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.

That's a really good point I hadn't considered. We're planning to file jointly going forward, but should we also be updating our status with Social Security, health insurance, etc.? Are there any benefits we might lose by being considered married?

Yes, you should absolutely update your status with all agencies. Being inconsistent is a red flag. As for benefits you might lose - some income-based programs phase out at higher income levels for married couples compared to singles, and there can be a "marriage penalty" in certain tax brackets where two high earners pay more jointly than they would separately. Some people find that student loan payments increase when filing jointly if one partner has a much higher income. You might want to run calculations both ways (MFJ vs MFS) to see what works best, though in most cases MFJ provides better tax benefits.

I went through this in 2023. We claimed common law married status in Iowa and got audited. The key was having consistent documentation - joint bank accounts from when we started considering ourselves married, beneficiary designations, insurance policies listing each other as spouses, and affidavits from family and friends confirming they knew us as married.

That's really helpful to know. Did you need to get a lawyer involved during the audit process? And how far back did they want documentation? I'm just trying to understand what we might be getting ourselves into if we make this change.

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.