Quick question- what about state taxes? Everyone's focusing on federal capital gains, but many states also tax capital gains, often at your ordinary income tax rate. Make sure to account for this in your planning!!

One important detail to double-check - make sure you're using the correct date-of-death valuation. Since you mentioned the FMV was "approximately $245,000," you'll want to have solid documentation for this stepped-up basis amount. The IRS may want to see a formal appraisal from around the date of death, especially since your sale price was significantly higher at $310,000. If you don't have a formal appraisal from the date of death, you might want to get a retrospective appraisal or use comparable sales data from that time period. The difference between using $245K vs. a potentially lower undocumented value could significantly impact your taxable gain calculation. Also, don't forget that any estate taxes paid on the property can be added to your basis under IRC Section 1014(a), though this typically only applies to larger estates that exceeded the federal exemption threshold.

Has anyone used a tax professional to help with claiming these education credits retroactively? I'm in a similar situation trying to remember which credits I used years ago but I'm worried about making mistakes.

One thing to keep in mind about the Texas Tomorrow Fund - since it's a prepaid tuition plan, you'll want to check if your parents received a 1099-Q form for the distributions used to pay your tuition. This would show the amount that was distributed from the plan to cover your education expenses. If the entire tuition amount was covered by the prepaid plan and reported on a 1099-Q, then those expenses generally can't be used again for education tax credits. However, you might still be eligible for credits based on other qualified expenses you paid out of pocket, like mandatory fees, books, or required course materials. Also, don't forget that you can amend returns for up to 3 years after the original filing date (or 2 years after you paid the tax, whichever is later). So if you discover you were eligible for credits in 2014/15 that you didn't claim, you might still be able to file amended returns for those years if they're within the statute of limitations.

I would recommend using the IRS Free File program if your income is that low. Go directly to IRS.gov and look for Free File options. They have partnerships with tax software companies that will let you file completely free if your income is below certain thresholds, which clearly you would qualify for with zero income.

I was in almost the exact same situation last year - zero income and two kids. Yes, you can absolutely claim the Child Tax Credit! The key is understanding that part of it is "refundable" which means you get money back even if you don't owe any taxes. For 2024 taxes (filing in 2025), you can get up to $1,600 per qualifying child under 17 through the Additional Child Tax Credit, even with zero income. There's no special non-filer tool this year - you just file a regular tax return showing $0 income. I used the IRS Free File program on IRS.gov and it walked me through everything. Make sure you have your kids' Social Security numbers and can prove they lived with you more than half the year. The process was actually simpler than I expected, and I got about $3,200 total for my two kids. It was a huge help during a really tough time. Don't let anyone tell you that you can't get tax credits without income - that's one of the biggest misconceptions out there!

This is such an important question about VITA capabilities! Yes, VITA volunteers are trained to handle amended returns, including multiple years, though the complexity might mean they refer you to a more experienced volunteer or supervisor within the program. They can definitely help with the actual preparation of Forms 1040X (amended returns) and will walk through all the documentation you have. Regarding payment plans, VITA volunteers can help you understand your options and even assist with filling out Form 9465 (Installment Agreement Request), but they can't actually set up the payment plan for you - that has to be done directly with the IRS. However, they're great at explaining what information you'll need and helping you calculate what monthly payment amount would work for your budget. One thing I'd add to the excellent advice already given - your volunteer should also look into whether they qualify for "Currently Not Collectible" status if their financial situation is truly dire. This temporarily suspends IRS collection activities if you can prove you can't pay basic living expenses. It's not forgiveness, but it gives breathing room. The fact that this person was volunteering their time to help the community while dealing with a nonprofit's administrative failures really shows the kind of person they are. With proper documentation and the right help, this situation is definitely manageable.

As someone who's dealt with IRS issues before, I want to emphasize that this volunteer should act quickly but not panic. The IRS is actually more understanding than people think when there's a legitimate reason for the oversight. A few practical steps I'd recommend: 1) Have the volunteer request copies of their tax transcripts from the IRS for the past 6 years to see what income was actually reported. This will help determine exactly which years need amended returns. 2) Contact the nonprofit in writing to document their failure to provide timely tax documents. This creates a paper trail that could help with reasonable cause arguments for penalty relief. 3) Calculate the worst-case scenario (taxes + penalties + interest) and the best-case scenario (with all possible deductions and penalty relief) to understand the actual range they might be dealing with. 4) Consider consulting with an Enrolled Agent (EA) rather than just a regular tax preparer. EAs specialize in IRS representation and can often negotiate on your behalf. The volunteer should also know that even if they end up owing money, the IRS payment plans are quite reasonable - often as low as $25/month for smaller amounts. The key is being proactive and honest about the situation rather than trying to hide from it.

Has anyone used H&R Block or TurboTax for handling ISO sales with AMT credits? I'm wondering if they calculate everything correctly or if I need to use a specialized tax preparer for this.

This is a great question about AMT and ISO dispositions! I went through something very similar last year. One thing I learned that might help: when you sell those 3,000 shares at $6.75, you'll indeed have different tax treatments for regular vs AMT purposes. For regular tax, you'll have long-term capital gains of ($6.75 - $1.35) × 3,000 = $16,200. But for AMT purposes, you'll actually have a loss of ($6.75 - $13.50) × 3,000 = -$20,250. This AMT loss helps generate additional AMT credit that you can use to offset future regular tax liability. The key thing to remember is that AMT credits can only be used when your regular tax exceeds your tentative minimum tax in future years. So if you're planning to exercise more ISOs this year, you'll want to model out whether you'll be able to use those credits effectively or if they'll just carry forward again. I'd strongly recommend getting a tax projection done before you make any moves, especially if you're considering additional exercises. The timing of when you sell and exercise can make a huge difference in your overall tax bill.