What kind of documentation did you need from your parent? My mom isn't great with paperwork and I'm worried about this exact situation.

I had my mom write a simple statement saying: "I confirm that [my name] provided over 50% of [brother's name]'s total support for the tax year, including [list specific things I paid for]." She signed and dated it, and I had it notarized just to be safe, though that might be overkill. The key was having her acknowledge that my contributions exceeded half of his total support. You could help your mom draft something similar - it doesn't need to be complicated. The IRS just wants confirmation from the person they live with that you're the primary financial supporter.

Yes, the value of lodging counts as support! The IRS considers the fair rental value of the home as part of the total support calculation. So if your dad provides free housing valued at say $1,000/month ($12,000/year), that counts as support from him.

Thanks for explaining that. Looks like I might not meet the 50% threshold then. The rental market where they live is really expensive, so even though I'm paying probably $15k annually for my sister's other expenses, the housing value might push my dad's contribution higher than mine.

Thanks for this explanation! I went back and checked our paystubs from this year vs last year and you're totally right. We're getting about $280 more per month in our paychecks compared to last year. That adds up to around $3,360 for the year, which almost exactly accounts for the difference in our refund. I guess I never noticed the slightly larger paychecks since it wasn't a huge difference per pay period, but it definitely adds up over the year! This makes me feel so much better. We might still adjust our W4 to get a slightly bigger refund next year since we like having that forced savings, but at least now I understand what happened.

I think they mean their W4 withholding at work is set to HOH, not their actual filing status. That's actually a common mistake - people have their withholding set wrong all year and then file with their correct status.

My daughter just has her job income from working at the campus bookstore, no investments or anything fancy. But I'm curious - what counts as "unearned income" exactly? And does scholarship money factor into any of this tax stuff? She got a partial scholarship last year.

Unearned income includes things like interest, dividends, capital gains, rents, royalties, etc. - basically money received from sources other than working a job. It's passive income rather than earned income. As for scholarships, they're generally tax-free if used for qualified education expenses like tuition, fees, books, and required supplies. However, any scholarship money used for room and board, or other non-qualified expenses would be considered taxable income. But this would be considered earned income, not unearned income, so it wouldn't trigger the kiddie tax rules. It would just be added to her regular taxable income.

The federal rules for standard deduction for dependents are the same regardless of what state they're in. But for state taxes, it gets complicated. Some states may require your son to file a return as a part-year resident or non-resident of that state if he earned money there. Most states follow similar dependent rules as federal but there are exceptions. Check both your home state and his college state rules.

Thanks for mentioning this! I just checked my December paystub and you're right - it does show up there in a separate category called "Relo-MIDP" with the tax withholding. That's really helpful to know it should be on my W-2. Did you need to do anything special when filing your taxes, or did the tax software handle it automatically since it was part of your W-2 income?

Since it was included in Box 1 of my W-2, I didn't need to do anything special when filing. The tax software handled it automatically as regular income. The only thing I made sure to do was keep documentation from my relocation company that explained the payment, just in case I ever got audited. The one thing to double-check is that the withholding amounts match up with what was actually withheld from your MIDP payment. Sometimes companies withhold at a higher supplemental rate for these kinds of payments.

That's a good point about grossing up! My company did that for some relocation expenses but not others. It's definitely worth asking about.

H&R Block absolutely does NOT offer free filing for self-employment anymore. I tried them this season and ended up with a $134 bill at the end - more expensive than TaxAct! They don't tell you about the fees until you've already spent hours entering all your information. Total waste of time.

That's actually not true - the threshold is $400 in net earnings, not $1,000. If you make more than $400 profit from self-employment, you are required to file Schedule C and pay self-employment tax. This is a common misconception.