As someone who's dealt with health-related work interruptions before, I really feel for your situation. The uncertainty about tax obligations when you're already dealing with health issues is genuinely stressful. Everyone here has given solid advice about the zero income situation, but I wanted to add one practical point: if you do decide to use any of the tools mentioned (like taxr.ai) or eventually speak with the IRS directly, having a simple timeline written down beforehand can be really helpful. Just basic stuff like "stopped working in [month] due to health issues, had $0 income from all sources for 2024, lived on savings and family help." Having those facts organized ahead of time makes any conversation or questionnaire much smoother, especially when you're not feeling 100% due to health stuff. It also becomes part of that documentation everyone's suggesting you keep. The community advice here is spot-on - with truly zero income, you're not required to file federal taxes. But having that peace of mind confirmation, whether from a tool or direct IRS contact, is totally worth it when you're already dealing with enough stress. Take care of yourself first, and don't let tax anxiety add to your health concerns!

I just wanted to add a perspective as someone who went through a similar health-related income loss situation. The anxiety around tax filing when you're already dealing with medical issues is so real, and I'm glad to see this community providing such supportive and accurate advice. One thing that really helped me was understanding that the IRS filing requirements are actually pretty straightforward - they're based on income thresholds, and with zero income, you're simply below any threshold that would require filing. It's not a loophole or something you're "getting away with" - it's how the system is designed to work. I also want to echo what others have said about documentation. Even though you're not required to file, keeping a simple record of your situation (health issues, zero income, family assistance received as gifts) can provide peace of mind. I kept a one-page summary with dates and it really helped reduce my anxiety about the whole situation. The tools mentioned here like taxr.ai can be great for confirmation, but honestly, with truly zero income from all sources, you can feel confident that no federal filing is required. Focus on your health recovery first - the tax situation is actually the easy part of what you're dealing with. Wishing you a smooth recovery!

This is such a helpful discussion! I'm dealing with this exact issue right now. I live in a high-tax state and have been automatically reporting my state refunds as taxable income for the past several years without really understanding the nuances. From reading through all these comments, it sounds like the key question is whether my actual state/local tax payments (after subtracting any refunds) still exceeded the $10,000 SALT cap. If they did, then the refund portion shouldn't be taxable since I didn't get a federal tax benefit from that excess amount. I'm going to pull out my old tax returns and do the math. If I find that I've been overpaying, it sounds like I can amend returns for the past three years using Form 1040-X. Has anyone here had success getting their amended return refunds processed quickly, or should I expect a long wait from the IRS? Also wondering - for those who used the tax analysis tools mentioned here, did you feel confident filing the amendments yourself, or did you end up having a tax professional review everything first?

This thread has been incredibly eye-opening! I'm a tax preparer and I have to admit that I've been automatically treating state tax refunds as fully taxable for clients without really diving into how the SALT cap affects this calculation. The key insight here is that the tax benefit rule only applies to the extent you actually received a benefit. With the $10,000 SALT cap, many taxpayers in high-tax states are getting refunds for amounts that never provided them any federal tax benefit in the first place. For anyone working through this, here's what I'd recommend: First, gather your prior year tax returns and identify years where you itemized deductions. Then for each year, calculate your actual state/local tax payments (total payments minus refunds). If that net amount still exceeds $10,000, then your state refund for the following year should not have been reported as taxable income. One thing to watch out for - make sure you're considering ALL state and local taxes when doing this calculation, including property taxes, not just income taxes. The $10,000 cap applies to the combined total. The good news is that if you discover you've been overpaying, you can typically amend returns for the past three tax years. Given how common this mistake seems to be post-2018, it's definitely worth checking your returns!

I went through this exact same situation about 6 months ago and I completely understand your frustration! The whole thing feels so unfair when it was their mistake, but there is light at the end of the tunnel. Here's what I learned: you absolutely should push back on just accepting that you'll have to claim this as a deduction later. The correct way for employers to handle overpayment repayments is to issue a corrected W-2 that reflects the actual wages you received. This way, the overpayment essentially "never happened" from a tax perspective. My advice: document everything (emails, paystubs, repayment proof), then contact your payroll processing company directly. Don't just work through HR - they often don't understand the tax compliance side. When you call the payroll vendor, ask specifically for their "payroll tax compliance" department and explain you need a "wage adjustment due to overpayment repayment with corrected W-2 issuance." It took me about 2 weeks of persistence, but I got my employer to issue the corrected W-2 and didn't lose a penny. The key argument that worked was explaining that incorrect wage reporting creates compliance issues for both parties. You've got this - just stay persistent and don't let them brush you off with "company policy"!

I'm so sorry you're dealing with this stress, Fatima! Payroll errors are incredibly frustrating, especially when you're left holding the bag for someone else's mistake. I actually went through a very similar situation about 8 months ago - $2,900 overpayment that I had to repay at gross. At first I was furious because it felt like I was being penalized for their error, but I learned that there's actually a logical reason for the gross repayment requirement. When your employer withheld taxes from that $3,200, they already sent that money to the government on your behalf. If you only repay the net amount, their records will still show they paid you the full gross amount, which means you'd end up being taxed on money you didn't actually keep. That's why they need the gross amount back. The key is making sure they handle the tax reporting correctly afterward. Push HARD for them to issue a corrected W-2 that reflects the actual wages you received after the repayment. This is the proper way to handle it and means the overpayment essentially "never happened" from a tax perspective. Don't let them brush you off with "company policy" - there are specific tax compliance requirements they need to follow. Contact your payroll vendor directly (ADP, Paychex, etc.) and ask for their tax compliance department. Use the exact phrase: "wage adjustment due to overpayment repayment with corrected W-2 issuance." Document everything and stay persistent. It took me about 3 weeks but I got the corrected W-2 and didn't lose a penny. You can get through this!

I've been following this discussion closely as I'm approaching a similar situation in about 8 months. One thing I wanted to add that might be helpful - make sure to coordinate with your HR department or benefits administrator well before your Medicare transition date. I spoke with my former employer's benefits team (I'm also retired but still on their HDHP), and they mentioned that some people forget to notify them about Medicare enrollment, which can create complications with HSA payroll deductions if you're still doing those. They also provided me with a helpful timeline worksheet that breaks down exactly what needs to happen and when. Another consideration - if you have automatic HSA contributions set up through payroll deduction or bank transfers, make sure to cancel or adjust those BEFORE your Medicare effective date. It's much easier to prevent excess contributions than to fix them after the fact. I've already set a calendar reminder for two weeks before my 65th birthday to review and adjust all my automatic contributions. The peace of mind from getting ahead of this process has been worth the extra planning time. Better to over-prepare than deal with IRS penalties later!

Great question about HSA investments during the Medicare transition! I went through this exact situation last year when my husband turned 65. Here are a few key points I learned: First, you can absolutely keep your HSA funds invested after one spouse goes on Medicare - there's no requirement to move to cash or change your investment strategy. The HSA remains a powerful retirement healthcare account even after you lose contribution eligibility. However, you might want to consider rebalancing toward more conservative investments or keeping a larger cash portion if you're planning to start using HSA funds regularly for Medicare premiums and healthcare expenses. Medicare premiums, deductibles, and copays can add up quickly, so having some liquid funds available makes sense. One timing consideration - if you're planning to use HSA funds for Medicare Part B premiums, those withdrawals are tax-free, but you need to be careful about the timing. You can't use HSA funds to pay premiums for Medigap policies, but you can use them for Medicare Parts A, B, C, and D premiums. I'd suggest reviewing your investment allocation about 6 months before the Medicare transition to ensure you have adequate liquidity for upcoming healthcare expenses while still maintaining growth potential for long-term healthcare needs. The HSA can still be a fantastic retirement healthcare account even after you can't contribute anymore!

As a tax professional, I want to emphasize something that's gotten buried in all these responses but could save you significant money: the TIMING of when your daughter starts college courses matters more than you might think. Since she turns 18 in May 2025, if she takes even one qualifying course in spring 2025 (January-May), you can claim education credits on your 2025 tax return AND still get the full dependent deduction for that year. This creates a "bridge year" where you're transitioning from Child Tax Credit to education credits but maximizing both dependency benefits and education credits. Here's what I'd recommend for your specific situation in Houston: Look into Houston Community College's spring 2025 registration (usually opens in November). A single 3-credit course runs about $300-400 for district residents, but the American Opportunity Tax Credit could give you back up to $300 (100% of the first $2,000 in qualified expenses, though you'd only have $300-400 in expenses that semester). The real benefit comes in fall 2025 when she could take more courses. If she's enrolled at least half-time (6+ credit hours) for at least one academic period during 2025, you can claim the full American Opportunity Tax Credit of up to $2,500 on your 2026 tax return. One critical detail many people miss: keep ALL receipts for required textbooks and supplies, not just tuition. These count as qualified education expenses too. For community college students, textbooks can easily add $200-300 per semester to your claimable expenses. Also, given your income level ($64k combined), you're in an ideal position for education credits since you're well below the phase-out thresholds but likely paying enough in taxes to benefit from the full credit amounts.

I'm dealing with this exact same situation and wanted to add something that's been really helpful for our family planning. After reading all these great responses, I realized there's one aspect that might be worth considering: the psychological adjustment for both parents and kids during this transition. My daughter just turned 17 last month too, and while we've been focused on the tax implications, we also had to have honest conversations about expectations for her contribution to household expenses and college costs. It's helped us plan better when we're all on the same page about what financial support looks like going forward. One practical thing we did was sit down with her to create a simple budget showing what her living expenses actually cost us (food, utilities, phone, car insurance, etc.). This helped her understand why we're encouraging her to apply for financial aid and consider starting with community college. It also made the "more than half support" calculation much clearer for tax purposes. The education credit planning is definitely important, but don't forget to factor in the emotional and communication aspects of this transition. Having those conversations early made the whole process feel less overwhelming for our family, and it's helping her make more informed decisions about college and work. Sometimes the non-financial planning is just as crucial as getting the tax strategy right!