anybody know if AOTC is better than the Lifetime Learning Credit? my tax guy said AOTC is usually better but depends on your situation

Just wanted to add a few key points that might help others in similar situations: 1. The AOTC requires you to be enrolled at least half-time in a degree program, while the Tuition and Fees Deduction doesn't have this requirement. 2. If you receive a refund from your school for any reason (dropped classes, etc.), you need to reduce your qualified expenses by that amount or potentially pay back part of the credit. 3. Keep ALL your receipts and documentation - not just the 1098-T. The IRS can audit education credits, and you'll need proof of what you actually paid and when. 4. If you're planning to continue school beyond 4 years total (including any previous colleges), start thinking about whether to save some AOTC eligibility for later years when your expenses might be higher. With your income level and being in year 3, the AOTC is definitely your best bet. Just make sure you're tracking everything properly for future years!

idk why they make this stuff so complicated smh. good luck op

Just went through this same process! One thing to add - if you go the online route through IRS.gov, make sure you have your prior year tax info handy for identity verification even if you didn't file. They might ask for things like SSN, DOB, and address from that year. Also double check with your financial aid office about the exact format they need - some schools want the actual IRS letter while others accept the transcript printout. Better to confirm now than have to redo it later!

Has anyone else noticed that the thresholds aren't adjusted for inflation? $100k in 2018 when many of these laws started is not the same as $100k today. With inflation, these thresholds are effectively getting lower each year, forcing more small businesses to deal with multi-state compliance.

The inflation point is really frustrating as a small business owner. What was intended to catch larger sellers is now pulling in smaller operations that might not have the resources to handle multi-state compliance properly. I've also noticed that some states are getting more aggressive with enforcement - I received a notice from Pennsylvania last month for nexus I didn't even know I had established. Turns out they were tracking my Amazon sales data and determined I crossed their threshold 6 months ago. The retroactive penalties were brutal. It makes me wonder if we'll see more states like Kansas raising their thresholds, or if the trend will continue toward making it easier to trigger nexus requirements. Either way, staying on top of these changes is becoming a full-time job in itself.

For what it's worth, I itemized deductions as a dependent last year and it was definitely worth it in my case. Had about $14,000 in medical expenses after a major surgery (which easily cleared the 7.5% AGI threshold) plus some charitable donations. The key thing I learned is that you need to be the one who actually paid the expenses if you want to claim them. So I made sure to pay my medical bills directly from my account rather than having my parents pay them, even though they offered. Made documentation much cleaner for tax purposes.

Katherine, you're definitely on the right track asking about this! As a dependent, you can absolutely file your own return and itemize deductions if it benefits you. Looking at your specific situation: Your $2,800 in medical expenses could be partially deductible since they need to exceed 7.5% of your $18,500 AGI (so about $1,388). That means roughly $1,412 of your medical bills would qualify. Your $500 charitable donation to the university is fully deductible since you made it with your own money. However, those job expenses related to your internship likely aren't deductible anymore due to tax law changes in 2018 - unreimbursed employee expenses were eliminated for most people. So you'd potentially have around $1,912 in itemized deductions ($1,412 medical + $500 charitable). As a dependent, your standard deduction would be $18,900 (your earned income plus $400, but capped at the regular standard deduction). In your case, itemizing probably wouldn't be worth it since your itemized amount is much lower than the standard deduction. The good news is you can still claim these on your own return - they don't go to your parents just because you're a dependent. Just make sure you have good documentation showing you personally paid these expenses!

Just to clarify something important: this notice doesn't mean you're getting a refund in 2022. It means part of your 2021 refund ($950) was applied as a payment toward your 2022 taxes (the ones you'll file in 2023). The IRS is telling you they couldn't apply the full $1,825 you requested because after recalculating your 2021 taxes, you didn't have that much refund available to apply. Check the notice for details about what error they found - typically it's unreported income, incorrect credits, or math errors.

I had a similar situation a couple years ago and it really helped to understand the timeline of what actually happens. When you file your 2021 return and elect to apply part of your refund to 2022 estimated taxes, the IRS treats that as if you made an estimated tax payment for 2022 on April 15th (or whenever you filed). So in your case, they applied $950 as if you had made a $950 estimated tax payment for 2022. This will show up on your 2022 tax account and reduce any balance you might owe when you file your 2022 return. The key thing to watch for is whether the notice shows a balance due for your 2021 return. If they found an error that reduced your refund from $1,825 to $950, but you had other refund amounts beyond what you wanted applied to estimates, they might have just reduced your cash refund instead of creating a balance due. Look for sections in the notice that show "Amount you owe" or "Balance due" - if those are zero or blank, you're probably fine and don't need to take any immediate action.