Thanks for this suggestion! Do you know how I would contact them or what qualifies as "financial hardship"? I'm definitely struggling financially because of this whole mess.

You can contact the Taxpayer Advocate Service by calling 877-777-4778 or by filling out Form 911 (Request for Taxpayer Advocate Service Assistance). Financial hardship can include things like being unable to pay basic living expenses, facing imminent eviction, or having utilities shut off due to inability to pay. In your specific situation with the earned income ban, if losing the Earned Income Tax Credit means you can't afford necessities, that would likely qualify. The TAS is particularly helpful in cases where normal IRS channels haven't resolved the issue or where there's an urgent need. They can sometimes expedite the appeals process too.

The IRS communication system is absolutely broken. I recommend requesting a detailed explanation by calling the number on your notice and specifically asking for the "examination report" that led to the determination. This usually contains more specifics than the initial notice.

Thanks for the tip! I'll tell my brother to ask for the examination report. Really appreciate it because we've been completely lost trying to figure out how to address something when we don't even understand what rules were supposedly broken.

Do you know if having unfiled tax returns (even when not required to file) can affect things like financial aid applications or student loans? I'm in a similar situation for 2017 and 2018.

Having unfiled tax returns typically won't affect financial aid if you weren't required to file in those years. Most FAFSA forms and financial aid applications have a checkbox indicating "not required to file" for this reason. However, if you were required to file (based on your income and status) but didn't, that could potentially create issues with financial aid verification processes. Some schools select students for verification and may ask for tax transcripts or non-filing letters from the IRS. If you're concerned, you might want to request a "Verification of Non-filing Letter" from the IRS for those years, which confirms you weren't required to file.

Yes, you were likely required to file for 2019. The filing requirement is based on your gross income, not your final tax liability. For 2019, dependents generally needed to file if they earned more than $12,200 in wages OR had unearned income over $1,100 OR if self-employment income was over $400. With $7,500 in wages, you technically may not have needed to file based on the earned income threshold alone. However, if you had any federal tax withheld (check your W-2 box 2), you would want to file to get that money refunded. The standard deduction would likely have eliminated your tax liability, meaning you'd get all withholding back.

Thank you for the clarification! I just checked my 2019 W-2 and I had about $850 withheld in federal taxes. So I guess I missed out on getting that back since it's now 2025 and the three-year window has passed? That really sucks... At least I know for the future.

But I already sent the money to the family directly. Is there any way to reclassify it now? And does this educational expense exception work for schools in other countries too? The college is in Malaysia.

Unfortunately, you can't reclassify it after the fact. The money has to be paid directly to the qualified educational institution at the time of payment to qualify for the educational expense exception. For foreign educational institutions, they generally do qualify for this exception as long as they're a legitimate educational organization. The school doesn't have to be in the US for the direct tuition payment exception to apply. But again, the key is that the payment must go straight from you to the school - not through the family first. Keep this in mind for any future assistance you might provide.

Which tax software do you recommend for keeping track of charitable donations throughout the year? I always scramble at tax time trying to find all my receipts.

Does TaxAct force you to enter all those extra details for interest and dividends that the OP was complaining about? I hate when tax software asks for info that isn't actually required on the real forms.

TaxAct does ask for the payer names for interest and dividends, but it doesn't require all the excessive details like addresses and phone numbers. You can just enter the name and amount for each 1099-INT or 1099-DIV. For IRA distributions, you do need to enter each 1099-R separately, but that's actually correct since the distribution codes can be different. It's much less demanding than some of the other software I've tried.

Does your accountant e-file for you? I'm wondering if they have access to better tax software than what's available to regular consumers.

I had no idea about these caps! I'll definitely look into that for our state. Do you know if these exemptions are something we can apply for retroactively? We bought in 2022 but never filed for any exemptions because we didn't know about them.

In most places, you can apply for exemptions like homestead retroactively, but usually only for the current tax year and maybe the previous year. It varies by location though. When you call your assessor's office, specifically ask about retroactive applications for exemptions. Also, if this is your primary residence and you've lived there since you purchased in 2022, make sure the county knows that. Sometimes they assess at a higher rate if they think it's a rental or second home. Just having the property correctly classified can make a big difference in your tax bill.

Good point. When I bought my house, the previous owner was a veteran with a disability exemption. My taxes were way higher than what they had been paying, but there was nothing wrong with the assessment itself. Just the exemptions changing.

That's really interesting and something I hadn't considered. The previous owners were an older couple who had lived there for about 15 years, so they might have had some exemptions we don't qualify for. I'll definitely ask about this when I contact the assessor's office!