I hadn't even considered the trust angle! Do you know what specific features of your Malaysian policies triggered the 3520 requirements? Were they whole life policies with investment components or something else? This adds a whole new layer of complexity I need to look into.

My policies were whole life with investment components, but what triggered the 3520 requirements was the specific contractual structure. The policies were technically held in a separate account managed by trustees, even though I was the beneficiary. Some Asian insurance companies use trust structures for tax efficiency in their local markets, not realizing it creates a nightmare for US taxpayers. Look for any mention of "trust," "trustee," or separate legal entities in your policy documents. If your partner directly owns the policies in their name, you might be safe from 3520 requirements, but if there's any intermediary entity, that's a red flag.

Unfortunately, your Hong Kong advisor is likely applying HK tax rules, not US ones. The US-HK tax agreements don't provide the protection they're suggesting. For US tax purposes, foreign life insurance policies rarely qualify for the same tax-deferred treatment as US policies. The annual growth (inside buildup) of cash value in foreign policies is generally taxable phantom income for US taxpayers unless the policy meets strict requirements under IRC 7702. Almost no foreign policies meet these requirements since they're designed for their local markets. Your accountant is probably right about reporting the growth.

Thank you for this suggestion! I had no idea VITA existed. Do they have income limits? And will they still help even if I'm missing some of my documents?

Yes, VITA does have income limits - generally they serve people making under $60,000, but exact limits can vary by location. Since you mentioned making around $28k-$32k, you should definitely qualify. They absolutely will help if you're missing documents! That's a super common situation. The VITA volunteers can help you determine what's missing and can show you how to request wage transcripts from the IRS that will have all your W-2 information. They deal with this situation regularly and won't make you feel bad about it. Just be upfront about your situation when you make the appointment so they can schedule enough time to help you.

Not an audit exactly, but I did get CP59 notices (failure to file notices) for 2 years I missed. The IRS doesn't usually do full audits just for not filing - they send notices first. Your sister should respond ASAP though. The longer she waits, the worse it gets. If she can't pay what she owes, she should still file and then request a payment plan. The penalty for not filing is 10x higher than the penalty for not paying.

I filed through a CPA but want to check their work before asking them to amend. Does the interest paid on a home equity loan also count as mortgage interest for tax purposes? I know there used to be some difference.

Home equity loan interest is deductible only if the loan was used to buy, build, or substantially improve the home that secures the loan. If you used the money for other purposes (like paying off credit cards or student loans), the interest isn't deductible anymore. This changed with the 2017 tax law. Also, there's a limit on total mortgage debt for interest deductions - you can only deduct interest on the first $750,000 of mortgage debt ($375,000 if married filing separately) for loans taken out after December 15, 2017. For older mortgages, the limit is $1 million.

The IRS Tax Withholding Estimator is just for calculating paycheck withholding, not for figuring out amended returns. It's really confusing how few official calculators the IRS actually offers! I ended up just using FreeTaxUSA to recalculate - you can enter all your info there for free and it shows you the result without paying unless you actually file.

Would an email work instead of certified mail? I have all their texts demanding payment for the shirts, but I'm not sure I want to spend money on certified mail to these jerks.

Email isn't ideal because it's easier for them to claim they never received it. The certified mail creates an official record that they received your communication, which is important if this escalates further. The $4-5 for certified mail is worth it for the paper trail it creates. That said, if you do use email, make sure to request a read receipt and save all correspondence. The texts demanding payment are good evidence already, so keep those too. The key is documenting everything in case you need to prove harassment later or defend yourself if they try to send this to collections.

That's a good point - OP should look up the IRS Whistleblower Program. If the employer is systematically underreporting wages, the IRS takes that very seriously and you could potentially get a reward if your information leads to the recovery of unpaid taxes. The reward can be 15-30% of what the IRS collects!

Thanks for mentioning this! I hadn't considered the refund delay. Do you know if there's any way to apply for the ITINs now, before tax season starts, so everything's ready when I file?

Yes, you can absolutely apply for ITINs before tax season! You'll need to submit the W-7 forms along with your federal tax return, but you can do this outside of tax season. You'll include a note explaining that you're applying for ITINs for the purpose of filing tax returns in the future. The advantage is that once the ITINs are assigned, you'll be able to file your 2025 tax return normally without delays in processing or receiving your refund. Given that ITIN processing is typically slower during peak tax season, applying now could save you significant waiting time.

Is there a directory or something where you can find certified acceptance agents in your area? I'm in a small town and not sure if we even have any nearby.