Anyone know which tax software handles this education credit situation the best? I've used TurboTax in the past but I'm in my 5th year of school now and want to make sure I get the right credits.

Your H&R Block tax specialist was definitely mixing up the rules. The Form 1098-T itself has no lifetime limit - you'll receive one every year you're enrolled and have qualified education expenses, and you can use it on your tax return each time. What has the 4-year lifetime limit is specifically the American Opportunity Tax Credit (AOTC). This is the most valuable education credit (up to $2,500 per year, partially refundable), but it's limited to 4 tax years per student and can only be used for the first 4 years of undergraduate education. After you've exhausted your AOTC eligibility, you can still claim the Lifetime Learning Credit using your 1098-T information. The LLC is less generous (up to $2,000 per year, non-refundable) but has no year limit and can be used for undergraduate, graduate, or professional courses. So to be clear: keep using your 1098-T every year, but strategically plan which credit to claim based on your situation. Don't let misinformation from a tax preparer cost you money!

I've been through this exact situation! Made direct HSA contributions for three years now because my employer's payroll system is notoriously slow with changes. The process is straightforward - just make sure you have your HSA account number and routing info, then you can do an ACH transfer from your bank or even write a check. Most HSA administrators have online portals that make this really easy. One tip that saved me some headache: when you make the contribution online or by check, there's usually a field asking what tax year the contribution is for. Make sure you specify the correct year, especially if you're contributing between January 1st and the tax deadline for the previous year. Since your wife doesn't pay Social Security taxes anyway, you're not missing out on any FICA savings by going direct instead of payroll. The $1,600 tax savings your preparer calculated should be exactly what you'll get with direct contributions. Just remember to save the confirmation/receipt from your HSA provider - you'll want that documentation when you file your taxes.

This is exactly the kind of situation where direct HSA contributions make perfect sense! I've been making direct contributions for years because it's actually more flexible than payroll deductions. Since your wife doesn't pay into Social Security anyway, you won't lose any FICA tax benefits by going direct. The $1,600 savings your tax preparer calculated should be spot-on with direct contributions. Here's what I'd recommend: Most HSA providers have online portals where you can transfer funds directly from your checking account. The process usually takes 2-3 business days, and you'll get immediate confirmation. Just make sure to specify it's for the current tax year when you make the contribution. One advantage of direct contributions is that you actually have until April 15th (the tax filing deadline) to make contributions for the previous tax year, giving you even more time if needed. When tax season comes around, you'll report the contribution on Form 8889 - your HSA administrator will send you Form 5498-SA showing your total contributions. Pro tip: Keep a screenshot or email confirmation of your contribution for your records. Some people find it easier to just switch to direct contributions permanently rather than dealing with slow payroll systems!

This is a really common situation that more people are discovering as they get older and their parents clean out old files! The good news is that while you're past the age 30 deadline, you're not in as bad a spot as you might think. First, the IRS doesn't automatically start charging penalties just because you turned 30 - the penalties only apply when you actually take a distribution. So you haven't been accumulating back taxes for the past 4 years. When you do withdraw the funds, you'll need to pay income tax plus a 10% penalty on the earnings portion only. The original contributions your parents made can be withdrawn tax-free. The financial institution will send you a 1099-Q showing the breakdown. A few strategies to consider before just taking the full distribution: 1. If you're planning any education this year (even professional development courses at a community college), you could time the distribution to coincide with those expenses 2. Check if you have any qualifying relatives under 30 who could become the new beneficiary 3. Look into whether you had any unreimbursed education expenses in recent years that might apply Don't let the phone tree frustration discourage you from calling the financial institution again - sometimes asking specifically for the "education savings account department" or "Coverdell ESA specialist" can get you to the right person faster.

I actually work in tax preparation and see this situation fairly regularly. One thing that hasn't been mentioned yet is that you should request a detailed account statement from the financial institution showing the contribution history and earnings breakdown before you do anything. This will help you calculate exactly how much of that $3,800 is original contributions (tax-free) versus earnings (subject to tax and penalty). Also, while everyone's mentioning the 10% penalty on earnings, don't forget that the earnings portion will also be subject to your regular income tax rate. So if you're in a 22% tax bracket, you're looking at 32% total tax on the earnings portion (22% income tax + 10% penalty). One strategy I've seen work well is to spread the tax impact across multiple years if the amount is significant. You're not required to withdraw the entire balance at once - you could take partial distributions over 2-3 years to potentially stay in a lower tax bracket each year, especially if you have other income fluctuations to consider. The beneficiary change option to a younger family member is definitely worth exploring if you have eligible relatives. Just make sure to handle this properly with the financial institution to avoid any inadvertent gift tax issues.

Has anyone tried running this scenario through different tax software? I know inheriting an IRA is complicated but most tax programs should be able to calculate your RMD correctly. I'm dealing with an inherited Roth IRA which apparently has different rules.

I went through this exact same situation when my grandmother passed in 2021 at age 78. The confusion you're experiencing is totally understandable because the SECURE Act created these hybrid rules that many financial advisors are still getting wrong. Here's what I learned after consulting with a CPA who specializes in retirement accounts: Since your uncle died in 2021 (post-SECURE Act) and was already taking RMDs, you're subject to BOTH rules simultaneously - you must take annual RMDs based on your life expectancy AND completely empty the account by December 31, 2031 (10 years after the year of death). The key thing your tax preparer got wrong is that you don't have to take exactly 1/10 each year. You take the higher of: (1) the annual RMD calculated using the Single Life Expectancy Table, or (2) whatever amount ensures the account will be fully distributed by the 10-year deadline. I'd recommend getting a second opinion from a CPA or Enrolled Agent who specifically deals with inherited retirement accounts. The penalty for getting this wrong is 50% of the amount you should have distributed, so it's worth paying for expert advice to get it right.

Wait I'm confused about something... if you're getting paid through CashApp, shouldn't CashApp be sending you a 1099-K if you received over the threshold amount? I thought payment apps were required to report to the IRS now?

Hey Olivia! I totally understand your frustration - I had a similar situation last year where my employer kept giving me the runaround about tax forms. Here's what I learned from going through this: First, definitely report that $14,625 as self-employment income on Schedule C, even without the 1099. The IRS cares way more about you reporting all your income honestly than whether you have the official paperwork. Download your complete CashApp transaction history for 2024 - that's your proof of income. Your employer is technically wrong about not being "legally required" to provide 1099s. They should issue a 1099-NEC since you earned over $600, but their failure to do so doesn't stop you from filing correctly. Since you're filing as self-employed, don't forget about the self-employment tax (15.3% on top of regular income tax) - it can be a shock if you're not expecting it! Also look into business deductions like mileage to work, any supplies you bought, etc. Keep records of all your attempts to get the 1099 from them. Send one more email asking for a written statement of how much they paid you in 2024 - even an informal email works as documentation. If they still won't cooperate, you're covered as long as you report the income accurately. You've got this! The most important thing is being honest about your income, which you're clearly trying to do.