Try FreeTaxUSA instead. I used it for my student and server taxes and it was actually free for federal (state was like $15). They don't pull that bait and switch nonsense that TurboTax and H&R Block do.

The American Opportunity Credit is usually better though if you qualify (up to $2,500 vs $2,000 for Lifetime Learning). Plus AOTC is partially refundable while LLC isn't. But yeah if you've used AOTC for 4 years already or don't meet other requirements, Lifetime Learning is a great backup!

This is such a great analogy! I'm going to use this next time someone tries to tell me I should keep debt around for tax purposes. It's amazing how many otherwise smart people fall for this.

Not a dumb question at all! There are a few reasons: 1. It WAS more valuable before the standard deduction nearly doubled in 2017. Many more homeowners itemized then. 2. For people with very large mortgages (like in high-cost areas) who have enough deductions to itemize anyway, it still provides some tax benefit - though they're still paying more in interest than they save in taxes. 3. Real estate agents, mortgage lenders, and others in the industry have incentives to promote homeownership, and the tax deduction sounds like a great selling point. 4. Financial myths tend to persist, especially when they're repeated by seemingly knowledgeable people (like financial advisors who should know better!) 5. Most people don't actually calculate the true cost vs. benefit - they just hear "tax deduction" and think "free money.

Thanks for explaining this so clearly! It makes so much more sense now. I guess I should be more skeptical when I hear about "great tax advantages" without seeing the actual numbers worked out.

Did you do the return yourself or use a software/service? I'm wondering if it's worth paying for TurboTax or something similar for such a simple return, or if I should just do it manually to show her the forms.

We used the free version of one of the major tax software programs. It was simple enough that we didn't need to pay for anything. I thought about doing it manually to show her all the forms, but the software actually made it easier to explain each step as we went through it. We printed out copies of all the completed forms at the end so she could see what the actual tax documents look like. Best of both worlds - easy guided process but still educational about the forms themselves.

This is such an important point! The same thing happened with my niece. She had about $40 withheld from some bond interest, and the only way to get that back was to file. The threshold for required filing doesn't change the fact that she was entitled to get her withholding back.

I hadn't thought about that approach! Do you know what kind of documentation I should include to explain my situation? And did your accountant face any pushback from the IRS on this?

For documentation, I included a signed statement explaining my travel circumstances, copies of my travel itinerary showing the brief nature of my absence, and evidence of my continued ties to the US (apartment lease, utility bills in my name that continued during my absence). My accountant said that for brief absences, especially around holidays or year boundaries, the IRS tends to be reasonable as long as you clearly document that your absence was temporary and that you maintained your US ties. He said he's filed returns this way for years for clients with international travel and never had an issue. The key is being transparent and providing clear documentation rather than trying to hide anything.

Most consumer tax software struggles with dual-status returns. I tried using TurboTax for mine last year and ended up having to abandon it and go to a CPA. The software just isn't designed to handle the complex forms and calculations needed for dual-status returns.

I had the same issue and found SprinTax was actually designed specifically for international/dual-status situations. It costs more than regular TurboTax but was worth it because it handled all the weird form combinations needed for dual-status returns. Still complex but at least it was possible to complete.

Do those limits apply to both Traditional and Roth 401k combined? Or can I do $23,000 in Traditional and another $23,000 in Roth? Also, does the employer match count toward the limit?

The $23,000 limit applies to your combined Traditional and Roth 401k contributions - it's a total limit for all your elective deferrals. So you can split it however you want between Traditional and Roth, but the total can't exceed $23,000 (or $30,500 if you're 50+). Good news though - employer matching contributions don't count toward this limit! They fall under a separate, much higher limit (the "415(c) limit") which is $69,000 for 2024. This higher limit includes all contributions to the plan (your elective deferrals plus employer contributions).

Code "E" actually means distribution under a QDRO (qualified domestic relations order), which is usually for divorce situations. For excess contributions, you should normally see code "P" for principal or code "8" for earnings on excess contributions. You might want to contact your plan administrator because they may have coded your 1099-R incorrectly.