That's a perspective I hadn't considered. Did you use tax software to file for them or do the paper forms? And did they actually participate in the process or did you just do it for them?

I used free tax software for their simple returns. The first couple years I walked them through it with me sitting next to them, explaining each step. By age 16-17, they did it themselves with me just reviewing after. It was definitely worth it. My 19-year-old now understands tax concepts better than most adults I know. She can explain her withholding, knows which deductions she qualifies for, and even helped her roommate file this year. The investment account discussions led to broader financial literacy too - she's already putting money in a Roth IRA from her campus job.

Wait, you lose the child tax credit if you report their investment income on your return? That's a huge deal that I've never heard mentioned before! Is that always the case or only in certain circumstances?

That's a really good point. I didn't even think about the delayed earnings potential. Do you have any rough numbers on what that looked like for you financially? Just trying to do my own math here.

In my case, I was making about $85k during my MBA. The role I moved into after graduating paid $112k. So that's roughly $27k per year in lost salary increase, which means delaying graduation by 18 months cost me about $40k in potential earnings. My total tuition was $36k, and by stretching it I saved paying taxes on about $22k (the amount over the $5250 limit across 3.5 years). At my tax bracket that saved me around $6k in taxes. So I essentially lost $34k ($40k in delayed earnings minus $6k tax savings) by stretching the program. Obviously everyone's numbers will be different, but definitely consider the full financial picture, not just the immediate tax hit.

Some companies definitely do this! Mine doesn't call it a "gross-up" but they essentially pay about 40% extra on the amount over $5250 to offset the taxes. Worth asking about.

I actually did ask about this! My company said they don't offer any tax offset or gross-up for education reimbursement. Their policy is pretty rigid - $5250 tax-free per year, anything above that gets taxed, and that's it. I appreciate the suggestion though. Seems like I need to either stretch the program or just accept the tax hit as the cost of finishing faster.

Thanks so much for the tips! I'll definitely use a dark background and make sure to get that EIN number clearly. That might be why my dad's concerned - he's pretty old school about financial stuff and doesn't really trust anything digital. Do you think if I use the H&R Block app to take the photo it'll be better than just using my regular camera app?

Using the H&R Block app to take the photo is definitely better than using your regular camera app. The tax app is specifically designed to capture tax documents with the right angle, lighting guidance, and it will immediately check if the photo is usable for processing. It also keeps the image within their secure environment rather than storing it in your general photo gallery where other apps might have access to it. Your dad's concern is understandable - many people from earlier generations are cautious about financial documents, and rightfully so. You might ease his mind by explaining that the H&R Block app uses encryption to protect your data, and that digital submission is actually the standard method now, even preferred by the IRS.

This happened to me too! The software mixed up box 1 and box 3 amounts from my photo. Worth taking 2 extra minutes to verify everything before submitting.

This is really helpful to know. Did they at least help reduce the amount you owed at all? Or was it literally just setting up the payment plan?

Literally just set up a standard payment plan. When I first called, they made it sound like they could potentially get my tax debt reduced through an Offer in Compromise. But after I paid their initial fee, they came back and said I didn't qualify for that (which I could have figured out myself using the IRS pre-qualifier tool). The worst part was how they dragged everything out. What should have taken maybe 2-3 weeks took over 3 months, all while penalties and interest continued adding up. They claimed this was "part of the process" but I think they were just juggling too many clients with too few staff.

Thank you so much for this insight! After reading all these comments, I'm definitely going to stay away from the big national companies. I think I'll try the DIY route first using the tools mentioned here, and if I get stuck, I'll look for a local EA or CPA. Any specific red flags I should watch out for when talking to local tax pros?

You're making a smart choice! The biggest red flags to watch for with local tax pros are: 1) Anyone who promises they can settle your debt for "pennies on the dollar" without reviewing your full financial situation first. Legitimate professionals know that IRS acceptance rates for major reductions depend entirely on your specific circumstances. 2) Professionals who won't provide a clear, written fee agreement before starting work. Reputable tax pros will outline exactly what services they'll provide and what they'll charge, with no surprises. 3) Someone who seems unfamiliar with Form 433-A/F (Collection Information Statement) or Form 9465 (Installment Agreement Request). These are fundamental forms for tax resolution that any qualified pro should know inside and out. Good luck with your DIY approach! The IRS website is actually quite helpful for setting up standard payment plans.

Oh crap, I did have some freelance income last year. Not a ton, maybe $8,000 or so, but I definitely didn't make any quarterly payments. Would I get hit with all those penalties even though it wasn't my main source of income?

Yes, unfortunately the IRS doesn't distinguish between "main income" and "side income" - if you have self-employment earnings over $400, you're supposed to make estimated quarterly payments on that income. Your total penalty will depend on how much tax you owe on that $8,000. At that income level, you're looking at about 15.3% for self-employment tax plus your regular income tax rate. The good news is if this is your first time missing filing deadlines or estimated payments, you might qualify for first-time penalty abatement. Definitely mention that when you file or if you call the IRS.

Good point! My state (California) hit me with penalties that were almost as much as the federal ones when I missed filing a couple years ago. I had no idea states could be so strict.