Quick question - does that $10,000 FBAR threshold include all accounts combined or is it per account? My client has like 5 small accounts in Canada that individually are under $10k but together might be over.

It's definitely the combined total of ALL foreign financial accounts. So if your client has 5 accounts that each have $2,500, that's $12,500 total, which exceeds the $10,000 threshold - they would need to file the FBAR. The IRS and FinCEN are very serious about this reporting requirement. The penalties for not filing can be severe, especially if they consider it a willful violation. Make sure you count all accounts - checking, savings, investment accounts, pension funds, and sometimes even life insurance policies with cash value.

Not a stupid question at all! Yes, you absolutely need to report that $220 of interest on Schedule B, even though the foreign online bank didn't send a 1099-INT. You'd list the name of the bank, the amount of interest (converted to USD), and make sure to check the box indicating you had a foreign account. Since it's over $200, you'll definitely want to complete the foreign account questions at the bottom of Schedule B. And remember, if your total foreign accounts exceeded $10,000 at any point during the year, you'd also need to file an FBAR separately.

Is this still true if the payroll service issued the W-2 under their own EIN rather than one they set up for me? I never got an EIN because the service said they'd handle everything.

That's an important distinction. If the payroll service is operating as a Professional Employer Organization (PEO) and issued the W-2 under their own EIN, then they're technically the employer of record, not you. In that case, you might not need Schedule H. Check your service agreement carefully and maybe call the service to confirm. Ask specifically if they're acting as a PEO or if they're just processing payments under your name as the employer. If it's the latter and they're using your SSN or an EIN they set up for you, then you still need Schedule H. The documentation from the service should clarify your specific arrangement.

I used TurboTax last year with a similar setup. It actually handles this pretty well! When you indicate you have household employees, it asks if you used a payroll service. Then it specifically guides you through Schedule H and asks for the amounts already paid. The key is to have your year-end summary from your payroll service ready - you'll need the total wages paid and taxes already remitted.

But how do you actually document this on your tax return? Is there a specific form or worksheet where you list these additional qualified expenses? My tax software doesn't seem to have a place for this.

There's no specific form where you list out these additional expenses. What happens is you (or your tax preparer) calculate the total amount of qualified education expenses, subtract that from your total scholarships/grants, and then only report the excess as income. If you're using tax software, it should ask you about scholarships and qualified expenses separately. You enter the full amount of qualified expenses (including those not on the 1098-T), and it will do the calculation for you. The taxable portion typically gets added to the "Wages, salaries, tips, etc." line on Form 1040 with "SCH" noted next to it to indicate it's scholarship income. If your tax software doesn't specifically ask about additional qualified expenses, you might need to manually adjust the taxable scholarship amount it calculates.

Not OP but my accountant told me the university "should have" included all qualified expenses in Box 1 and refused to believe me when I said they don't. He insisted I could only use what's on the form. Is that just wrong?

Is it really 25-30%? That seems so high! Does that include state taxes too or just federal?

That includes both federal and state, which is why it's on the higher side. Federal self-employment tax alone is 15.3% (that covers Social Security and Medicare - you pay both halves when self-employed), plus your regular income tax rate on top of that. The exact amount depends on your total income and state, but 25-30% is a safe estimate for most people. If you end up setting aside too much, hey - that's a nice little bonus for yourself after filing! Much better than scrambling to find money you've already spent when you realize you owe more than expected.

You're exactly right. Contractor income goes on Schedule C, not as W-2 wages. This is important because Schedule C is where you can deduct your business expenses to reduce your taxable income.

I haven't received any letters yet. I've claimed both kids for the past 3 years, so it's not a new situation. Their mom and I have a formal agreement about who claims which child each year, so there shouldn't be any conflict there. Should I still be checking for mail from the IRS, or would they have contacted me by now if that was the issue?

If you've claimed the same children for multiple years without issues, it's less likely to be a verification problem. However, the IRS sometimes sends letters requesting information 4-6 weeks after filing, so it could still arrive. Mail from the IRS can also sometimes look like regular mail or get lost, so it's always good to check carefully. But honestly, at this point it sounds more like normal processing delays rather than an information request problem. The IRS processing times really have been significantly longer this year for returns with dependents.

The PATH Act is still in effect, but since the original poster filed on March 5th, that wouldn't be causing their delay. The PATH Act prevents the IRS from issuing refunds before mid-February for returns claiming EITC or the Additional Child Tax Credit, but once we're past that date, it shouldn't be a factor anymore.

Thanks for clarifying! I wasn't sure if they had extended those delays or if it was still just the mid-February cutoff. Makes sense that it wouldn't affect March filers.