Should she get a formal custody agreement ASAP? Seems like that would help with the tax situation too.

Absolutely. A formal custody agreement would definitely help clarify the situation, both for tax purposes and beyond. It creates an official record of the parenting time split, which is crucial for determining tax benefits. Even with a formal agreement though, remember that the IRS ultimately follows its own rules about who qualifies as the custodial parent for tax purposes. If the agreement specifies that the father can claim the child despite having less than 50% physical custody, the mother would still need to complete Form 8332 to release her claim. Without that form, the IRS will side with whoever meets the physical residence test.

This is a really good point! My brother went through something similar. The mom wouldn't put him on the birth certificate, and he had to legally establish paternity before he could even file for any custody rights or visitation. The tax stuff was completely off the table until that was resolved.

That's only for Qualifying Child, not Qualifying Relative. A girlfriend can never be a Qualifying Child because she doesn't meet the relationship test - has to be your actual child, sibling, niece/nephew, etc. Non-relatives can only qualify under the Qualifying Relative test, which always has the income limit.

Thanks for pointing that out! I just checked the 1099-NEC amount against my records and you're right - there's a discrepancy. The 1099 shows about $650 less than what I calculated based on the monthly benefits. Should I contact them about this or just report the amount on the form?

You should definitely contact the non-profit about the discrepancy. They may need to issue a corrected 1099-NEC. It's better to address this now than have mismatched information when the IRS compares your return with what the organization reported. If they insist the amount on the 1099-NEC is correct, ask them to explain the difference. Perhaps some payments were classified differently or there was a month when payments weren't made. Get it in writing if possible.

Do you know if there's a minimum amount you need to make for the QBI deduction? I only made about $4,000 on a 1099-NEC last year and wondering if it's worth claiming.

Thanks for the suggestions! I do max out my 401k already, but I hadn't thought about an HSA. My employer offers a high-deductible health plan option - would that automatically qualify me for an HSA?

Yes, if your employer offers a qualified high-deductible health plan (HDHP), that would generally make you eligible for an HSA. For 2025, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage, plus an extra $1,000 if you're 55 or older. The beauty of HSAs is the triple tax advantage - tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. Unlike FSAs, the money rolls over year to year, and you can even invest it for long-term growth. Many people don't realize you can use it as a stealth retirement account by saving receipts for medical expenses now and reimbursing yourself years later.

Isn't there also something about investment property loans being tax-advantaged? My cousin claims he deducts all his mortgage interest on his rental properties.

Would a cashless exercise eliminate the possibility of qualifying for long-term capital gains treatment? I'm trying to understand if there's any way to both solve the cash flow problem AND get the better tax treatment.

A standard cashless exercise would indeed eliminate the possibility of getting long-term capital gains treatment because you're selling the shares immediately upon exercise. The entire spread between your strike price and the selling price would be taxed as ordinary income. If you're looking to both solve cash flow issues and potentially get better tax treatment, some companies offer what's called a "partial cashless exercise" where you sell just enough shares to cover your costs and taxes, then hold the rest. Those remaining shares could potentially qualify for long-term capital gains treatment if you hold them long enough.

In my experience working at 3 different startups, the type of option is rarely negotiable. Companies typically have a standard equity plan that applies to everyone at similar levels. NSOs are often used for consultants or non-employees, while employees get ISOs. The tax advantages of ISOs are specifically designed for employees.