That's interesting! So are you saying the IRS doesn't strictly apply the $1,470 monthly limit that the SSA uses? My daughter has Down syndrome and occasionally works more hours for special events, but we still provide over 90% of her support.

That's right - while the IRS and SSA both use the term "substantial gainful activity," the IRS focuses more on the overall support situation rather than rigidly applying the monthly earnings limit. If you're providing 90% of your daughter's support, you're well within the requirements to claim her as a dependent. The key test for the IRS is whether you provide more than half of your dependent's total support for the year. The SGA question becomes more relevant if they're earning enough that they might be supporting themselves. Even with occasional higher earnings for special events, it sounds like your situation clearly meets the support test.

There are different SGA thresholds for blind individuals versus non-blind individuals with disabilities. In 2023, the threshold was $2,460 per month for blind individuals and $1,470 for non-blind. Doesn't matter what type of disability otherwise - physical, cognitive, etc all fall under the same threshold as long as they're not blind.

Good point! I just checked and you're right - my state withholding also changed on my part-time job. I'm in Illinois, and it looks like they increased the state withholding percentage at the same time as the federal. Any specific suggestions for handling state withholding with multiple jobs? Is it similar to federal or do they have different rules?

State withholding generally follows similar principles to federal, but each state has its own specific forms and calculation methods. For Illinois, they use your federal allowances as a starting point for state withholding calculations. I'd recommend checking the Illinois Department of Revenue website for their withholding calculator or Form IL-W-4. Since both jobs are now withholding correctly, you might just need to make sure your additional withholding amount on your full-time job's W-4 is adjusted downward to account for the new withholding happening at your part-time job. The goal is to get your total withholding across both jobs to match your expected tax liability.

That's actually by design! The 2020 W-4 redesign and IRS withholding tables are set up so that if you check the multiple jobs box, your second/lower paying job often has a higher withholding percentage. This is because the system assumes your first job already uses up your standard deduction and lower tax brackets, so additional income is taxed at higher marginal rates.

Wait, so if he enrolled in college classes the income limit wouldn't matter? Even at a community college? My daughter works part-time making about $8k but she's taking 3 classes each semester.

That's correct! If your daughter is under 24 and a full-time student (generally defined as taking a full course load for at least 5 months of the year), then the gross income test doesn't apply for determining if she's your qualifying child. She would need to meet the other tests: relationship (your daughter, so check), residency (lived with you for more than half the year), age (under 19 or under 24 if full-time student), and support (you provide more than half her support). The number of classes determines full-time status according to the school's definition, so 3 classes might qualify if her school considers that full-time.

Your friend is probably claiming her daughter as a qualifying child rather than a qualifying relative. If her daughter is a full-time student under 24, the income limit doesn't apply. The rules are different depending on which type of dependent they are.

This is super important! I messed this up my first year and both me and my parents got letters from the IRS because we had conflicting filings. Such a headache to fix.

I hadn't even thought about state taxes! I'm in Texas - do you know if they have state income tax here?

You're actually in luck! Texas is one of the few states with no state income tax, so you don't need to worry about filing a state return. Just the federal one. That makes things much simpler for you! If you ever move to another state though, definitely check their specific requirements. States like California, New York, and many others have their own income taxes with different thresholds and rules.

Whoa, I had no idea about the sunset provision! That could be a huge deal for my uncle. He's in Massachusetts if that makes a difference for state-level taxes. Would you recommend he talk to a specialized estate planning attorney rather than his regular attorney who handles his other legal matters?

Massachusetts has a state estate tax threshold of only $1 million with tax rates ranging from 0.8% to 16%, so yes, this is definitely something your uncle needs to address regardless of federal exemption amounts. Absolutely recommend a specialized estate planning attorney rather than a general practitioner. Estate planning, particularly with estates approaching the federal exemption and in states with their own estate taxes, requires specific expertise. The right attorney can potentially save your uncle's estate hundreds of thousands or even millions in taxes with proper planning. The fee for specialized advice will be well worth it given the potential tax savings.

This is such an important point. My mother did something similar and it was a nightmare. Are there any types of trusts that offer tax benefits but still maintain some flexibility?