I didn't even think about state taxes! I was in Illinois for college. Do you know if they're more aggressive than the IRS about pursuing old unfiled returns?

Illinois actually follows the federal statutes of limitations pretty closely for most tax matters, generally 3 years from filing or due date (whichever is later). However, like the IRS, they technically have no time limit for unfiled returns. That said, Illinois typically receives information from the IRS and educational institutions, so if the IRS hasn't flagged your account, Illinois likely hasn't either. State tax authorities usually have even fewer resources than the IRS for pursuing older, smaller cases. If you haven't received notices from Illinois by now, it's even less likely they'll pursue this than the federal government would.

Yes, he should check the box indicating that someone can claim him as a dependent when filing his own return. This is important because it affects his standard deduction amount and eligibility for certain credits. Being claimed as a dependent doesn't eliminate his obligation to file his own return if he meets the filing requirements (which for 2024, for dependents with only earned income, would be income exceeding $14,600). He'll need to report his taxable scholarship income (the portion exceeding qualified education expenses) as income on his return.

I did last year. Had W2 for my bartending job and 1099 for DJing special events at the same venue. Made sure to document EVERYTHING for the 1099 work - kept mileage logs, receipts for equipment, music subscriptions, etc. Filed Schedule C with all those deductions. Ended up owing less than I expected! Just make sure you're setting aside money for taxes throughout the year.

Thanks for sharing your experience! That's really helpful to know it's doable without issues. Did you use any specific tax software that handled the dual arrangement well? I've been using TurboTax but wasn't sure if it would get confused with both forms from the same employer. I'll definitely start documenting my expenses better. I have some equipment purchases and mileage that should qualify for deductions. Did you pay quarterly estimated taxes on your 1099 income or just handle it all at filing time?

Thanks for the warning! Yeah, the social media stuff was definitely on their schedule - they'd just tell me to "go handle the Instagram during slow periods" of my server shift. I didn't even think about the payroll tax angle. Now I'm wondering if they're just trying to save money by putting some of my work on a 1099. Not cool.

This happened to me too! My accountant said it's actually illegal if they're controlling the work like that. I showed my boss the IRS guidelines and they fixed my classification. Saved me like $700 in self-employment taxes I shouldn't have had to pay.

Thanks for the insider perspective! So would you recommend I just go with my simplified approach for this year since I'm claiming less of a loss than I'm entitled to? Or should I spend the extra money to have everything properly documented transaction by transaction?

If you're claiming less of a loss than you're entitled to, from a practical risk perspective, you're unlikely to face issues. However, from a compliance standpoint, you should report transactions accurately. My recommendation would be to consider using specialized crypto tax software that can handle the volume of transactions correctly rather than manually simplifying. It would give you proper documentation if questions ever arise, and you'd get your full allowable loss. The peace of mind is often worth the investment, especially if you continue crypto trading in future years.

This! It's like getting pulled over by a cop even when you're not speeding. Your heart still races because you start second-guessing everything. "Did I signal that lane change? Is my registration current? Is there a taillight out I don't know about?

Thanks for the tip about FreeTaxUSA! Did it handle the scholarship question well? That's my biggest concern - making sure we properly categorize what's taxable vs. non-taxable.

FreeTaxUSA handled the scholarship situation really well. It specifically asks whether scholarship money was used for qualified expenses (tuition, books, required fees) versus non-qualified expenses (room and board, living expenses). It also provided clear explanations about which portions of scholarships are taxable and which aren't, something TurboTax didn't explain as clearly in my experience. The program walks you through it step by step and even has a help section specifically addressing graduate student scholarships and fellowships.

What about tax credits that weren't available before? I heard the income thresholds change when filing jointly and you might qualify for different credits?

This is a good point I hadn't considered! My last US address was in Florida before moving to Germany. I still have my Florida driver's license though it's expired now. Would I still need to worry about state tax issues even though Florida doesn't have state income tax?

You're in a good position having your last residence in Florida since they don't have state income tax. States without income tax (like Florida, Texas, Nevada, etc.) don't generally pursue former residents for tax purposes. The bigger concern is for people from high-tax states like California or New York, where state tax authorities sometimes argue that you never truly "left" if you maintain certain connections. In your case with Florida, as long as you're filing your federal returns properly, you shouldn't have to worry about state tax complications.

This is so true! I got absolutely destroyed on taxes because I had UK investment funds that were classified as PFICs. The forms are ridiculously complicated (Form 8621) and the taxation is punitive compared to US-based investments. I ended up selling all my foreign funds and only investing through US brokerages now.