This has been such an enlightening discussion! As someone new to this community who's facing a similar situation next year, I've learned so much from everyone's shared experiences. I'm particularly grateful for the clarification that the Section 121 exclusion truly reduces AGI, not just taxable income. When we sell our house with an estimated $850K gain, our AGI will only increase by $350K (the amount above the $500K married filing jointly exclusion), not the full gain amount. That's still significant for student loan calculations, but much more manageable than I initially feared. The strategies everyone has shared are incredibly practical: - Proactive contact with loan servicers using specific terminology like "alternative documentation for one-time income event" - Strategic timing of the sale relative to annual recertification dates - Thorough documentation including closing statements, tax returns, and explanation letters - Creating organized filing systems well in advance One question I haven't seen addressed: for those who successfully used alternative documentation, did you find it helpful to include projected income information for the following tax year to demonstrate that your income would return to normal levels? I'm wondering if showing forward-looking income stability strengthens the case that this truly was a one-time event. Thanks to everyone who shared their real-world experiences - this community has transformed what seemed like an overwhelming situation into something completely manageable with proper planning!

This thread has been incredibly helpful for someone in my exact situation! My husband and I are planning to sell our primary residence in about 3 months with an expected $725K capital gain. After reading through everyone's experiences, I now understand that only $225K (the amount above our $500K married filing jointly exclusion) will be added to our AGI, not the full gain. I've already started implementing the proactive strategies mentioned here - I called our loan servicer (Nelnet) yesterday to ask about their "alternative documentation of income for one-time capital gains events" process. They have a specific form called "Income Exception Request" and the representative was very familiar with house sale situations. They estimated 6-8 weeks processing time, so I'm planning to submit everything immediately after filing our taxes. One tip I wanted to add for others preparing for this - I've been working with our realtor and lender to ensure we have flexibility in our closing date. Being able to control whether we close in December vs January could make a significant difference in managing the AGI impact relative to our loan recertification timeline. The documentation checklist everyone has shared is gold - I'm already gathering closing statements, improvement receipts, and preparing explanation letters. It's amazing how much stress this planning ahead is relieving. Thanks to everyone who shared their real experiences - this community has made what seemed impossible completely manageable!

I've helped several clients through interstate LLC moves, and there are a few key points to add to the excellent advice already shared here: First, regarding the EIN question - you definitely need a new one. The IRS is very clear that when you dissolve an LLC and form a new one (even with identical operations), it's considered a new legal entity requiring a new EIN. Don't try to use the old EIN with your new Colorado LLC as this will create tax filing complications. For the dissolution/formation process, I'd strongly recommend consulting with attorneys in both states. Arizona has specific dissolution requirements including publication in some counties, and Colorado has its own formation procedures. The timing matters too - you want to avoid any gaps that could affect your business continuity or create liability issues. One often-overlooked aspect is sales tax registration. If you collect sales tax, you'll need to close your Arizona sales tax account and register for a new one in Colorado. This can take several weeks, so plan accordingly. Also consider whether you have any Arizona-specific business licenses or permits that won't transfer to Colorado. Some professional services require state-specific licensing that you'll need to obtain in Colorado before you can legally operate there. The statutory conversion option mentioned by Amina is worth exploring too - it might save you significant time and paperwork if both states allow it.

Having gone through a similar LLC move from New Jersey to Delaware about 18 months ago, I can confirm what others have shared about needing a new EIN. What I'd add is to be prepared for some unexpected admin work with your existing business relationships. One thing that caught me off guard was that several of my long-term clients required me to go through their vendor re-registration process as if I was a completely new supplier, even though I explained it was the same business just relocated. This included new background checks, insurance verification, and in one case, a completely new contract negotiation. Also, if you use any business software subscriptions tied to your EIN (like certain accounting software, business credit monitoring, etc.), you'll need to update those with your new EIN. Some providers treated this as a new account setup rather than an account transfer, which meant losing historical data in a few cases. For your Arizona to Colorado move specifically, Colorado is pretty business-friendly for LLC formations, but they do require a registered agent if you don't have a Colorado address initially. Make sure to factor that into your timeline and costs. The whole process was ultimately worth it for me, but definitely plan for more complexity than it initially appears!

Does anyone know how long IRS Direct Deposit refunds are taking this year? Got my W-2 yesterday and planning to file this weekend.

Great question! As someone who made similar mistakes early on, I'd definitely recommend taking your time rather than rushing. The key is making sure you have ALL your tax documents before filing. Since you mentioned having a side gig last year that you forgot about, create a checklist of all possible income sources: W-2s from all employers, 1099s from freelance work, banks (interest), investment accounts, student loan servicers, unemployment benefits, etc. Even small amounts matter! I keep a simple spreadsheet with what I received last year as a reference. Most 1099s are due by January 31st, but some can come as late as February 15th. If you're expecting a refund and have all your documents, filing early is fine. But if there's any doubt about missing income, it's worth waiting a few extra weeks to avoid the headache of amending your return. The peace of mind from being thorough is definitely worth more than getting your refund a couple weeks earlier!

Am I the only one who finds it ridiculous that the IRS still uses all these paper forms? Every year I stress about whether I've filled them out correctly. And the instruction booklet is like 20 pages long for what should be a simple form. No wonder everyone's confused about this stuff.

I completely understand your confusion! I went through the exact same thing my first year filing 1099s. You're absolutely correct - you would put "2" in the box asking for the number of forms on your 1096. The 1096 is just the transmittal form that goes with your 1099-NECs, so it doesn't count toward that total. One tip that helped me: I always double-check that the total dollar amounts on all my 1099-NECs add up to what I'm reporting on the 1096. It's an easy way to catch any math errors before sending everything off. Also, make sure you're using the current year's 1096 form - I made that mistake once and had to refile everything! Don't worry about asking "stupid" questions - the IRS forms can be confusing even for people who've been doing them for years. Better to ask and get it right than to file incorrectly and deal with correspondence later.

Important point everyone is missing: If you use the standard mileage deduction rate for the first year, you can switch between standard mileage and actual expenses in future years. But if you use actual expenses the first year, you're LOCKED IN to using actual expenses for the life of that vehicle. THIS IS HUGE if you're buying a car specifically for gig work. Get professional advice before making this decision because it could cost you thousands over the life of the vehicle if you choose wrong in year one. Also, keep a mileage log no matter what method you choose. IRS requires it even if you go with actual expenses. There are good apps for this - I use Stride.

Something else to consider that might affect your decision - if you're consistently making $650/week between both of you from gig work, you're looking at around $33,800 annually in self-employment income. This means you'll owe self-employment tax (15.3%) on top of regular income tax. A dedicated business vehicle can help offset some of that tax burden, but make sure you're also setting aside money quarterly for estimated tax payments. The IRS expects you to pay as you go when you're self-employed, not just at year-end. Also, don't forget about business insurance. Your personal auto policy likely won't cover you during commercial activities. You'll need either rideshare coverage or commercial insurance, which will be another deductible business expense if you go the actual expenses route. One more tip: if you do buy a dedicated gig car, consider getting it inspected and any needed repairs done before you start using it for business. Those initial repair costs could potentially be deductible as startup expenses.