Thanks for bringing this up, but I don't think it applies in our situation. Both my parents are alive but separated. Neither of them has dependent children living with them - my brother and I are both adults supporting them, not living with them. But good to know about this filing status for future reference!

You're right, it doesn't apply in your specific situation. I just wanted to mention it since it's something people often overlook. Another consideration is that if either of your parents receives Social Security benefits, claiming them as a dependent might affect how those benefits are taxed. Usually only matters if they have other significant income alongside Social Security, but something to be aware of.

That's not entirely accurate. While the personal exemption was suspended, there's still a $500 credit for non-child dependents. Plus, claiming a parent as a dependent might allow you to file as Head of Household (if they live with you), which has more favorable tax rates and a higher standard deduction. You might also be able to deduct medical expenses you pay for them. Definitely can be worth it.

Thanks, that's interesting! Do the same general tax advantages apply? Like with the SEP, would I still see a similar reduction in my current tax burden if I contributed the same amount to a Solo 401k?

Yes, you'd get the same tax deduction for equivalent contributions. The tax treatment is identical - both reduce your current tax burden and grow tax-deferred until withdrawal. The main advantage of Solo 401k is that you can potentially contribute more in total. For example, in 2023 you could contribute up to $22,500 as an "employee" contribution plus the same employer contribution you'd make with a SEP (up to 25% of compensation with a combined limit of $66,000). If you're over 50, you also get an additional $7,500 catch-up contribution option with the Solo 401k. Many people don't realize that a Solo 401k can be fairly simple to set up with major brokerages like Fidelity, Vanguard, or Charles Schwab.

This is so true. I maxed out my SEP last year and felt great about the tax savings, then my biggest client terminated their contract unexpectedly. I would have been in serious trouble if I hadn't kept a decent emergency fund. How much did you end up paying in penalties when you had to take that early distribution?

This is great advice, but I think you mean Form 4506-T for the transcript request, not 8962 (which is for Premium Tax Credits). The Taxpayer Advocate suggestion is gold though - they really can help with these situations!

You're absolutely right, thank you for catching that! It is Form 4506-T for requesting transcripts, not 8962. I mixed up my form numbers. The Taxpayer Advocate Service was definitely the key to resolving my case. They have more direct access to various departments and can often get answers when regular channels fail. They're especially helpful in cases like this where you have evidence the IRS actually received payment but is still sending non-filing notices.

It's a CP59 notice, and it directs us to IRS.gov and the main IRS phone number, so unfortunately I think it's legitimate. We also verified by calling the IRS directly (not using any number from the letter). I wish it was a scam - would be easier to deal with!

Yep, CP59 is definitely a legitimate IRS notice for unfiled tax returns. Good job verifying independently by calling the main IRS number. Since we're dealing with a 2020 return (filed in 2021), you should know the IRS is still working through a massive backlog from the pandemic years. Paper returns especially got backed up severely. I've seen cases where returns were sitting in trailers in IRS parking lots for months before processing. Even with the payment being processed, the physical return could have been separated or lost. Follow the advice others have given about sending a clearly marked copy with a detailed cover letter. Persistence is key with these situations!

Do you know if having a baby THIS year (after filing 2024 taxes) would still qualify us for the monthly payments? Or would we have to wait until next year's tax filing?

Based on how the 2021 CTC expansion worked, there would likely be a portal where you could update your information to add a new child born during 2025. During the previous expansion, the IRS created the "Child Tax Credit Update Portal" specifically for situations like yours. If they follow the same model, you wouldn't have to wait until next year's filing to benefit. Once you register your new child in the portal, the IRS would adjust your monthly payments accordingly. Of course, this all depends on the final bill language, but this is how they handled it previously.

From what I've read, the new bill is supposed to include "safe harbor" provisions for moderate-income families, similar to 2021. If your income increases but stays below $80,000 for single filers or $120,000 for joint filers, you'd be at least partially protected from having to repay. But if you go above those thresholds, you might have to repay.

9 When you say "issued before 2009" - does that mean the original divorce decree or would modifications after 2009 still count? Our original divorce was in 2008 but we modified the child support arrangement in 2020.

3 It's specifically about when the original agreement about claiming dependents was executed. If your original 2008 decree included the language about who claims the child for tax purposes, that part might still be valid without Form 8332. But if that arrangement was only added in the 2020 modification, then you would need Form 8332. The key thing is that pre-2009 agreements containing "unconditional declarations" about who claims the child can sometimes serve in place of Form 8332. However, the IRS has gotten stricter about this over the years, so having the signed form is always the safest approach regardless.

11 Do you know if the form has to be signed every single year? Or can you have them sign once for multiple tax years?