1 I've looked through everything that was sent to me and don't see any supplemental information specifically about this line. There are a few other pages with details about some other entries but nothing about code AE or what the asterisk means. Should I contact the partnership? They're not always the most responsive.

3 Yes, definitely contact the partnership that issued the K-1. They're required to provide explanations for any special notations on the form. While you're waiting to hear back, I'd suggest entering it exactly as it appears on your K-1 (with the zero balance) and proceeding past the FreeTaxUSA warning. The code AE specifically relates to Qualified Production Activities Income deductions, which was part of the former Section 199 deduction. Since that deduction was repealed in the Tax Cuts and Jobs Act, it's possible they're reporting a zero balance but including the code for continuity or tracking purposes. The partnership's tax preparer would be able to confirm this.

9 I've seen this too. My S-corporation K-1 often has codes with zero balances in years where certain activities didn't generate income but need to be tracked for continuity. The software warnings are annoying but can usually be ignored if you're entering exactly what's on the form.

I actually used a small local tax preparer last year who has since closed their business. I tried reaching out to them directly but their phone is disconnected. I don't have access to whatever software they used. That would've been the easy solution!

That's unfortunate about your preparer closing shop. In that case, the transcript route others suggested is probably your best bet. For the future, I'd recommend always saving a PDF copy of your complete return somewhere secure like a password-protected cloud storage. I learned that lesson the hard way too. I've had good experiences with the IRS transcript system for basic stuff, but for something specific like Form 5329, you might need to go with one of the other suggestions here to get the full details.

Good question. I've had to reference previous 5329s when dealing with multiple years of early withdrawals. The IRS sometimes gets confused about which tax years penalties have already been paid for.

I've only claimed it for 3 previous tax years (2020, 2021, and 2022), so this would be my 4th and final year of eligibility. I did check that part!

Perfect! Then you should be good to go on that front. The 4-year limit trips up a lot of people, especially if they've taken gap years or had a non-traditional education path. Since this is your 4th year claiming it, make sure to keep extra good documentation in case of an audit.

If you claim your son as a dependent, then YOU (the parent) would claim the AOTC on your tax return, not your son on his return. The person who claims the student as a dependent gets to claim the education credits. The only exception is the refundable portion we're discussing here. If your son meets all AOTC qualifications but doesn't meet the disqualifying factors (like not being a full-time student for 5+ months), then he could potentially receive the refundable portion on his return even if you claim the non-refundable portion.

Thanks for this info! She's being claimed as our dependent. I'm going to check the 1098-T boxes more carefully. Do you know if room and board counts as a qualified expense even though it doesn't show up on the 1098-T?

Yes, room and board can count as qualified expenses if your daughter is enrolled at least half-time, even though they don't appear on the 1098-T. You'll need to use the school's official cost of attendance figures for on-campus housing, or if she lives off-campus, the actual expenses up to the school's published allowance for room and board. Make sure you're accounting for all eligible expenses when determining how much of the 529 distribution is tax-free. The key is that your total qualified expenses need to be at least equal to the total 529 distribution to avoid having any taxable portion.

Yes, textbooks absolutely count as qualified expenses regardless of where they were purchased, as long as they were required for her courses. Keep receipts and a copy of her syllabus or course requirements showing these were required materials.

Thanks for this advice! When you say to keep copies of everything, how long do you typically hold onto those records? And has any US client ever withheld any taxes from your payments despite having the W-8BEN on file?

I keep all my records for at least 7 years, which is what our tax office recommends in Australia. It's better to be safe than sorry when it comes to tax documentation, especially for international work. I've never had a US client withhold taxes after properly filing the W-8BEN form. That's actually the whole purpose of the form - it certifies you're not subject to US tax withholding. In the rare case where a client does withhold something, you should contact them immediately as they've likely made an error in their accounting system.

This is super helpful! Do you know if there's a specific form or section in the NZ tax return where international income needs to be reported differently than domestic income? I'm just starting out with US clients too.