Has anyone run into issues with cost basis reporting on UTMA accounts? My son's 1099-B has some transactions marked as "basis not reported to IRS" and I'm not sure if I should be calculating the basis myself or if TurboTax handles this differently when using Form 8814.

I went through this exact same situation last year with my two kids' UTMA accounts. You're absolutely correct to be concerned about double taxation - it's a common pitfall that TurboTax doesn't automatically prevent. Here's what you need to do: Delete the UTMA 1099-Bs from your main tax return since you'll be reporting that income through Form 8814. When you complete Form 8814, TurboTax will ask you to enter the investment income information separately, and that's where you'll input the details from those UTMA 1099-Bs. One important thing to verify first - make sure your kids are still eligible for Form 8814. They need to be under 18 (or under 24 if full-time students), and their investment income must be under $11,000. If they had any capital gains over $2,200, be aware that portion will be taxed at your higher tax rate due to the kiddie tax rules. I'd also recommend double-checking the cost basis information on those 1099-Bs. UTMA accounts sometimes have transactions where the basis isn't reported to the IRS, and you'll need to have that information ready when completing Form 8814. The good news is that using Form 8814 often results in lower overall taxes compared to filing separate returns for the kids, especially if your children's investment income is modest. Just make sure you don't accidentally report the same income twice!

Looking at your numbers, I think I see what might be happening. You mentioned your income went from $32k to $46k - while that's still well below the phaseout thresholds others mentioned, there's another factor to consider: your tax liability itself. Education credits can only reduce your tax owed, and some credits like the American Opportunity Credit are partially refundable while others like Lifetime Learning Credit are not. If your overall tax situation changed (maybe more was withheld, or you have other credits), you might have little to no tax liability left for the education credits to reduce. Also, since you're in your 5th year as mentioned in another comment, you've likely exhausted your 4 years of American Opportunity Credit eligibility. The Lifetime Learning Credit has different income thresholds and is calculated differently - it starts phasing out at much lower income levels for single filers. Try running a comparison: temporarily remove your education expenses entirely and see what your refund/tax owed looks like, then add them back. This will show you exactly how much benefit you're actually getting from the credits, even if it's not as much as you expected.

I had almost this exact same situation last year! The frustrating thing about education credits is that they're "non-refundable" in most cases, meaning they can only reduce the tax you owe, not create a bigger refund. Here's what likely happened: with your income increase to $46k and switching from freelance to W-2, you probably had much more tax withheld throughout the year, so your tax liability is already close to zero or negative. Education credits can't increase a refund beyond what you've already paid in. To test this theory, look at your "Tax Owed" line before applying any credits. If it's already zero or you're already getting a refund, then education credits won't help much regardless of how much you spent on qualified expenses. Also, double-check that FreeTaxUSA is actually calculating the Lifetime Learning Credit (since you mentioned being in 5th year). The software sometimes defaults to trying the American Opportunity Credit first, and when it realizes you've maxed out those 4 years, it should switch to LLC - but you might need to manually tell it to use LLC instead. One more thing: make sure you're including textbooks and required supplies in your qualified expenses, not just what's on the 1098-T!

Something missing from this discussion - the tiebreaker rules when both parents live together! When parents who aren't married live together with their children, the IRS has specific tiebreaker rules: 1. First, the parent who provides more than 50% support 2. If that's unclear, then the parent with the higher AGI gets to claim Since you mentioned having the higher AGI and paying "just about everything," you clearly qualify under both criteria. Your ex definitely incorrectly claimed them.

I'm dealing with a very similar situation right now and want to share what I've learned from my tax attorney. The penalties your ex could face depend largely on whether the IRS determines it was an honest mistake or intentional fraud. For what sounds like your situation (unmarried parents living together), the IRS will look at who provided more than 50% of the children's support during the year. Since you mentioned paying for "practically everything" and having the higher AGI, you clearly meet the requirements to claim them. When you file your corrected return, your ex will likely receive a CP87A notice requiring her to either amend her return or provide documentation supporting her claim. If she can't substantiate it, she'll have to pay back the child tax credit, earned income credit, and any other dependent-related benefits - which could easily be $4,000+ per child. The accuracy-related penalty is typically 20% of the additional tax owed, but this can sometimes be waived for first-time offenders or if there's reasonable cause. The key is having solid documentation of your support payments ready - keep those utility bills, rent receipts, grocery receipts, medical bills, etc. One thing I learned - file your return as soon as possible. The IRS processes these disputes in the order they're received, and having your documentation ready from the start can significantly speed up the resolution.

I'm dealing with a similar wash sale situation as a non-resident, and this thread has been incredibly helpful! One thing I wanted to add based on my experience is that you should double-check your 1099-B carefully because some brokerages don't always correctly identify ALL wash sales, especially if you have accounts at multiple brokerages. I discovered that I had wash sales that weren't marked on my 1099-B because I sold shares at one brokerage and bought similar shares at another brokerage within the 30-day window. The wash sale rule still applies in this situation, but the brokerages don't communicate with each other to identify these cross-brokerage wash sales. So even if your 1099-B shows some wash sales, make sure to review all your transactions across all accounts to catch any that might have been missed. You'll still need to report these on Form 8949 with code "W" even if they weren't identified by your brokerage.

As a non-resident who went through this exact same wash sale confusion last year, I want to emphasize something that really helped me understand the process: the key is that wash sale rules apply to ALL investors regardless of residency status, but the REPORTING mechanism is what's different for non-residents. Here's what I learned after finally getting it sorted out: 1. Yes, you absolutely must report wash sales as a non-resident 2. The Schedule NEC itself doesn't have wash sale columns because it's designed to receive already-processed totals from Form 8949 3. Form 8949 is where you do all the detailed wash sale reporting with code "W" 4. The adjusted totals from Form 8949 then flow to your Schedule NEC The biggest lightbulb moment for me was understanding that Form 8949 is essentially the "worksheet" where you handle all the complex capital gains/losses calculations (including wash sales), and Schedule NEC is more like the "summary" that takes the final numbers. Also, make sure you understand the basis adjustment aspect - when you mark a transaction as a wash sale on Form 8949, you're not just losing that loss forever. The disallowed loss gets added to the basis of your replacement shares, which will reduce your gain (or increase your loss) when you eventually sell those replacement shares. One last tip: if this is your first time dealing with wash sales as a non-resident, consider keeping extra detailed records. The IRS systems don't always track basis adjustments perfectly across different tax years or residency status changes.

Omar, you're absolutely right to be concerned about this! I went through the same confusion last year when I started getting paid through Zelle for my consulting work. The key thing to understand is that while Zelle doesn't send 1099-K forms like PayPal or Venmo, ALL income is still taxable regardless of how you receive it. Think of it this way - if someone paid you $25,000 in cash, you'd still owe taxes on it even though there's no paper trail, right? For your $25,000 in annual Zelle payments, you'll need to report this as business income on Schedule C of your tax return. Make sure you're also tracking any business expenses you can deduct - things like software subscriptions, equipment, home office expenses, etc. These deductions can significantly reduce your tax liability. My advice: Start keeping meticulous records NOW. Create a simple spreadsheet with columns for date, client name, amount, and description of work. Also save screenshots of your Zelle transactions as backup documentation. The IRS may not get automatic reports from Zelle, but if you're ever audited, they'll definitely want to see proof of your income and expenses. Don't risk not reporting it - the penalties and interest for unreported income are way worse than just paying the taxes upfront. Better to be safe and compliant!

The confusion around Zelle and tax reporting is totally understandable, Omar! I went through this exact same worry when I started my freelance photography business. Here's the bottom line: Zelle's exemption from 1099-K reporting requirements doesn't exempt YOU from reporting the income. The $25,000 you're making annually absolutely needs to be reported on Schedule C as self-employment income, and you'll owe both regular income tax AND self-employment tax on it (about 15.3% for Social Security/Medicare). Since you mentioned your record-keeping hasn't been meticulous, I'd strongly recommend going back through your bank statements and Zelle transaction history to create a complete record of all payments received. The IRS can easily spot unreported income during an audit by comparing your bank deposits to your reported income, even without 1099 forms. Also, don't forget about quarterly estimated tax payments! With $25K in annual income, you're likely going to owe more than $1,000 when you file, which means the IRS expects you to make quarterly payments throughout the year rather than paying it all at once in April. You can use Form 1040ES to calculate what you should be paying each quarter. The good news is that as a freelancer, you can deduct legitimate business expenses like software, equipment, home office costs, etc. to reduce your taxable income. Just make sure you keep receipts and documentation for everything you claim.