This is really helpful! Question though - my school "required" us to have health insurance but it wasn't directly tied to a specific course. Would that count as a qualified expense? Also, some of my textbooks were technically listed as "recommended" not "required" on the syllabus but the professor actually did require us to have them for assignments. Can I count those?

Health insurance required by the school generally doesn't count as a qualified education expense for Pell Grant purposes, even if the school requires it. That falls under personal expenses according to IRS guidelines. For your textbooks that were "recommended" but actually needed for assignments, this is a gray area. Technically, only "required" textbooks count, but if you can document that these books were necessary to complete required coursework and assignments (like if the syllabus mentions assignments from these books), you could make a case for including them. If you were to be audited, you'd want documentation showing why these were effectively required for the course, such as assignment instructions that reference these "recommended" textbooks.

This advice could be misleading. If OP is being claimed as a dependent on someone else's return (like their parents), the filing threshold is much lower - just $1,250 for unearned income in 2024. Scholarship/grant money not used for qualified education expenses counts as unearned income.

Does anyone know if the repayment has to be voluntary to qualify for these options? My wages were garnished to repay overpaid unemployment from 2021, so I'm not sure if that counts as a "repayment" for tax purposes.

Great question about garnished wages. Yes, involuntary repayments like wage garnishment absolutely count as repayments for tax purposes. The IRS doesn't distinguish between voluntary and involuntary repayments in this case. What matters is that you included the original unemployment amount in your taxable income in a prior year, and now you've repaid it (whether by choice or through garnishment). Make sure you get documentation from the unemployment office showing the total amount garnished during the year, as you'll need that to support your deduction or claim of right adjustment.

I had this same issue with TurboTax last year! You need to go to "Deductions & Credits" then "I'll choose what I work on" then scroll down to "Miscellaneous Tax Deductions" and you should see an option for "Claim of Right" or sometimes "Repayments Under Claim of Right." If you don't see it, try searching for "IRC 1341" in the search box.

This is super important! My brother and I both inherited annuities from our mom, but his was qualified (inside an IRA) and mine was non-qualified. We had COMPLETELY different tax situations and options. The qualified annuity had never been taxed yet, while the non-qualified one had already had some taxes paid.

You're absolutely right about the qualified vs non-qualified distinction. That's a crucial factor I should have mentioned. Qualified annuities (inside IRAs or 401ks) have never been taxed before, so all distributions are generally fully taxable as ordinary income. Non-qualified annuities (purchased with after-tax dollars) will only have their earnings portion taxed, not the original investment amount that's considered the "basis.

Yes, you can disclaim an inheritance including an annuity! My financial advisor had me do this with an inherited annuity from my grandmother. You need to: 1) Not accept any benefits from it 2) Provide written refusal within 9 months of the death 3) Not direct who gets it next (it follows the contingent beneficiary designations) Made a huge difference for my family tax-wise.

Generally, the custodial parent (who the kids live with more than 50% of the time) gets to claim the child tax credit. In your case, that would be your wife since they're with her during the week. However, she can release the claim to you using Form 8332 if you both agree to that arrangement.

Do the free versions of those tax programs actually include self-employment forms? I tried using one of the big free tax sites last year for my regular job and it kept trying to upsell me for everything.

You're right to be cautious. Many "free" tax sites do try to upsell, especially for self-employment forms. FreeTaxUSA includes Schedule C in their free version, but you pay about $15 for state filing. TaxSlayer's free version covers simple returns but charges for self-employment - their "Classic" tier ($29.95 last I checked) includes all self-employment forms. The IRS Free File program is also worth checking - if your income is under a certain threshold (usually around $73,000), you can access truly free filing options including self-employment forms. The key is to access these through the IRS Free File portal rather than going directly to the company websites.

I think we're overcomplicating things for someone who made $2,700. At that income level after taking the standard deduction, they'll likely only owe the self-employment tax portion. That's about $381 in SE tax (15.3% of $2,500 assuming minimal expenses).