Does anyone know if the rules are different for state taxes? We're in California and their tax rules sometimes differ from federal. Can my son be my dependent on federal but independent on state? He's 19, in college, I pay more than half his support.

This is such a common confusion that comes up every tax season! Your son can absolutely file his own return to get his refund AND you can still claim him as your dependent - these two things are completely separate. The key is that when he files his return, he needs to check the box that says "Someone can claim you as a dependent." This tells the IRS that while he's filing to get his withholdings back, he's not claiming his own personal exemption. Based on what you've described, your son clearly qualifies as your dependent under the "qualifying child" test - he's under 19 (or under 24 if a full-time student), lives with you more than half the year, and you provide more than half his support. His $4,800 in earnings doesn't disqualify him at all. The benefits work out much better for your family this way too. You get to claim valuable tax credits like the Child Tax Credit, while he still gets back whatever was withheld from his paychecks. It's really a win-win situation, even though it might take some explaining to convince him that this is the smart financial move for the whole family!

Slight tangent, but is anyone familiar with qualified personal residence trusts (QPRTs)? I've been told they can be good for estate tax purposes while still letting you live in your home. But I'm not clear on how the mortgage interest deduction works with them.

One thing to consider that hasn't been fully addressed - if you do set up an irrevocable grantor trust, make sure your tax preparer understands how to handle the reporting. I made this mistake my first year after setting up the trust. Even though it's a grantor trust and the mortgage interest flows through to your personal return, there are still some filing requirements for the trust itself (like getting an EIN and potentially filing Form 1041 depending on the trust's income). My original tax preparer wasn't familiar with grantor trust rules and almost filed everything incorrectly. I'd strongly recommend finding a CPA or tax professional who has experience with trust taxation before you make the transfer. The last thing you want is to set up the trust correctly but then mess up the tax filings and lose your deduction anyway due to reporting errors.

If your bonus pushed you from the 22% to the 24% bracket, for example, remember that our tax system is progressive. Only the dollars that fall into that higher bracket get taxed at the higher rate. The rest of your income is still taxed at the lower rates of the brackets below it. But a large bonus can definitely cause underwithholding if your employer only withheld at the standard 22% supplemental wage rate. For 2025, single filers hit the 24% bracket at $95,376, the 32% bracket at $182,101, and the 35% bracket at $231,251. Married filing jointly has different thresholds.

I went through this exact same situation last year! Got a large bonus that was about 30% of my salary and ended up owing $2,100 even though my employer withheld taxes. What helped me understand it was realizing that the 22% flat withholding rate on bonuses is often not enough when you factor in state taxes, FICA taxes on the bonus amount, and how it affects your overall tax bracket. One thing that caught me off guard was that my bonus also pushed me over the income limit for some tax credits I'd been getting in previous years. The loss of those credits added to what I owed on top of the underwithholding issue. For this year, I updated my W-4 to have extra withholding throughout the year to cover any bonus I might receive. I'd rather get a smaller refund than owe a big chunk again. Also consider making a quarterly estimated payment if you know a bonus is coming - you can avoid underpayment penalties that way.

wait but what about the taxable portion of social security benefits?? my dad gets social security AND takes 401k money and says his social security gets taxed more cuz of the 401k withdrawls... is that different?

This is such a common source of confusion! I went through the exact same worry when I was approaching retirement. The key thing to remember is that FICA taxes (Social Security and Medicare) are only on "earned income" - basically wages and self-employment income. Your 401k withdrawals are considered "unearned income" or investment income, so they're completely exempt from FICA taxes. What helped me understand it better was thinking about it this way: when you were working and contributing to your 401k, you were still paying FICA taxes on your full gross salary before any 401k deductions. So you've already "paid your dues" to Social Security and Medicare on that money. Now when you withdraw it in retirement, the government just wants their income tax cut, not another round of FICA taxes. The only thing to watch out for is if you're still working part-time in retirement - those work wages will still have FICA taxes, but your 401k withdrawals won't. Hope this helps ease your mind about retirement planning!

I'm dealing with a very similar situation right now! My SSA overpayment was determined in January 2024, and I've been on a payment plan since February, making $75 monthly payments religiously. When I called SSA last week specifically about tax refund offset, the representative told me something crucial that I wish I had known earlier. She explained that there are actually TWO separate processes: 1) Your payment plan with SSA, and 2) The Treasury Offset Program certification. These don't automatically sync up! Even though you're making payments, your debt might have already been sent to Treasury for offset before your March payment plan was established. The good news is that you can request what's called a "suspension of offset" even after certification. I had to specifically ask for this - it's not something they volunteer. The key phrase to use when calling is "I need to request a suspension of my debt from the Treasury Offset Program due to financial hardship." Given that you're caring for your mother and need the refund for her medical equipment, you have a strong hardship case. I'd also recommend calling the IRS at 1-800-829-1040 to check the status of your refund - if it hasn't been processed yet, you might still have time to prevent the offset. Document everything, get confirmation numbers, and don't let them brush you off. Your situation with your mother's medical needs is exactly the type of hardship these programs are supposed to accommodate.

I'm in a nearly identical situation and just went through this process last month! Here's what worked for me: **Immediate Actions (do these TODAY):** 1. Call Treasury Offset Program at 800-304-3107 - they'll tell you if your debt is certified for offset 2. Call SSA at 800-772-1213 and say "I need to request an immediate suspension of my debt from Treasury Offset Program due to caregiver hardship" 3. Ask them to check the "offset indicator" in your account **Key Documents to Request:** - Form SSA-632 (Waiver of Overpayment Recovery) - Form SSA-634 (Change in Repayment Rate) - Written confirmation that your debt is suspended from TOP **What I learned:** The March 2024 overpayment determination means your debt was likely certified for offset around that same time, BEFORE your payment plan started. Payment plans don't automatically prevent offsets - you need a separate "suspension" request. **Your advantages:** - Consistent $85 monthly payments show good faith - Caregiver status for mother's medical needs = strong hardship case - You have documentation and confirmation numbers I was able to get my suspension processed in about 10 days by emphasizing the medical hardship angle and providing payment history as proof of compliance. Don't let them tell you "payment plans prevent offsets" - that's not accurate. You need the specific suspension. Stay persistent and use the exact phrase "suspension from Treasury Offset Program." Good luck!