That's a really good point! Her daughter is 6 years old and lived with her the entire year (both in the apartment and at the grandparents' house), so she definitely meets the age and residency tests. And my cousin provided all her support. So we're good on the qualifying dependent part. I was just hung up on the "maintaining a home" test since she only had her own place for part of the year.

Sounds like you're in good shape then! Just remember that when determining if she paid more than half the cost of maintaining the home, you'll be looking at the total costs for those 7 months only, not the whole year. Since she paid all the expenses for that period, she clearly meets the "more than half" test for maintaining a home. One other tip - make sure she keeps good records of her rent payments, utility bills, and other household expenses from those 7 months. If she gets audited, the IRS might ask for proof that she maintained the home.

I used to work for a tax prep company, and this is correct. When the IRS says "paid more than half the cost of keeping up a home for the year," they're referring to the home(s) where the taxpayer and qualifying person lived during the year. If your cousin paid all the costs for the 7 months they lived in the apartment, she meets this test.

We actually did buy our first home in August! But the mortgage interest wasn't that much since we only had it for part of the year. We donated some clothes and household items to Goodwill, but I didn't keep receipts because I didn't think it would matter. No student loans currently. The main change was definitely getting married and my wife losing her job in November. Would the job loss affect our 2024 taxes even though it happened in November? We were thinking that would mostly impact next year's taxes.

Buying a home definitely has tax implications! Even with only a partial year of mortgage interest, that should be a deduction that helps reduce your tax burden. Make sure that's included on your Schedule A if you're itemizing deductions instead of taking the standard deduction. The job loss in November wouldn't have a huge impact on 2024 taxes, but it does affect your overall annual income which could potentially put you in a different tax bracket. More importantly, if your wife received unemployment benefits after the job loss, those are taxable income and could be part of why you're owing taxes if the proper withholding wasn't taken out.

This is a really good point! I'm in Minnesota and got absolutely hammered with the marriage tax penalty. Meanwhile my sister in Texas (no state income tax) actually saved money by getting married.

Would the original poster and their fiancé be in any trouble here? Since technically they signed the return even with false information on it? I'm always worried about that when mistakes happen.

The taxpayer does have responsibility for reviewing their return before signing, but the IRS recognizes that most people trust their preparers and may not catch sophisticated errors or fraud. The key factor here is intent - the taxpayer had no intention to defraud the government. The fact that they're proactively addressing the issue once discovered works strongly in their favor. The IRS is primarily interested in collecting the correct tax amount and proper penalties, not in punishing taxpayers who were misled by preparers. I've seen many cases where penalties were waived when preparer error was demonstrated. Documenting every communication with the preparer from this point forward will be important to establishing good faith efforts to correct the situation.

Not OP but I've seen this happen with multiple budget prep services. They hire seasonal workers, give them minimal training, and use clunky software. Always worth paying a little more for someone who knows what they're doing and uses professional-grade software like Lacerte or UltraTax.

Do you use a tax professional to help with the estimate or do you just figure it out yourself? I'm worried about getting the estimate wrong.

I work with my accountant to make the estimate, but you could definitely do it yourself if you understand your tax situation well. The safest approach is to slightly overestimate what you'll owe. If you end up overpaying, you'll just get that money back as a refund when you file your actual return. For a DIY approach, you can use your previous year's tax return as a starting point and adjust for any major changes in income or deductions. The IRS mainly wants to see that you're making a good faith effort to pay what you reasonably believe you'll owe.

True. I owed about $35k two years ago and couldn't pay it all at once. Set up an installment plan and the process was surprisingly easy. Just had to fill out Form 9465 and was approved pretty quickly.

Thanks for mentioning student loan interest! We both finished paying ours off last year, so we might be able to deduct the interest from those final payments. Is that something we report on a different form than the itemized deductions?

Student loan interest is reported on Schedule 1 as an adjustment to income (sometimes called an "above-the-line deduction"), which means you can claim it even if you take the standard deduction. It's not part of your itemized deductions at all. You should receive Form 1098-E from your loan servicer showing how much interest you paid. The deduction starts phasing out at higher income levels though, so depending on your combined income, you might get a partial deduction or none at all.

This is bad advice. The OP already said their mortgage interest alone exceeds the standard deduction. Plus, if you're close to the line, itemizing state taxes and charitable giving can easily push you over. Missing legitimate deductions is literally giving away your money.