Reading through all these responses, I wanted to add one important perspective that might help clarify things. As someone who's handled numerous bonus repayment situations through my work in corporate finance, the key distinction everyone is making about same-year vs. cross-year repayments is absolutely critical. Your situation is actually quite favorable - repaying in 2025 when you received the bonus in 2025 means your employer should be able to adjust your W-2 to show reduced wages, effectively treating that portion as if it was never paid. This avoids the much more complex "claim of right" deduction scenarios that apply to cross-year repayments. The $5,000 calculation (66.7% of $7,500 for 8 months short of 12) looks correct, but definitely verify with your employer that you're both using the same methodology. Some companies calculate from employment start date, others from bonus payment date. One thing I haven't seen mentioned much - make sure to ask about the impact on your final paycheck withholdings if they process this as a deduction. A $5,000 reduction could significantly affect your tax withholding calculations for that pay period, potentially resulting in under-withholding for the year. Your payroll department should be able to walk through this scenario. The advice about getting everything in writing before making any payment is spot-on. I've seen too many cases where employees repaid bonuses based on verbal agreements, only to have issues with W-2 corrections later. Document everything!

As a tax attorney who frequently handles employment-related tax issues, I want to emphasize a few critical points that could save you significant complications down the road. Your same-year repayment timing is absolutely ideal - this allows for a clean W-2 adjustment that treats the repaid portion as if it was never received. However, the devil is truly in the details of execution. **Key Documentation Requirements:** 1. **Written W-2 adjustment guarantee** - Specifically request confirmation that they'll reduce Box 1 (wages), Box 2 (federal withholding), Box 3 (Social Security wages), Box 4 (Social Security tax), Box 5 (Medicare wages), and Box 6 (Medicare tax) by the appropriate amounts 2. **Supplemental wage tax breakdown** - Since bonuses are typically taxed at the 22% flat supplemental rate, you need to know exactly how much of each tax type was withheld from your $7,500 bonus specifically **Critical Warning:** I've seen employers agree to "adjust the W-2" but then only reduce the gross wages without properly adjusting the withholding amounts. This leaves employees paying taxes on phantom income. Make sure they confirm ALL relevant boxes will be adjusted proportionally. Your $5,000 calculation appears correct (8/12 months = 66.7%), but verify their calculation methodology includes the same start/end dates you're using. The payroll deduction approach others mentioned is excellent - it essentially reverses the original transaction through the same system that processed it. Just ensure they can handle the withholding adjustments properly with such a large single-pay-period deduction. Don't make any payment without ironclad written confirmation of the complete W-2 adjustment process!

As a newcomer to this community, I'm blown away by how comprehensive and helpful this discussion has become! Reading through everyone's responses has completely changed my understanding of dependency rules for college students. What really resonates with me is how this thread started with one family's panic about potentially losing dependency status due to income, and evolved into a complete guide for navigating these complex tax situations. The key insight that keeps coming up - that full-time students under 24 don't have income limits for dependency, only the support test matters - seems to be news to so many families. I'm particularly struck by how many people shared stories of almost making drastic financial decisions (like the original 80% income cut) before getting accurate information. It really highlights the importance of understanding the actual rules rather than operating on assumptions or partial knowledge. The resources everyone has shared - especially IRS Publication 501 and Worksheet 3-1 - provide such a clear roadmap for families to follow. And the success stories where students kept their full income while parents still claimed them show that these situations often have much better outcomes than families initially fear. For anyone else reading this who might be in a similar boat: this thread is basically a masterclass in how to approach tax dependency questions systematically. Don't panic and make major changes without first doing the math and understanding your specific situation. The work experience and financial independence you gain during college are incredibly valuable - make sure you're not sacrificing them unnecessarily based on tax myths! Thank you to everyone who contributed their expertise here - you've created an invaluable resource that will help countless families navigate these decisions with confidence rather than fear.

As a newcomer to this community, this thread has been absolutely invaluable! I'm currently dealing with the exact same situation - my parents were freaking out about my part-time job potentially affecting their ability to claim me as a dependent. What's been most eye-opening is learning about the full-time student exception. I had no idea that the income limit doesn't apply to students under 24 who are enrolled full-time. Like so many others here, my family was operating under the assumption that ANY income above a certain threshold would disqualify me from being claimed as a dependent. The support test explanation has been a game-changer. Reading through everyone's experiences with calculating the actual numbers - including fair market value for housing, tuition costs, and all other expenses - really shows that most parents are probably already providing more than 50% of their student's total support even when the student has substantial part-time income. I'm planning to use IRS Worksheet 3-1 this weekend to work through our situation properly. Based on all the success stories shared here where students kept their full income while parents still claimed them, I'm optimistic we can avoid the drastic hour cuts my parents were initially suggesting. Thank you to everyone who shared their knowledge and real experiences - you've probably saved countless families from making unnecessary financial sacrifices based on tax misconceptions. This community's approach to breaking down complex tax rules into manageable steps is exactly what families need during these stressful situations!

I just wanted to share my experience since I went through something very similar recently. My W2 showed Paychex (another PEO) as my employer even though I work for a small marketing firm in Ohio. I was initially confused and worried about state tax implications too. After doing some research and talking to a tax professional, I learned that this is completely normal when your employer uses a Professional Employer Organization. The PEO becomes the "employer of record" for payroll and tax purposes, but it doesn't change where you actually performed your work or your state tax obligations. The most important thing is to verify that boxes 15-17 on your W2 show the correct state information - in your case, Indiana should be listed as your state with the appropriate Indiana state tax withholding. If that's correct (which it sounds like it is based on your follow-up comment), then you only need to file Indiana state taxes regardless of where Decision HR is located. I filed only in Ohio last year despite having Paychex listed as my employer, and everything went smoothly with no issues from the IRS or state tax authorities. The key is just making sure all the state information on your W2 is accurate for where you actually worked.

As someone who just went through a very similar situation, I can definitely relate to the initial panic! I had the exact same thing happen where my W2 showed a PEO (in my case, it was Trinet based in California) instead of my actual employer, even though I work remotely from Texas. What really helped me understand the situation was learning that PEOs are essentially co-employers for administrative purposes only. Your actual work location and state tax obligations don't change just because the PEO is in a different state. The key thing to focus on is boxes 15-17 on your W2 - as long as those show Indiana (which it sounds like they do based on your follow-up), you're only responsible for filing Indiana state taxes. I was worried about this for weeks until I finally filed my return with just Texas taxes despite the California PEO, and everything processed normally with no issues. The IRS and state tax agencies are very familiar with these PEO arrangements since they're becoming so common with remote work and smaller companies outsourcing HR functions. You should be completely fine filing only in Indiana as long as your state information in boxes 15-17 is correct!

Does anyone use a specific app for tracking gambling? I've been using a spreadsheet but wondering if there's something better. My casino trips are usually multiple days and I play different games each day, so it gets complicated fast.

As someone who's dealt with gambling record-keeping for several years, I'd recommend keeping it simple but consistent. Your approach of noting date, location, game type, and net win/loss is actually quite good - the IRS understands that detailed hand-by-hand tracking isn't practical for table games. What I've found helpful is to supplement basic session logs with any receipts you can collect: ATM withdrawals, cash-out tickets, comp receipts, even parking stubs. These help corroborate your gambling activity and show you were actually at the casino on the dates you claim. For blackjack specifically, I usually note my buy-in amount, any significant wins during the session (like if I hit blackjack several times or had a particularly good/bad streak), and my final cash-out. The key is being able to demonstrate a reasonable pattern of gambling activity that matches any W-2Gs you receive and supports the losses you're claiming as deductions. Don't overthink it - consistency in your record-keeping method is more important than capturing every minute detail.

Don't feel overwhelmed - you're not alone in finding ESPP taxes confusing! The key is to tackle it systematically. First, gather all your documents: Form 3922s from each purchase period, your purchase confirmations, and any 1099-B forms from sales. For each sale, you'll need to determine: 1) Was it a qualifying or non-qualifying disposition based on the holding period rules? 2) What's your correct cost basis (purchase price + any discount already taxed)? 3) What additional ordinary income needs to be reported for non-qualifying dispositions? I'd recommend creating a simple spreadsheet listing each sale with purchase date, offering date, sale date, purchase price, FMV at purchase, and sale price. This will help you see which sales are qualifying vs non-qualifying and calculate the tax treatment for each. If you're still feeling lost after organizing everything, consider consulting a tax professional who has experience with employee stock plans. The peace of mind is often worth the cost, especially when dealing with multiple years of ESPP participation.

I went through a very similar situation last year when I left my company and had ESPP shares to deal with. Here's what I learned that might help you: First, you're right that you won't get a W-2 from your former employer for the stock sales - that discount was already reported when you made the purchases while employed. You'll get a 1099-B from your brokerage instead. The tricky part is that many brokerages don't report the correct cost basis for ESPP shares on the 1099-B. They often miss the discount amount that was already taxed as ordinary income, which means you could end up paying taxes twice on that portion if you're not careful. Here's what saved me: I dug up all my old ESPP statements and Form 3922s (if your company issued them) to reconstruct the correct cost basis for each lot of shares. Your cost basis should be: what you actually paid + the discount that was reported as income on your W-2. For the sale timing, if you held the shares more than 1 year from purchase AND more than 2 years from the offering date, it's a qualifying disposition (better tax treatment). If not, you'll have additional ordinary income to report. I'd strongly recommend keeping detailed records and consider getting help from a tax professional if you have multiple purchase periods - it can get complex quickly, but it's definitely manageable with the right approach!