Quick question - I'm in a similar situation but I've been renovating my rental for 8 months now. Can I deduct all the renovation expenses even though the property isn't rented yet?

One thing I haven't seen mentioned yet is the importance of establishing the "placed in service" date properly for IRS purposes. Since you're doing renovations while living there, you'll want to document the exact date when the property becomes available for rent - this could be when you finish renovations, move out, and list it for rent. Keep records of when you complete the work, when you stop using it as your personal residence, and when you first advertise it. The IRS can be picky about this date since it affects when depreciation starts and how you allocate expenses between personal use and rental use. Also, since you mentioned staying in one bedroom - make sure you're clear on the business vs personal use percentages. If you're using 1/3 of the house personally, you can only claim rental deductions (including future depreciation) on the remaining 2/3. This gets tricky during the renovation period since you might argue the personal use is temporary and solely for renovation convenience, but the IRS generally looks at actual use patterns.

I'm in almost the exact same situation! Filed my return on February 8th, got the 810 freeze code on February 12th, received my 12C letter in early March asking for income verification, and submitted my amended return about 4 weeks ago. My transcript is still showing just that original 810 code with no updates. The waiting and uncertainty is absolutely brutal. I've been checking my transcript daily hoping to see ANY movement, but it's been complete radio silence. What's helping me stay somewhat sane is reading through all these experiences and realizing this 16-20 week timeline for amended returns with freeze codes is unfortunately just the reality we're dealing with. I think I'm going to follow the advice here and call just to confirm they actually received my amended return. From what everyone's saying, that seems to be the most important first step - at least knowing you're officially in their queue vs wondering if your paperwork got lost somewhere in their system. The fact that so many of us are going through the exact same timeline and experience is oddly comforting. We're all just stuck in IRS purgatory together! Thanks for posting this - it really helps to know I'm not alone in this frustrating waiting game. Hopefully we'll all see some movement on our cases soon 🤞

I'm dealing with almost the exact same situation right now! Filed my 2024 return on February 12, got accepted, then saw the 810 freeze code appear on my transcript a few days later. Got my 12C letter in early March asking for income verification and filed my amended return about 3 weeks ago. Still showing just that original 810 code with zero updates. The waiting and not knowing what's happening is honestly the most stressful part. I've been refreshing my transcript constantly hoping to see ANY change, but it's been complete silence. Reading through everyone's experiences here has been really eye-opening though - sounds like this 16-20 week timeline for amended returns with freeze codes is just the brutal reality we're all facing. I think I'm going to take the advice from others here and call to at least confirm they received my amended return. That seems like the most important first step based on what people are saying - just knowing you're officially in their queue versus wondering if your paperwork got lost in their system. It's oddly comforting to see so many of us going through the exact same timeline and frustrations. We're all just stuck in IRS limbo together! Thanks for posting this - it really helps knowing this nightmare experience is unfortunately normal and not just something wrong with my specific case. Hoping we all see some movement soon! 🤞

Has anyone used TurboTax for this situation? Will it guide me through the process correctly for both my return and my kid's return?

This is such a common situation and you're absolutely on the right track! Your daughter can definitely file her own return while you claim her as a dependent - happens all the time with college students. Just to reinforce what others have said: since you're providing over half her support (housing, utilities, insurance, groceries, phone) and she's a full-time student under 24, she qualifies as your dependent. The $800-900/month she makes for personal expenses doesn't change that. When she files her return, she'll need to check the box indicating someone else can claim her as a dependent. This is crucial - if she forgets to check that box, it can cause issues when you file your return claiming her. One thing I'd add: keep good records of what you pay for vs. what she pays for. The IRS support test looks at the total cost of her support for the year, and you need to provide more than 50%. Given that you're covering all the major living expenses, you should be well over that threshold, but it's good to have documentation just in case. Your daughter should definitely file her own return if she had any taxes withheld from her paychecks - that's likely the only way she'll get those refunds back. Plus it's good practice for her to learn the process!

Eva, I can definitely relate to your concerns about the treaty termination - it's natural to worry about potential double taxation when you hear that kind of news. But after reading through all the responses here, I think you're getting some really solid advice that should put your mind at ease. What strikes me most is how many people have successfully navigated similar situations in non-treaty countries. The combination of FEIE ($126,500 exclusion for 2024) plus Foreign Tax Credits for income above that threshold really does prevent the "nightmare" scenario you're worried about. One thing I'd add that hasn't been mentioned much: consider the broader financial picture beyond just taxes. Hungary's significantly lower cost of living, access to excellent healthcare, and your ability to travel freely throughout the EU as a resident could provide substantial value that outweighs the additional tax complexity. If you're serious about this move, I'd suggest creating a simple spreadsheet comparing your total costs (including taxes, living expenses, healthcare, etc.) between staying in the US versus moving to Hungary. You might be surprised to find that even with some additional tax obligations, you could come out ahead financially while gaining a much better quality of life. The tools to manage international taxation are well-established and proven - don't let the fear of complexity prevent you from pursuing what sounds like an exciting opportunity!

Eva, I've been following this thread and wanted to share some practical insights from my own experience as a US citizen living abroad without treaty protection. The anxiety you're feeling about potential double taxation is completely understandable, but the reality is much more manageable than it initially appears. I've been living in a non-treaty country for over two years now, and while the paperwork is definitely more complex than it would be with treaty benefits, the actual tax burden isn't nearly as scary as you might think. Here's what I wish someone had told me before I made my move: focus on the FEIE first - that $126,500 exclusion for 2024 covers the vast majority of what most people earn, and it applies regardless of treaty status. For income above that threshold, the Foreign Tax Credit system works quite well to prevent true double taxation, even if it requires more documentation. One practical tip that's saved me headaches: start documenting your Hungarian ties from day one if you decide to move. Keep copies of everything - lease agreements, utility setup, bank account opening, local registration documents. The IRS wants to see genuine establishment of foreign residence, not just extended tourism. Also, don't underestimate the value of connecting with the existing American expat community in Budapest before you move. They've already navigated these exact challenges and can provide real-world guidance that goes beyond theoretical tax advice. The treaty termination adds complexity, but it shouldn't derail what sounds like an exciting opportunity for personal and professional growth!

Based on all the discussion here, it sounds like you need to weigh the actual tax impact against the stress of rushing distributions. The key insight from everyone's responses is that there's no direct penalty for going past the 2-year deadline - the main consequence is having to file separate returns with higher trust tax rates. Here's what I'd recommend: calculate the approximate additional tax cost of missing the deadline by a month. If your trust doesn't generate much income, the extra cost might be minimal and worth the peace of mind of doing distributions properly rather than rushing. But if you have significant investment income or business income like some others mentioned, those compressed trust tax brackets could cost thousands. The documentation points raised by Santiago and others are crucial either way. Make sure you have clear paper trails for whenever you do complete distributions - formal resolutions, bank records, everything dated properly. One thing I didn't see mentioned - have you considered doing partial distributions now to reduce the trust's income-generating assets, then completing the rest after the deadline? This could minimize the tax impact of the higher trust rates while giving you more time to handle the final distributions properly.

The partial distribution strategy is excellent advice from @37b3aea8aa57. To answer your questions @3889e6ce151f - there are no specific restrictions on which assets to distribute first, but cash and liquid investments are definitely the smart choice for partial distributions before the deadline. The key thing to understand is that the Section 645 election doesn't require complete distribution of all trust assets within 2 years. The election period simply ends after 2 years (or earlier if you complete all distributions), and then you start filing separate returns for whatever remains in the trust. So yes, partial distributions absolutely count and can significantly reduce your tax exposure. If you distribute the income-producing assets now, you'll have much less income subject to those compressed trust tax brackets after the deadline passes. I'd suggest prioritizing distributions in this order: 1) Cash and money market funds, 2) Dividend-paying stocks and bonds, 3) Any business interests that generate regular income, and 4) Save non-income producing assets like growth stocks or vacant real estate for after the deadline when you have more time for proper documentation. This way you get the tax benefits of the partial distributions while giving yourself breathing room to handle the more complex asset transfers properly. Just make sure to document everything clearly as others have mentioned.