One thing I learned the hard way is that the type of assets you transfer into the trust can have different tax implications. We initially planned to fund our children's trust with appreciated stock, but our attorney explained that transferring appreciated assets to an irrevocable trust means losing the potential step-up in basis that would occur if we held them until death. For example, if you have stock worth $100k that you originally bought for $20k, transferring it to an irrevocable trust locks in that $20k basis. If your kids eventually sell it, they'll pay capital gains on the full $80k appreciation. But if you kept it and passed it through your estate, they'd get a stepped-up basis to the $100k value. We ended up funding the trust with cash instead and keeping the appreciated assets in our names. Just something to consider when you're deciding what assets to use for the $650k transfer. Your estate planning attorney should definitely walk through these basis considerations with you!

Great question! I went through this same process about two years ago when we set up a trust for our kids after my mother passed away. The good news is that there are typically no immediate taxes just for *creating* the trust structure itself. However, once you transfer that $650k into the trust, that's when the tax considerations kick in depending on what type of trust you establish. A few key points from my experience: - If you go with a revocable trust (where you maintain control), it's still considered your asset for tax purposes, so no immediate gift tax issues - For irrevocable trusts, you'll be making a gift to the trust which uses your lifetime gift tax exemption ($13.61M for 2024), but with $650k you're well under that limit - You'll still need to file Form 709 (gift tax return) even if no tax is owed - just for documentation - The trust will need its own EIN and may need to file Form 1041 annually if it generates income over $600 One thing I'd definitely recommend is discussing the timing of when you fund the trust vs. when you actually establish it. We spread our funding over two tax years to use both my wife's and my annual gift exclusions more effectively. Smart move meeting with an estate planning attorney - they'll help you structure everything to minimize ongoing tax complications!

Hahahaha I laughed at "having them all prepare my returns"... bro do u know how much tax prep COSTS? You're gonna pay like $300-500 at EACH place just to compare. Seems like an expensive experiment when you could just use free online software and do it yourself!

I actually work for the IRS (though obviously speaking for myself here, not the agency), and I can confirm this is completely legal. We don't care how many preparers you consult before filing - we only care that you file ONE accurate return. That said, a few professional observations: If you're getting wildly different refund amounts, that's concerning. The tax code is the tax code - legitimate preparers working with the same facts should get similar results. Big differences usually mean either 1) someone found deductions others missed (good), 2) someone is being overly aggressive with questionable positions (bad), or 3) there's an actual error somewhere. My advice? If you do this, ask each preparer to walk you through their major deductions and credits line by line. Don't just go with the biggest refund - go with the one who can best explain and justify their positions. Trust me, dealing with an audit because someone took aggressive stances to inflate your refund is way worse than getting a smaller legitimate refund upfront. Also, most preparers charge whether you file with them or not, so this could get expensive fast. Consider it an investment in understanding your tax situation better rather than just refund shopping.

Just want to clarify something important - the 1098-T can be reported on either a payment basis or a billing basis depending on the school. Box 1 shows payments received and Box 2 shows amounts billed. Make sure you check which box your school is using because it makes a huge difference! My university switched from one method to the other between years and it confused the heck out of me.

This is a really helpful thread! I'm dealing with a similar situation where my spring semester payment from January 2024 isn't showing up on my 2024 1098-T yet, but I made it in early January. Based on what everyone's saying here, it sounds like I need to keep track of my actual payments regardless of what the 1098-T shows. One question though - if I'm claiming expenses that aren't on my 1098-T, do I need to attach any additional forms or documentation when I file my taxes? Or do I just keep the receipts in case of an audit? Want to make sure I'm doing this correctly and not setting myself up for problems later.

can we just take a moment to laugh at how TERRIBLY the irs communicates with ordinary people?? like who the heck would know what "total credit amount" means without a payroll degree lol. every year its the same story, trying to decode these forms like they're written in ancient egyptian 🙄

Totally agree with what others have said - that $7,000 is almost certainly the total federal income tax that was withheld from your paychecks throughout your employment, not something you'll owe. It's actually a good sign that your employer withheld a decent amount! Just to put your mind at ease, when you file your return, this $7,000 (plus any withholding from your current job) will be credited against your total tax liability for the year. If your total tax owed is less than what was withheld, you'll get a refund. If it's more, you'll pay the difference. But that $7,000 represents money you've already paid toward your taxes, not an additional bill. You can double-check by looking at box 2 on your actual W-2 form - that's where federal income tax withheld is officially reported, and it should be close to that $7,000 figure you're seeing.

Has anyone used TurboTax to report this kind of situation? Does it have a good section for handling insurance payments on rental properties or should I use a different tax software?

I dealt with this exact situation last year when my rental unit had flood damage. The key thing to understand is that you need to separate the personal use portion from the rental portion of your property for tax purposes. For the rental portion: If you received $7,800 but only spent $4,600 on actual repairs (the $7,800 minus the $3,200 you used elsewhere), then that $3,200 difference is generally taxable income that should be reported on Schedule E. This is because you essentially converted insurance proceeds into cash for other purposes. For documentation, keep all your receipts for materials you bought for the DIY repairs. The IRS doesn't allow you to count your own labor, but material costs definitely count toward legitimate repair expenses. The insurance company will likely send you a 1099-MISC if the payout was over $600, but that doesn't mean the entire amount is taxable - just that they reported the payment to the IRS. My advice: Calculate what percentage of your property is used for rental, apply that percentage to both the insurance payout and your actual repair costs, then report any excess on Schedule E. Better to be conservative and report it than get caught in an audit later!