Don't forget to check if you might qualify for the Earned Income Tax Credit even with low self-employment income! If you're over 25 or have qualifying children, you might get money back even if you don't owe taxes.

You definitely need to file! The $400 threshold for 1099-NEC income applies regardless of your total income level. Since you received $3,000 as an independent contractor, you'll need to file Form 1040 with Schedule C (for business income/expenses) and Schedule SE (for self-employment tax). The self-employment tax will be about 15.3% on your net earnings, but don't panic - you can potentially reduce this by deducting legitimate business expenses. Keep receipts for anything you purchased specifically for the internship (software, equipment, transportation costs, etc.). Also, even though you'll owe self-employment tax, you likely won't owe any federal income tax due to your low total income. You might even qualify for a refund if you had any taxes withheld from other jobs during the year. The filing requirement exists mainly to ensure you pay into Social Security and Medicare through the self-employment tax.

Hey Kayla! I totally understand your confusion - I went through this exact same situation with my grant refunds last year and it was so stressful trying to figure out what I needed to report. From what you've described, here's the breakdown: The portion of your $2,350 refund that went toward rent would definitely be considered taxable income since housing/room and board are non-qualified education expenses. For the textbooks, you'll need to check if they were listed as "required" on your course syllabi - if so, that portion would be tax-free. If they were just "recommended" or optional study materials, then that portion would also be taxable. The good news is that this is super common for students with substantial grants, so you're definitely not alone in dealing with this! Here are a few practical steps that helped me: 1. Contact your financial aid office and ask for a detailed breakdown of how your grant was applied and refunded - some schools can provide forms that categorize everything by expense type 2. Gather all your course syllabi to document which books were actually required vs. recommended 3. Keep receipts for everything if you haven't already Since your parents claim you as a dependent, you'll still need to report the taxable portion on your own return (if you file one) as "Other Income" on Schedule 1. The dependency status doesn't change whether the grant income is taxable - just affects which return it gets reported on. Don't stress too much about this! It's way better to figure it out now than get a surprise letter from the IRS later. You've got this!

Hey Kayla! I can definitely relate to the confusion around grant refunds - I went through something very similar during my sophomore year and it was overwhelming at first. Based on what you've described, here's how it breaks down: The portion of your $2,350 refund that you used for apartment rent would be considered taxable income, since room and board are classified as non-qualified education expenses by the IRS. For the textbooks, you'll need to check your course syllabi - if they were listed as "required course materials," then that portion of your refund would remain tax-free. However, if they were optional or just recommended reading, that portion would also be taxable. A few practical steps that really helped me sort this out: 1. Contact your university's bursar or financial aid office and ask for a detailed statement showing exactly how your original $7,800 grant was applied. Many schools can provide a breakdown that separates qualified vs. non-qualified expenses, which makes the tax reporting much clearer. 2. Gather your course syllabi from last semester to document which books were actually required vs. recommended. This documentation will be important if you ever need to justify your tax reporting. 3. Look for your 1098-T form in your student portal - it won't show the refund directly, but it will show your total grants and qualified tuition payments, which gives you a baseline for calculations. Since your parents claim you as a dependent, you'll still need to report any taxable portion of the grant refund on your own tax return (assuming your total income requires you to file). The taxable amount would go under "Other Income" on Schedule 1 of Form 1040. Don't stress too much about this - it's actually a really common situation for students with substantial financial aid packages. The key is just being accurate about documenting which expenses were truly qualified vs. non-qualified. Getting it sorted out correctly now will definitely save you headaches later!

One thing no one mentioned yet - if you're using the property occasionally for personal use, that complicates things even more. Even a week of personal use can change how expenses need to be allocated. We learned this the hard way when we used our rental for just 10 days ourselves, and it messed up our entire tax calculation.

Your tax preparer's wording was confusing, but they're not technically wrong about the economic effect. The key insight here is that mortgage principal payments aren't deductible expenses, which means more of your rental income remains taxable. Think of it this way: if you collect $2,000 in rent and have a $1,500 mortgage payment ($1,000 principal + $500 interest), you can only deduct the $500 interest portion. So you're effectively paying tax on $1,500 of income instead of $500, making it feel like you're being "taxed on the principal." However, don't forget about depreciation! You can depreciate the building portion of your rental property (not the land) over 27.5 years, which often provides a substantial deduction that helps offset this issue. For a $300,000 rental property where $240,000 is allocated to the building, that's about $8,727 in annual depreciation deductions. Also keep detailed records of all repairs, maintenance, property management fees, insurance, and property taxes - these are all deductible and can significantly reduce your taxable rental income. The principal payments are building equity in your property, which will benefit you when you eventually sell, but they just don't provide current-year tax relief.

Definitely report it! I didn't report an inherited property sale a few years ago because it sold for less than the appraised value at death. Ended up getting a letter from the IRS asking about it, and had to go through the hassle of amending my return. Even though you don't owe any taxes, the title company reports the sale to the IRS on a 1099-S form, so they know about the transaction. Better to report it properly the first time than deal with questions later!

Just went through this exact situation with my grandmother's house last year! Even though we had no capital gains (actually a small loss), our tax preparer emphasized that we absolutely had to report it. The IRS gets a copy of the 1099-S from the title company showing the sale, so they'll be expecting to see it on your return. One tip that saved us some headaches - make sure you have clear documentation of the stepped-up basis. We used the estate's formal appraisal, but I've heard some people successfully use other methods like comparative market analysis if done close to the date of death. Since there are multiple siblings involved, each of you will report your portion of the sale on your individual tax returns. So if you inherited equal shares, you'd each report 1/3 of both the sale price and the stepped-up basis. Definitely smart to get professional help for this year - inherited property sales have some nuances that are worth getting right the first time!

Anyone know which tax software handles this education credit situation the best? I've used TurboTax in the past but I'm in my 5th year of school now and want to make sure I get the right credits.

Your H&R Block tax specialist was definitely mixing up the rules. The Form 1098-T itself has no lifetime limit - you'll receive one every year you're enrolled and have qualified education expenses, and you can use it on your tax return each time. What has the 4-year lifetime limit is specifically the American Opportunity Tax Credit (AOTC). This is the most valuable education credit (up to $2,500 per year, partially refundable), but it's limited to 4 tax years per student and can only be used for the first 4 years of undergraduate education. After you've exhausted your AOTC eligibility, you can still claim the Lifetime Learning Credit using your 1098-T information. The LLC is less generous (up to $2,000 per year, non-refundable) but has no year limit and can be used for undergraduate, graduate, or professional courses. So to be clear: keep using your 1098-T every year, but strategically plan which credit to claim based on your situation. Don't let misinformation from a tax preparer cost you money!