Does this actually work with mortgage lenders though? Don't they usually look at 2 years of tax returns? I wonder if they'd notice the pattern and question it.

It can work depending on the lender and your specific situation. You're right that they typically look at 2 years, but many put more emphasis on the most recent year, especially if your income is trending upward. The key is to be strategic and consistent. Don't make it look like you're manipulating numbers - instead, make legitimate business decisions about when to make major purchases or when to defer income. For example, delaying some business purchases until after you close on the home is completely legitimate. Lenders understand that self-employed income fluctuates naturally.

This is a really good point. When I did this last year, I was surprised how much extra I ended up paying because I forgot about the self-employment tax part. Definitely do the math carefully!

Is this still true with the changes to the child tax credit? I thought they made some modifications recently and wasn't sure if non-working parents still qualify the same way.

Yes, this is still true even with recent changes. For 2023 tax filing (which happens in 2024), the Child Tax Credit is $2,000 per qualifying child under 17. The credit is partially refundable even for non-working parents - up to $1,500 per child can be received as a refund through the Additional Child Tax Credit. Even with just SSI income and no other earnings, the mother in this situation would likely qualify for the refundable portion if she's the custodial parent. There were temporary expansions to the credit during COVID that have expired, but the basic structure allowing non-working custodial parents to benefit still exists.

This is what my sister had to do. Her ex claimed their kids even though they lived with her. She filed by paper, got letters from school showing the kids' address, and eventually got her refund. Took forever though - like 8 months. But at least she got the money eventually.

Doesn't that strategy risk owing penalties if you end up owing too much at tax time? I thought there were rules about having to pay enough throughout the year.

You're right to be concerned about that! You do need to be careful not to underwithhold too much. The general rule is you need to pay at least 90% of your current year tax liability OR 100% of last year's tax liability (110% if your income is over $150,000) through withholding and estimated payments to avoid underpayment penalties. What we did was calculate it pretty closely so we'd either get a very small refund or owe just a little bit. This way we avoided the penalties while also preventing large refunds that would be automatically applied to old debts. It takes a bit more planning, but the IRS has a good withholding calculator on their website that helps make sure you're still meeting the requirements.

Yes, the standard 10-year statute of limitations for IRS collections does apply to shared responsibility payments. The clock starts ticking from the date the tax was assessed, not the tax year itself. So if the assessment happened in 2017 for a 2016 tax issue, the IRS would have until 2027 to collect. Keep in mind that certain actions can extend this timeline, like if the taxpayer requests a payment plan or submits an offer in compromise. But barring any extensions, the IRS generally has 10 years to collect on this type of debt.

Thanks for the suggestion! Is there an age requirement for using VITA services? Like, can I go by myself at 16 or would I need my mom to come with me?

Great question! VITA doesn't have a minimum age requirement for the taxpayer themselves. Since you're filing your own return and have legitimate income, you can absolutely visit a VITA site without a parent. However, since your situation involves household members, it would be very helpful if your mom could join you. Many VITA sites can prepare multiple related returns together, which gives them a better picture of your full household situation. This would allow them to determine the best overall tax strategy for your family unit. But if your mom can't come, you can still get help with your return.

What kind of documentation did your cousin have to provide? I'm helping my younger brother in a similar situation and want to be prepared if the IRS flags his return.

Is there a simple way to check if your withholding is correct? I just started a new job and don't want to be surprised next April.

The IRS has a Tax Withholding Estimator tool on their website that's pretty straightforward to use. You input your income, filing status, and other tax situations, and it calculates whether your current withholding is appropriate or if you need to adjust your W-4. I'd recommend running this calculator midway through the year to make sure you're on track. It's especially important if you have multiple jobs, a working spouse, or any significant changes in your financial situation during the year.

It does seem unnecessarily complicated, but there are some free resources that can help. I've been using the free filing options through the IRS website for years and haven't had any issues. They partner with several tax software companies that offer free filing if your income is below a certain threshold.