Oh wow, I hadn't even thought about the state tax implications. Do you know if there's any way around this? Would it help if they established residency in another state before going to Pakistan next time?

Yes, establishing residency in a no-income-tax state before leaving for an international assignment can help. States like Florida, Texas, Nevada, etc. would be options. They would need to genuinely establish residency though - driver's license, voter registration, bank accounts, etc. For the current situation, they should look closely at NY's 183-day rule. If they were physically present in NY for fewer than 183 days and don't maintain a permanent abode there, they might have an argument against NY residency. However, with 6 months (approximately 180-183 days), they're right on the edge. Documentation of exact days in and out of NY will be critical.

I've used Form 8833 before and it's actually not that bad. Just make sure your friend documents which specific article of the US-Pakistan tax treaty they're relying on. The form is pretty straightforward - just explains what treaty benefit you're claiming and why you qualify.

Thanks for bringing up the Child Tax Credit - I hadn't even thought about that! Do you know if there are income limits for claiming it? And are there any other tax benefits I should look into as a new parent?

Yes, there are income limits for the full Child Tax Credit. For 2023, the credit begins to phase out at $200,000 for single filers and heads of household. If you earn more than that, the credit amount reduces by $50 for each $1,000 above the threshold. As for other benefits, definitely look into the Dependent Care Credit if you're paying for childcare so you can work. Also, check if your employer offers a Dependent Care FSA, which lets you set aside pre-tax money for childcare expenses. North Carolina may have additional state-level credits or deductions for dependents, so check your state tax forms too.

Do formula and diapers count as medical expenses too? I've been spending a fortune on those.

How did you find your tax attorney? I'm in a somewhat similar situation (owe about $30k from business losses) and have been getting bombarded with ads from tax resolution companies that sound super scammy with their "we can settle for pennies on the dollar" promises.

I found our attorney through the state bar association's referral service. I specifically asked for attorneys specializing in tax controversy and resolution. This approach was much better than responding to those "pennies on the dollar" ads, which are usually misleading. The bar association gave me three names, and I interviewed all of them. I asked about their experience with cases similar to ours, their success rate with Offers in Compromise, and their fee structure. Our attorney charged a flat fee for the initial analysis of our situation, then another flat fee for preparing and submitting the Offer in Compromise. This was much more transparent than the percentage-based fees some places charge.

Thanks for mentioning this! Do you know what the income limits are to qualify for these clinics? And do they help with state taxes too or just federal?

Do they handle all types of tax issues or just specific problems? I've got multiple notices I need help with.

The Taxpayer Advocate Service (TAS) is designed primarily for situations where you've tried normal IRS channels without success or are experiencing significant hardship. They don't handle routine questions about notices. For multiple notices, you're better off contacting the specific numbers listed on each notice first. TAS is more of a last resort when you're stuck in the system or facing serious consequences like wage garnishment or bank levies.

Did you end up having to pay it? Or can you contest their decision?

This is super helpful, thanks! Quick question - how much is considered a "larger amount" that might trigger more scrutiny? Are we talking $10k, $50k, $100k+?

There's no fixed threshold, but generally speaking, the Criminal Investigation division typically focuses on cases involving substantially higher amounts - usually $100k+ in unpaid taxes. That said, smaller amounts can still trigger criminal investigation if other aggravating factors are present (like a clear pattern of evasion, hiding assets, or lying to investigators). The IRS has limited resources for criminal prosecution, so they tend to focus on cases that are either very substantial in dollar amount or have clear evidence of fraudulent intent. For most people with moderate tax debts who are making efforts to comply, the focus is on collection rather than prosecution.

Yeah this is true. From what I read, it was like a pattern over multiple tax years with substantial income. I think that's the big difference between that case and just owing money that you're paying through an installment plan.