Do I still qualify for child tax credits if my income was around $80k total (including the contractor work)? I thought there were phaseouts.

Yes, you should still qualify. The Child Tax Credit begins to phase out at $200,000 for single filers and $400,000 for married filing jointly. With your total income around $80k, you're well below those thresholds, so you should be eligible for the full amount for each qualifying child. The Earned Income Credit has lower income limits, so you'd need to check those specifically based on your filing status and number of qualifying children. But the Child Tax Credit should definitely be available to you based on the income information you've shared.

What app do you use for mileage? I've been trying to keep track on a notepad but I always forget.

I use MileIQ and it's been a lifesaver. It automatically tracks all your drives and then you just swipe right for business or left for personal. Super easy and creates IRS-ready reports. Some people also like Everlance or Stride. Another tip: set calendar reminders for quarterly tax payments (April 15, June 15, September 15, and January 15). The IRS doesn't send reminders and it's easy to forget, especially that weird June one that's only two months after April!

No, I actually haven't had that conversation with them yet! That's a really good point. To be honest, I've been avoiding bringing it up because money discussions are always awkward in our family. But you're right - they might not even be planning to claim me regardless of whether I qualify. Is there a significant difference in the tax benefits between them claiming me vs. me filing as independent? I'm wondering if there's an obvious financial advantage one way or the other that could guide the conversation.

There can be significant differences! If you file independently and paid for education expenses, you might qualify for education credits like the American Opportunity Credit (up to $2,500) or the Lifetime Learning Credit. These credits are usually more valuable to a student with lower income than to grandparents who might be in a higher tax bracket. On the other hand, if your grandparents claim you, they might get a dependent tax credit (though this is reduced at certain income levels). The key is figuring out which arrangement saves the most money overall between both tax returns. Sometimes families even split the difference - like if you filing independently saves $2,000 in taxes versus them claiming you, maybe they could give you a portion of that difference since they're losing the dependent benefit.

Wait, are you sure about that? I thought there was definitely an income limit for being claimed as a dependent regardless of whether you're a qualifying child or relative. This is so confusing!

You're confusing two different tests. There IS an income test, but only for Qualifying Relatives, not for Qualifying Children. A student under 24 can be claimed as a Qualifying Child regardless of their income amount, as long as they don't provide more than half of their own support and meet the other tests. The IRS is very clear about this in Publication 501. The confusion happens because people mix up the rules for Qualifying Children vs. Qualifying Relatives. As a college student under 24, the original poster would be evaluated under the Qualifying Child tests, where there is NO income limit - only the support test matters.

They're disputing her 2023 return (the one we filed earlier this year). And you're right about the timeline - dad passed in 2021, so she filed MFJ for 2021, then qualifying widow for 2022 and 2023. According to what others are saying, it seems the issue is definitely about my sister not being a full-time student.

Thanks for clarifying! Then yes, it does sound like the issue is about your sister's status as a qualifying child. Since she was over 19 and not a full-time student, she wouldn't meet the qualifying child definition for this purpose, even though she's still a legitimate dependent. The distinction between "qualifying child" and "qualifying relative" dependents trips up a lot of people. For the surviving spouse filing status, you specifically need a qualifying child dependent, not just any dependent.

This is good advice. I work with tax resolution cases, and the IRS will often work with taxpayers who are proactive. Even if the filing status determination is correct, there are options: 1) Payment plans (as mentioned) 2) Penalty abatement (can reduce the bill significantly) 3) In some cases, partial dispute of the assessment Don't just pay the full amount without exploring these options!

That's really interesting - I hadn't considered using a trust. Would this approach still allow us to report everything on Schedule E? And does it matter if we're in a community property state? (We're in Arizona

Yes, with proper structuring, you could still report the rental income on Schedule E because the single-member LLC would remain a disregarded entity for tax purposes. Arizona being a community property state actually gives you some additional options. In community property states, married couples can sometimes form a single-entity LLC that's treated as a disregarded entity rather than a partnership for federal tax purposes, even with both spouses as members. This is because community property can be viewed as a single economic unit. I'd recommend consulting with a local attorney familiar with Arizona's specific community property laws to explore this option.

You're making an excellent point. We have 2 properties and pay about $800/year in LLC fees plus extra accounting costs. Our CPA actually recommended just getting a $2M umbrella policy instead for our next property since we're in a state with high LLC maintenance fees.

Did you end up taking legal action? I'm worried this might be headed that way and wondering what the process was like for you. Did you have to hire a forensic accountant?

We managed to avoid court, thankfully. I hired both my own CPA and an attorney specializing in shareholder disputes. The attorney sent a formal demand letter outlining the specific records we needed to inspect and the potential claims we might bring if denied. That got their attention. We did hire a forensic accountant who reviewed 5 years of bank records and identified over $175,000 in fake "loans" that never actually entered company accounts. Rather than litigation, we negotiated a settlement where the majority shareholder returned the improper payments and we restructured the company with better oversight. The threat of legal action and potential personal liability for the majority shareholder was usually enough motivation to resolve things.

This is great advice. When this happened at my company, our bylaws actually prohibited shareholder loans entirely without unanimous consent. Made it real easy to challenge the "repayments" since no vote was ever taken.