Child and Other Dependent Tax Credits Changed for 2025 - I OWE $2500 in taxes!!

Thanks for the suggestions. I do contribute to my 401(k) but not the max - could I still make a contribution for last year even though it's already February? And yes, my older kid started college in the fall, but I didn't know about that Lifetime Learning thing. Do I need receipts or something to claim that? Also, the mortgage interest and property tax deductions - I thought those only help if I itemize? The standard deduction seemed way higher when I was going through the software.

For the 401(k), unfortunately you can only make contributions through your employer's payroll system, and those had to be completed by December 31st. However, you can still make a traditional IRA contribution for the previous tax year until the tax filing deadline (typically April 15th). This could reduce your AGI if you're within the income limits. The Lifetime Learning Credit is worth looking into if your child started college. You'll need Form 1098-T from the college showing tuition payments. The credit is worth up to 20% of the first $10,000 in qualified education expenses, so potentially $2,000. Your income might phase out some of the benefit, but it's definitely worth checking.

How exactly does that work? Does it just look at your old returns or do you have to upload all your W2s and stuff? I'm having the same issue with my 17 year olds and I'm desperate.

I'm always skeptical of these tax service recommendations. Did they charge a lot? I feel like this is something a regular accountant should catch without needing special software.

It analyzes your previous returns and current documents. You upload your last year's return and current tax forms (W-2s, 1099s, etc), and it runs a comparison to spot major changes or missing opportunities. It's super straightforward - took me maybe 15 minutes to upload everything. I totally get being skeptical! I used their free analysis first which pointed out the dependent exemption issue, then decided to go with the full service. It's not about whether an accountant "should" catch something - my old accountant missed it completely, which is why I tried this in the first place. Their system is specifically designed to catch year-over-year tax law changes and how they affect your personal situation.

How does this actually work? Do they just call the IRS for you or what? I don't understand how they can get through when nobody else can.

Yeah right. So some random service can magically get through to the IRS when millions of people can't? Sounds like a complete waste of money to me. The IRS will get to you eventually if you just keep calling.

They don't call for you - you still talk to the IRS yourself. Their system basically waits on hold for you and navigates the phone menu. When they reach a live agent, you get a call to connect with that agent. You maintain complete privacy since they transfer the call to you. They use technology to constantly dial and navigate the IRS phone system until they get through. It's not magic - just automated persistence. I spent hours trying to get through myself, redialing constantly after being disconnected. Their system just does this automatically until it works. After a week of failing on my own, getting through in 15 minutes was absolutely worth it to me. When you owe money and need to discuss options before penalties kick in, "eventually" isn't good enough.

One of my kids did work a summer job and made about $3,800 last year. How would that change things? Should they file their own return? Would I still claim them as a dependent?

Yes, your child should definitely file their own return for that summer job income. The good news is that you can still claim them as a dependent on your return as long as you provided more than half of their support for the year and they meet the other dependent tests. When they file their own return, they'll check the box indicating "Someone can claim you as a dependent." This is actually beneficial because while you still get whatever dependent benefits you qualify for, they may get some of their withholding back if too much was taken from their paychecks. It's not a major tax strategy that will eliminate your $2500 liability, but every bit helps, and it's teaching them about tax responsibility too.

With mortgage interest of $9,200 and property taxes of $4,500, you're at $13,700 just from those two items. Add in state income taxes (up to the SALT limit) and any charitable contributions, and you might exceed the standard deduction ($13,850 for single filers, $20,800 for head of household in 2023). Run the numbers both ways to see which gives you the better result. But remember, even if itemizing only saves you a few hundred dollars over the standard deduction, that's still money in your pocket.