8 You're right about the 3-year limit, but you're still within the window for 2020! The deadline for filing amendments to claim a refund is 3 years from the original due date of the return. For 2020 tax returns, the original filing deadline was May 17, 2021 (it was extended that year due to COVID). That means you have until May 17, 2024 to file an amended return and claim any additional refund. So you should act quickly, but you definitely still have time to file that amendment.

5 Thank you so much for clarifying this! I was worried I'd missed my window completely. I'll get on this amendment right away before the May deadline hits. Really appreciate the help!

10 Yes, the IRS definitely will send you a notice if they identify underreported income. They run an automated matching program where they compare the income reported on your tax return against what was reported to them by employers, banks, etc. The letter you received is probably a CP2000 Notice, which is not an audit but a proposed adjustment to your tax return based on this information matching.

Thanks for the tip! My dad gets a small social security check ($843/month) but it all goes toward his medications that aren't covered by Medicare. Would that count against the income limit? And yes, I've been keeping all receipts for household expenses since I had a feeling this might come up.

Social Security benefits do count toward the gross income test for dependency, so that's about $10,116 annually. For 2024, the gross income limit for dependents is $4,700, so your father's income is over that threshold. However, there's still a way you might qualify for head of household. Even if your father doesn't meet the gross income test to be your dependent, he might still be considered your "qualifying relative" for head of household purposes if you provide more than half his support and he meets the other tests. This is a special exception specifically for parents. Keep documenting everything - especially showing how his SS income is spent entirely on his medical needs and how you cover everything else.

That's really helpful to know! My mom lives in her own apartment but I pay for everything. I've been filing as single all this time... wonder if I should amend my past returns?

Do student loans really count as the student providing their own support? I thought since they're loans that need to be paid back later, they wouldn't count for the current tax year?

Yes, student loans absolutely count as support provided by the student for the current tax year, regardless of when they'll be repaid. The IRS looks at who paid the expenses during the tax year, not where the money originally came from. Even if your parents cosigned the loans, as long as you're legally obligated to pay them back, the tuition and expenses paid with those loan funds count as support you provided for yourself. The same applies to scholarship funds - those count as support you provided (not support from your parents), even though the money comes from a third party.

The IRS actually contacted you both about this? How long did it take for them to notice the duplicate dependency claim?

It happened pretty fast! We both filed in February, and by April we each got letters asking for documentation. The duplicate dependency claim triggered an automatic flag in their system. The IRS actually put both of our refunds on hold until the issue was resolved. My parents had to pay back the extra refund they received from claiming me plus a small penalty. The whole process took about 3 months to resolve completely. Definitely not something you want to deal with during finals or job hunting!

What about uniforms and equipment? I'm guessing my security uniform is deductible but what about boots, flashlights and that kind of stuff?

Uniforms are typically deductible if they're required for your job and not suitable for everyday wear. So generic black pants probably wouldn't qualify, but a shirt with a security company logo would. Equipment like flashlights, specialized boots, and other gear is generally deductible if it's specifically required for your security work and not something you'd use outside of work. Keep all receipts and document how each item is used specifically for work purposes. Small items under $200 can often be fully deducted in the year purchased, while more expensive equipment might need to be depreciated over several years.

I used TurboTax Self-Employed last year for my security consulting business. It does have some industry-specific questions but honestly wasn't great for the more nuanced deductions. It asked about standard business expenses but didn't really guide me through the professional development stuff. I ended up upgrading to their Live service to talk to a tax expert about my martial arts training.

Thanks for mentioning state requirements! We're in Michigan - do you know if web design services are subject to sales tax here? And for the business license, would we need one for each partner's home location since we work remotely?

In Michigan, services like web design generally aren't subject to sales tax (they focus more on tangible products), but if you're selling actual digital products like templates or hosting, that could potentially be taxable. Check with Michigan Treasury to be sure. As for business licenses, since you're operating as a partnership, you typically only need one license for the business entity itself, not for each partner. However, if all partners work from different municipalities, you might need to check local regulations for each area. Some cities have different requirements for home-based businesses. Usually registering in the location where your business is primarily managed is sufficient.

Schedule B is for individual returns, not partnership returns, right? I thought partnerships use different schedules with the 1065?