This is his first year of college directly after high school, so we're good on the 4-year limit. Is there anything else I should know about income limits? We make around $95k combined if that matters.

You should be fine with the income limit at $95k combined. The AOTC begins to phase out for modified adjusted gross income (MAGI) above $160,000 for married filing jointly and $80,000 for single filers. Since you're below those thresholds, you should be eligible for the full credit amount. Another thing to remember is to keep good records of all qualified education expenses paid. Make sure you have receipts for tuition, required fees, and course materials like textbooks. Also, expect to receive a Form 1098-T from the college which will help substantiate your claim for the credit.

That's not quite right. The student doesn't need earned income to qualify for AOTC. The requirement is that whoever claims the credit (either the student or the parent) must have a tax liability or the credit is refundable up to 40%. If the parent claims the student as a dependent, the parent claims the credit regardless of who paid the expenses.

Oh that's really helpful! Summit is actually an LLC, but I don't know how they're taxed. So I definitely need that W-9 to determine whether they're taxed as a partnership or a corporation before I figure out the 1099 situation?

That's exactly right. The W-9 will indicate how they're taxed. If their LLC is taxed as a partnership or single-member LLC (disregarded entity), you'll need to issue the 1099-NEC. If they're taxed as an S-Corp or C-Corp, then you generally don't need to issue the 1099. This is why it's best practice to get W-9s from all vendors when you first start doing business with them, so you know from the beginning whether you'll need to track their payments for 1099 purposes. In your case, definitely request their W-9 now so you're prepared when tax time comes around.

I used TurboTax Self-Employed last year to handle 1099s for my business, including some referral fees similar to what you're describing. It does walk you through the process, but you need to have all your information organized beforehand. Make sure you have the W-9s collected and total payment amounts calculated per vendor before you start. The system will guide you through creating and filing the 1099-NECs, but it's not as intuitive as it could be for percentage-based payments that accumulated throughout the year. I ended up creating a separate spreadsheet to track all my commission payments to make sure the totals were accurate.

Thanks for mentioning this! My account is actually a Canadian TFSA (Tax-Free Savings Account). I've been trying to figure out if there's any special treatment under the tax treaty. Have you heard anything specific about Canadian TFSAs being exempt from PFIC reporting or getting better treatment?

The US-Canada tax treaty is complex regarding TFSAs. Unfortunately, the current interpretation by the IRS is that TFSAs generally do not qualify for the same beneficial treatment as Canadian RRSPs (which are recognized under Article XVIII of the treaty). Most tax professionals consider Canadian TFSAs to be regular foreign financial accounts for US tax purposes, which means the PFIC rules still apply if you have mutual funds in the account. There has been ongoing advocacy to change this treatment, but currently, you likely need to report the mutual funds as PFICs. One potential strategy some use is to move TFSA investments to more tax-efficient options (like individual stocks instead of mutual funds) to avoid the complex PFIC reporting, while maintaining the account itself.

Is there any way to argue "reasonable cause" to avoid the penalties? I mean, what regular person would ever know that their foreign retirement account needs all this crazy reporting?

That's a good point about tax credits! I was getting some education credits last year that might have phased out with our combined income. Is there any way to figure out if filing separately would be better in our situation? Or is joint filing almost always better?

Filing separately is rarely better than filing jointly, but there are exceptions. The main situations where filing separately might benefit you are if one spouse has significant medical expenses (which have a 7.5% AGI threshold), student loan interest deductions with income-based repayment plans, or if one spouse has past tax debts the other doesn't want to be responsible for. You can run your tax return both ways to see which results in a lower combined tax. Just be aware that if you file separately, neither of you can take certain credits like education credits, and if one spouse itemizes, the other must also itemize even if they have few deductions. Most tax software will let you compare both scenarios to see which is better for your specific situation.

This is spot on. People obsess about refunds vs. owing, but what really matters is your ACTUAL tax liability. My wife and I owed $2k after marriage but our effective tax rate dropped from 14% to 13.2% combined. So we actually saved money despite owing at filing time. The withholding tables just aren't designed well for dual-income couples. The W-4 calculator on the IRS website is actually pretty accurate if you take the time to use it properly.

Does TurboTax charge extra for the crypto feature? I've heard they nickel and dime you for everything.

You need their Premier version which handles investments including crypto. It's about $100 for federal filing (more for state), so definitely more expensive than FreeTaxUSA. The CoinTracker integration is included in that price for basic usage (up to a certain number of transactions), but if you have a lot of crypto activity, you might need to pay for a higher tier of CoinTracker separately. I'm not a fan of how TurboTax structures their pricing either, but in my situation with multiple investment types including crypto, it made sense. For someone with just a few hundred dollars in PayPal crypto transactions, it might be overkill cost-wise.

This is what I've been doing too! Honestly for a few hundred dollars worth of transactions, this seems easiest. I keep a master spreadsheet year-round and just update it whenever I buy/sell. Tax time is super easy then.