Does anyone know if my state taxes US obligation income differently than others? I'm in California if that matters. My tax software is asking about this but doesn't explain if California has special rules.

Just wanted to add something that might help clarify the confusion about finding this on your 1099 forms. When you're looking at your 1099-B, the "US obligations" won't necessarily be labeled that way explicitly. Look for securities with these types of identifiers or descriptions: - Anything starting with "912" (CUSIP numbers for Treasury securities) - Securities described as "T-BILL", "T-NOTE", "T-BOND" - "TREASURY" in the description - "UNITED STATES OF AMERICA" as the issuer Also, if you have a 1099-INT form, Box 3 will show "Interest on U.S. Savings Bonds and Treasury obligations" - this is separate from capital gains but shows if you held these types of securities during the year. Don't forget that if you sold Treasury securities at a loss, you still need to report them in this section (you'd enter a negative number for the loss). The state exemption applies to both gains and losses on these securities.

One thing nobody mentioned - if you're getting tax transcripts for a mortgage, make sure to ask your loan officer EXACTLY which transcripts they need! I got the wrong kind first (tax account transcript instead of tax return transcript) and it delayed my closing by a week. Some lenders also require the Record of Account transcript which is different. Save yourself time and get the right one first!

I went through this exact same situation last year when I lost all my tax documents in a basement flood. Here's what worked for me: First, definitely try logging into your old tax software accounts - TurboTax, H&R Block, FreeTaxUSA, etc. I was able to recover 3 years worth of returns this way even though I thought they were gone forever. For the IRS route, I'd recommend starting with the free transcripts online first since you need them quickly for your mortgage application. The Tax Return Transcript shows most of what lenders need, and you can get it instantly if you can verify your identity online. If that doesn't work, you can request them by mail using Form 4506-T (which is free, unlike the full return copies). One tip that saved me time - call your mortgage lender first and ask them exactly which years they need and what specific information they're looking for. Some lenders are fine with just the AGI and tax liability amounts, while others need more detailed breakdowns. This helped me avoid requesting more than I actually needed. Also, don't panic too much - this happens to more people than you'd think, and lenders are usually pretty understanding about the process taking a little time to get the documents together.

This whole discussion has been incredibly enlightening! As someone who's been renting for years and just started seriously house hunting, I had no idea about the complexity of itemized deductions vs. the standard deduction. One thing I'm wondering about as I look at potential homes - is there a way to estimate beforehand whether itemizing will be worth it for my situation? I'm looking at houses where the property taxes would be around $6-7K annually, and I live in a state with moderate income taxes (probably $4-5K withheld yearly). So I'd be right around that $10K SALT cap. With mortgage interest on top of that, it seems like I'd probably come out ahead itemizing, but I'm curious if there are any online calculators or rules of thumb for figuring this out during the home shopping process. It would be helpful to factor this into the overall cost analysis of different properties. Also, reading about all the document tracking and escrow timing complexities makes me realize I should probably start getting organized about tax record keeping well before I actually buy! Any suggestions for systems that work well for new homeowners?

This is such a valuable discussion for new homeowners! I went through this exact confusion when I first started itemizing after buying my house in 2022. The key insight that helped me was understanding that the SALT deduction isn't just about property taxes - it's about preventing the federal government from taxing you on money that's already been claimed by state and local governments. Your state income tax withholding represents money that never actually reached your pocket because your state government took it first. The federal system recognizes this by allowing you to deduct it. Think of it this way: if your gross pay was $50,000 but your state took $3,000 in income tax, you really only had $47,000 available to live on or pay federal taxes with. The SALT deduction ensures the federal government doesn't tax you on that full $50,000. One practical tip for tracking everything: I set up a simple Google Sheet with columns for date, amount, type (state income tax, property tax, charitable donation, etc.), and notes. Every time I get a relevant document - W2, 1098, property tax bill, donation receipt - I add it to the sheet immediately. Come tax time, I just sort by category and everything's ready to go. Much easier than digging through boxes of papers in April! The $10K cap is frustrating for those of us in higher-tax states, but at least understanding how it all works together helps with planning and peace of mind.

I went through this exact same situation last year and it was so confusing! The key thing to understand is that TurboTax is trying to help you optimize your tax situation, not trick you into claiming something wrong. Here's what's happening: When your scholarships/grants (Box 5) exceed your qualified education expenses (Box 1), you have flexibility in how to allocate those funds. By telling TurboTax that some of your scholarship money went to room and board, you're making that portion taxable income BUT you're also freeing up more of your qualified expenses to count toward the American Opportunity Credit. The math usually works out in your favor - you might pay a little tax on the scholarship money used for room and board, but the increased AOTC more than makes up for it. Just make sure you actually did have room and board expenses equal to what you're claiming the scholarship covered. One tip: Keep good records of all your education-related expenses (tuition, fees, books, room, board) so you can confidently answer these allocation questions. The IRS allows you to choose how to allocate scholarship funds as long as you're truthful about your actual expenses.

I just went through this exact same situation with my 1098-T! I was so confused at first too, but after reading through all these responses and doing some research, I finally understand what's happening. The key insight is that when Box 5 (scholarships/grants) exceeds Box 1 (qualified education expenses), you get to choose how to allocate those scholarship funds. TurboTax is asking about room and board because if you designate some of your scholarship money as going toward room and board, that portion becomes taxable income - BUT it also means more of your out-of-pocket qualified expenses can count toward the American Opportunity Credit. It's counterintuitive, but paying a little tax on the "room and board scholarship" often results in a much larger tax credit. In my case, I ended up with about $1,200 more in refund even after accounting for the extra taxable income. The most important thing is to make sure you actually had room and board expenses that match what you're telling TurboTax. As long as you're being honest about your actual expenses, you have the flexibility to optimize how you allocate your scholarship funds. Don't be afraid to use this strategy - it's completely legitimate and the IRS expects students to make these kinds of allocation decisions!

I had a very similar situation when my partner moved in with me after I bought our house solo due to his student loan debt affecting his credit. What really helped us was setting up clear documentation from the start. We created a simple expense-sharing agreement that outlined exactly what costs we'd split (mortgage payment, utilities, groceries, etc.) and what percentage each person would pay. This made it crystal clear that the monthly transfers were for legitimate shared expenses, not rental payments or income. For the banking/reporting side, our monthly transfers of around $1,200 never triggered any IRS reporting. Banks generally only report specific types of transactions - like interest over $10, business payments over $600 through payment apps, or cash transactions over $10,000. Regular personal transfers between individuals for expense sharing don't fall into these categories. One tip: if you use payment apps like Venmo or PayPal, always categorize the transfers as "personal" or "friends & family" rather than "goods & services." This keeps them clearly marked as personal transactions rather than business payments that might trigger reporting. The key thing the IRS cares about is whether you're making profit from the arrangement. Since you're just splitting actual household costs and not charging above market rates, these transfers are reimbursements, not taxable income. Keep basic records of your shared expenses and you'll be all set!

One thing that might give you additional peace of mind is understanding that the IRS receives millions of bank transaction reports annually, and they're primarily looking for patterns that suggest unreported business income or tax evasion - not legitimate expense sharing between partners. Your situation is actually very common. Many couples handle finances this way when only one person qualifies for the mortgage. The $800-900 monthly amount you mentioned is well within the range of normal household expense sharing and wouldn't raise any red flags. I'd suggest keeping it simple: maintain basic records of your shared expenses (maybe just save your monthly utility bills and mortgage statements), and if you want extra documentation, a simple text message or email chain between you two about the expense arrangement can serve as evidence of your intent. Also remember that even if somehow these transfers were ever questioned, the burden would be on the IRS to prove they represent unreported income rather than legitimate expense reimbursements. As long as you can show the money is going toward actual household costs you both benefit from, you're in good shape. Don't overthink it - you're being responsible by planning ahead, and your arrangement sounds completely legitimate!