No penalty if the IRS owes YOU money! But your cousin only has 3 years to claim that refund or she loses it forever. So she has until April 2027 to file her 2023 return and get that money back. The IRS is totally happy to keep your refund if you don't ask for it back in time!

She did start college in fall 2023, so this is really good to know. We paid about $3,500 out of pocket after her scholarships. I'll make sure we look into that credit when filing her prior year tax return. Thank you!

If I find different refund amounts between software, how do I know which one is correct? Should I just go with the one that gives me the bigger refund?

You should never simply choose the software that gives you the bigger refund without understanding why there's a difference. A larger refund might be incorrect and could potentially trigger an audit. If you find different results, dig into the actual tax forms and compare them line by line to see where the differences occur. The most common discrepancies happen with education credits, business expense categorizations, or retirement contribution deductions. When you find the specific lines that differ, research that particular tax topic or consult with a professional about that specific issue.

Does this work with state taxes too or just federal?

Isn't setting up a 501(c) really expensive and complicated though? I heard you need lawyers and stuff.

It's not as bad as people think. For a small organization, filing for 501(c)(3) status using Form 1023-EZ is relatively straightforward if your annual gross receipts are under $50,000. The filing fee is around $275. You don't necessarily need lawyers, though having someone with experience look over your application can help. There are also online services that guide you through the process for a few hundred dollars. The main requirements are having proper bylaws, a board structure, and clear charitable purpose. Once established, annual maintenance is just filing a simple Form 990-N if you stay under the $50,000 threshold.

This is actually what we do for our school's charity auction. People make checks directly to the charity, and we just collect them. Simplifies everything tax-wise.

That's really interesting! I hadn't heard of a landlord contribution agreement before. Did your brother's arrangement require monthly payments to still be made, or was it entirely offset by the improvements? My situation is more informal - I help with utilities and maintenance but don't pay a set "rent" amount.

The arrangement didn't require full elimination of rent payments. They structured it so a portion of what would have been market-rate rent was offset by the documented improvement costs. There was still some payment happening to establish a legitimate landlord-tenant relationship, but significantly reduced. The key was having everything in writing with fair market values established for both the rent and the improvements. They also took photos before/after and kept all receipts. Their tax professional basically said the most important thing is showing this is a legitimate business arrangement, not just a family helping each other out informally. The more formal documentation you have, the better position you're in if questions come up.

Doesn't the IRS also have some kind of recapture rule if you claim these credits and then move out or sell within a certain time period? I feel like I read something about that when I was considering solar panels.

I took it in English even though Hindi is my first language. The tax terminology is mostly English anyway, so I found the translated version more confusing than helpful when I tried practice questions in Hindi. The technical terms don't always translate well.

This is super helpful advice I hadn't considered. Are there any specific resources you'd recommend for learning about state taxation and these FBAR requirements? Would the regular EA prep courses cover these topics adequately?

Most EA courses touch on FBAR and international reporting but not deeply enough for specializing in international clients. I'd recommend the IRS's own resources on FBAR and Form 8938 requirements as a start (search "IRS FBAR Reference Guide"). For state taxation, each state has different rules, but I'd suggest focusing initially on understanding residency rules and sourcing of income, as these determine filing requirements. The tax foundation website has good comparative information across states. Once you understand the concepts, you can look up specific state rules as needed. Bloomberg Tax and Thomson Reuters also have good continuing education courses on international tax compliance that go beyond what's covered in basic EA prep.