Great question about the limits and what qualifies as improvements! For the interest deduction limits, HELOC interest that qualifies (used for home improvements) gets combined with your other mortgage interest and is subject to the overall acquisition debt limit of $750,000 for loans taken out after December 15, 2017 ($1 million for earlier loans). So if your parents' total qualifying mortgage debt stays under these limits, they should be fine. Regarding what qualifies as "substantial improvements" - the IRS doesn't actually use that term in the context of HELOC interest deductibility. The law just says the loan must be used to "buy, build, or substantially improve" the home. Kitchen and bathroom renovations absolutely qualify, as do things like adding rooms, replacing roofs, installing new HVAC systems, etc. Even smaller improvements like new flooring, windows, or landscaping can qualify. The key distinction is that it must be an "improvement" (adds value or extends the useful life) rather than just "maintenance" (keeps the property in ordinary working condition). So replacing a broken furnace might be maintenance, but upgrading to a more efficient system would be an improvement. The IRS provides good examples in Publication 936 if your parents want to review what specifically qualifies. The bottom line is most renovations beyond basic repairs will meet the requirement.

Absolutely recommend getting a written opinion from their new tax preparer before making any moves! Given what happened with their previous CPA incorrectly including the HELOC interest deduction, you want ironclad documentation of the tax strategy before implementing it. I'd suggest having the new preparer provide a written analysis that covers: 1. Current situation - confirming the existing HELOC interest is not deductible 2. Refinancing option - detailed breakdown of whether converting to a traditional mortgage on the vacation home would create tax benefits that justify the closing costs 3. Future HELOC strategy - clear guidelines on what types of improvements would qualify and proper documentation requirements 4. Interest rate analysis - comparison of current HELOC rate vs. available mortgage rates This written opinion serves multiple purposes: it protects your parents if there's ever an audit, ensures the new preparer has thoroughly analyzed their situation, and gives you confidence that you're all working from the same understanding of the tax rules. Also consider having them sign an engagement letter that specifically addresses their responsibility to stay current with tax law changes and provide accurate advice. The fact that their previous preparer was still operating under pre-2017 rules two years after the TCJA is concerning and suggests they weren't keeping up with continuing education requirements.

Yes, tax loss harvesting to offset the cash portion gains is definitely worth considering! Since you're doing the 50/50 split, you'll have taxable gains on the cash portion that you can offset with losses from other positions. Just be careful about the wash sale rules - if you're planning to sell positions at a loss, make sure you don't repurchase the same or substantially identical securities within 30 days before or after the sale. For professional help, I'd definitely recommend finding someone who specializes in equity compensation. The nuances around ESPP, RSUs, and corporate reorganizations are pretty specialized. You might want to look for an Enrolled Agent (EA) or CPA who specifically mentions stock compensation on their website. The National Association of Stock Plan Professionals (NASPP) sometimes has referral resources too. Another thought - if you have other appreciated positions you've been thinking about selling anyway, this might be a good year to realize those gains while you're already dealing with the merger tax complexity. At least everything would be consolidated in one tax year rather than spreading the complexity across multiple years. The fact that you're thinking about these strategies ahead of time puts you in a much better position than most people who just deal with it at tax time!

This thread has been incredibly comprehensive! As someone who's been lurking and learning from all the detailed advice shared here, I wanted to add one more consideration that might be helpful. For those dealing with multiple years of ESPP purchases, don't forget about the lookback provision if your plan had one. Some ESPP plans allow you to purchase shares at a discount based on the lower of the stock price at the beginning or end of the offering period. This can affect your cost basis calculations and the amount of compensation income you'll need to report. Also, if anyone is planning to make estimated tax payments for next year, the cash portion of this merger might bump up your required payments significantly. It's worth running a quick calculation to see if you need to adjust your Q4 estimated payment or increase withholding from other sources to avoid underpayment penalties. One last tip - take screenshots or save PDFs of all your merger documentation and broker statements showing the conversion details. I learned this the hard way with a previous corporate action where I needed the documentation years later for an IRS inquiry, but the company's investor relations site had been updated and the old docs were no longer available. The level of expertise shared in this discussion gives me confidence that this community really knows its stuff when it comes to complex tax situations!

Has anyone found a good resource for figuring out which tax forms are absolutely necessary vs. which ones are just "recommended"? I'm in a similar situation with only payroll HSA contributions, and my tax software (FreeTaxUSA) didn't automatically generate an 8889 even though it knows about my HSA contributions from my W-2.

I can confirm that Form 8889 is absolutely required even with only payroll contributions. I made this mistake myself a few years ago and had to file an amended return after the IRS sent me a notice asking about the missing form. The key thing to understand is that your W-2 Box 12 (code W) only shows the contribution amount, but Form 8889 serves as your formal declaration to the IRS that you were eligible to make HSA contributions and that you didn't exceed the annual limits. For 2024, the limit is $4,300 for individual coverage or $8,550 for family coverage (plus $1,000 catch-up if you're 55+). As a non-resident filing 1040-NR, this is even more critical because the IRS will want complete documentation of all tax-advantaged accounts. The good news is that if you only had payroll contributions and no distributions, you'll only need to complete Part I of Form 8889, which is pretty straightforward. Don't rely solely on tax software for this - they sometimes miss required forms. The IRS instructions are clear that ANY HSA activity during the year requires Form 8889, and contributions definitely count as activity.

As someone who went through this exact situation a few years back, I can confirm that dealing with US-Canada cross-border taxation is incredibly complex but totally manageable once you understand the key concepts. A few additional points that haven't been mentioned yet: Make sure you're aware of the timing differences between US and Canadian tax years if you're dealing with stock options. The US may tax the exercise of options differently than Canada, and you'll need to track both the exercise date and sale date for proper reporting in both countries. Also, if you're planning to stay in Canada long-term, consider the implications of becoming a Canadian tax resident vs maintaining US tax residency. The substantial presence test and tie-breaker rules in the tax treaty can get complicated, especially if you're here on a work permit that might lead to permanent residency. One more thing - keep excellent records of everything. Cross-border audits are rare but when they happen, having detailed documentation of your income sources, tax payments, and exchange rate calculations will save you major headaches. I learned this the hard way when I got selected for a CRA review and had to reconstruct months of trading records.

I'm dealing with a similar cross-border situation and wanted to share some resources that have been helpful. The IRS has Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad) which covers many of these scenarios, even though it's primarily focused on Americans living abroad rather than temporary residents. One thing I learned the hard way is that the timing of when you report stock option income can be different between the two countries. In the US, you typically report the income when you exercise the option (the spread between exercise price and fair market value), while Canada may treat it differently depending on whether it's considered employment income or a capital gain. For anyone struggling with the forms, the CRA's Guide T4037 "Capital Gains" has a section specifically about foreign currency transactions that's really helpful. It walks through the conversion process step by step and gives examples of how to handle multiple transactions throughout the year. Also, don't forget about FBAR reporting requirements if your Canadian bank accounts exceed $10,000 USD at any point during the year - that's a separate filing requirement to the Treasury Department that many people miss.

I made $112k last year and my effective tax rate was only about 18% after deductions, nowhere near the 24% bracket rate. Don't get too hung up on the bracket percentage - your actual tax rate will be much lower than that highest bracket percentage. Plus, definitely negotiate for more! Your new employer expects it, and the worst they can say is no. I always ask for 10-15% more than their initial offer and have usually gotten at least part of that.

Congratulations on the job offer! I went through a similar situation when I jumped from $85k to $115k about two years ago. I was terrified about the tax implications but it turned out to be much less scary than I thought. Everyone here is absolutely right about marginal tax rates - you only pay the higher percentage on the income above each threshold. In your case, going from $89k to $110k means only about $14,700 of your income will be taxed at 24% instead of 22%. That's literally just an extra $294 per year in federal taxes (2% of $14,700). When you factor in that you're getting a $21,000 raise, paying an extra $294 in taxes is pretty insignificant. You'll still be taking home significantly more money each month. One thing I wish I had done earlier was updating my W-4 with the new employer to account for the higher income. I ended up owing a bit at tax time because my withholdings weren't quite right for the new bracket. Definitely worth filling out a new W-4 accurately when you start! Take the job - the financial benefits far outweigh the modest tax increase!