Thank you for mentioning this! I'm actually expecting a small refund based on my calculations. So does that mean I won't face any penalties at all for filing late? That would be a huge relief.

That's right! If you're owed a refund, the IRS doesn't charge penalties for filing late. They're only interested in penalties when you owe them money. The only downside to filing late when you're due a refund is that you're essentially giving the government an interest-free loan for longer. And of course, you won't get your refund until you actually file. But there's no financial penalty for lateness when the IRS owes you.

I filed paper in July last year (for 2022 taxes) and it took almost 8 months to process! Definitely e-file if you can. The IRS accepts e-filed returns year-round for past years. The only reason to paper file is if you have some unusual situation that the e-file system rejects.

That's a good point about the support test. They definitely covered more than half my expenses for 2024 (rent, groceries, car insurance, etc.). I'll make sure to talk to them before we file. Do you know if there's a specific form or calculation to determine exactly what counts as "support"?

There's no specific form for calculating support, but the IRS does have guidelines. Support includes food, housing, clothing, education, medical expenses, transportation, and recreation. For housing, you calculate the fair rental value of the space provided plus utilities. Keep in mind that scholarships don't count as support you provided for yourself. Also, any loans you took out yourself do count as support you provided, but loans your parents took out count as support from them.

I used TurboTax last year when I was in a similar situation. It asks you specific questions about your living situation, income, and who provided support. It was pretty straightforward and determined my correct status. If you're still unsure after using it, they have tax pros you can talk to, though that costs extra.

Thank you! I tried going back through the Form 8863 section specifically and I think I found the issue. There was a checkbox asking if my expenses were for "qualified education expenses" that I had missed. After checking that and going through that section again, it's now showing I owe $0 instead of $817! I understand now about the non-refundable part. I wasn't expecting to get money back, just wanted to not owe anything. This is such a relief!

Great to hear you got it figured out! Yes, that checkbox is crucial - it's easy to miss but makes all the difference. The tax software can't apply the credit if it doesn't know your expenses qualify. That's exactly right about non-refundable credits - they can bring your tax liability down to zero but no further. For future reference, if you expect to have tax liability again next year, you might want to consider making estimated tax payments throughout the year since you're self-employed. It can help avoid a surprise bill come tax time, even with credits applied.

This is a good point. You can check if your school is eligible by looking up its Federal School Code on the FAFSA website. Almost all accredited universities and colleges qualify, but some vocational programs or non-degree programs might not.

Unfortunately, IRS Direct File still doesn't support 1040-NR for the 2025 filing season. It's limited to fairly simple 1040 returns for residents. Non-resident returns typically have more specialized requirements like treaty provisions and different deduction rules that aren't part of the Direct File system yet.

That's disappointing! I was hoping they'd expand it to include non-resident forms since they're rolling it out to more states. Thanks for confirming though - saves me time trying to figure it out.

I can't speak directly to their support for non-resident specific issues, but my colleague who used OLT said their email support was responsive (24-48 hours) when he had a question about reporting his foreign pension. He said they have a knowledge base specifically for non-resident issues that was helpful too. Definitely not as comprehensive as paid services, but adequate for straightforward situations.

Thanks for the info! That's actually better than I expected. I might try them next year if my situation doesn't change much. $180 vs free is a big difference for essentially the same outcome!

Would this be the same for a situation where the insurance company sent a check for property damage rather than lost rent? I received a check for roof damage but it was made out to both me and my mortgage company.

No, that's actually quite different. Insurance payments for property damage (like your roof) are generally not taxable income - they're considered reimbursement for capital expenses. However, if the insurance payment exceeds your basis in the damaged property component, you might have to recognize gain. The situation gets more complex when the check includes your mortgage company. Typically, mortgage companies are included on insurance checks for significant property damage to ensure the repairs are actually completed. This doesn't change the tax treatment - it's still not income - but you'll need to work with your mortgage company to get the funds released for the actual repairs.

Wait so if the 1099-NEC is for lost rental income is it considered passive income? I thought anything on a 1099-NEC is automatically considered self-employment income subject to SE tax?

That's a really common misconception! The 1099-NEC form itself doesn't determine whether income is subject to self-employment tax - the nature of the income does. In this case, despite being on a 1099-NEC, the payment is essentially replacement rental income, which is generally considered passive income reported on Schedule E and not subject to self-employment tax. The insurance company probably issued a 1099-NEC because they didn't have a more appropriate form for this type of payment, but that doesn't change its fundamental nature as replacement for rental income. When you report it on Schedule E along with your other rental activities, you're correctly characterizing it based on what it actually represents rather than just the form it came on.