals. The source of the funds doesn't affect the deductibility of the medical expense. However, be aware that withdrawals from traditional retirement accounts (like a traditional IRA or 401k) are generally taxable income, which will increase your AGI. This could potentially reduce the benefit of the medical expense deduction since you can only deduct expenses that exceed 7.5% of your AGI. It creates a bit of a circular problem - you withdraw money to pay medical bills, which increases your income, which raises the threshold for deducting those same medical bills.

Is there a good way to track all this? I've been keeping receipts in a shoebox but it's getting overwhelming.

Do you know if this is actually IRS compliant though? I thought you had to report every single transaction individually. My accountant friend told me the IRS could reject your return if you just do summary totals.

The IRS actually allows summary reporting as long as you have the detailed records available if requested. Form 8949 has a checkbox (Box C) that indicates you're reporting summary information rather than each individual transaction. FreeTaxUSA implements this correctly. Just make sure you keep your detailed transaction records from Coinbase for at least 3 years in case of an audit. The key is that your summary totals must exactly match what would be reported if you entered every transaction individually - no rounding or estimating.

Staking rewards are treated as ordinary income, not capital gains. In FreeTaxUSA, you'd report these under "Other Income" rather than with your crypto sales. The value is based on the fair market value of the crypto at the time you received each reward. Keep in mind that when you eventually sell crypto acquired through staking, you'll report capital gains/losses based on the difference between your selling price and the value at which you initially reported the staking reward as income.

This is incredibly helpful! When you worked with that CPA firm, did they give you a specific list of which states have those "factor presence" standards and what the exact thresholds are? That would be super valuable for me to have. Also, what do you mean by "responsive compliance"? Like, just wait until a state sends you a notice before filing there?

Yes, they provided a complete matrix showing all states with factor presence nexus standards. The key ones to watch are CA ($500k), NY ($1M), OH ($500k), WA ($267k for their B&O tax), and MA ($500k). But these thresholds change periodically, so you need to check current figures. By "responsive compliance," I mean exactly that - some agencies choose to file only in states where they clearly have nexus, and then respond accordingly if other states contact them. The reality is that states have limited resources to pursue out-of-state businesses, especially small service providers, so they tend to focus on larger targets first. It's a calculated risk approach rather than a strictly compliant one. Some CPAs advocate for this approach given the complexity, while others recommend full compliance with all potential nexus states regardless of practical enforcement risk.

Omg yes to the S-corp point! I got hit with penalties in NJ because my LLC (taxed as S-corp) didn't file there even though I filed my personal return with the flow-through income. Such a headache to sort out. Do u know if being a single-member LLC vs multi-member changes anything with the nexus rules?

Thanks for the heads up! I've already talked to my parents about this, and they agree that since I'm paying for everything myself, I should claim myself. We calculated all the expenses and they definitely don't provide half my support anymore. I'm going to keep good records of all my expenses just in case though. Did the IRS require specific documentation for your situation?

The IRS wanted pretty detailed documentation from both of us. They asked for proof of payments for tuition, rent receipts, estimated food costs, medical expenses, and basically anything that counted as "support." They even requested utility bills and proof of who paid them. They also looked at how many months he actually lived with me versus on his own. The most important factor ended up being who paid for what, rather than just living arrangements. Since your parents agree with your assessment, you should be fine, but definitely keep good records of all major expenses - especially tuition payments, rent, and any large bills you pay yourself.

Yeah, TurboTax is super confusing on this! The question isn't whether you WILL be claimed, but whether you CAN legally be claimed based on the tests the others mentioned. I ended up using FreeTaxUSA instead because their questions were more straightforward about dependency status.