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Q. What steps do we need to take to avoid having 529 funds appear as income?   Room and board are only qualified expenses for a 529/ESA distribution. R&B are not qualified for the education credit or tax free scholarship. If the student lives off campus, your qualified R&B expenses are limited to the lesser of your actual costs or the school's "allowance for cost of attendance" (COA).  There is a separate COA for students living at home   Allow for $4000 of tuition and fees to not be covered by a 529 distribution or scholarships, so that you can claim the tuition credit.    Be sure your distributions are taken in the same year as the expenses were incurred. A common error: you take a distribution in December to make a payment in January.  That will not be a "qualified distribution".    For 529 plans, there is an “owner” (usually the parent, but the grandparent in this case), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.  The 1099-Q gets reported on the recipient's return, if it needs to be reported.    The 1099-Q is  only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return.  You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records (you don’t need it). You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships.  

No, there is not an automatic way to create two MFS returns from one MFJ return.   If you and your spouse are considering using Married Filing Separately filing status, then you either both need to itemize your deductions, or you both use the standard deduction for Married Filing Separately, which is $14,600 for 2024 if under age 65.   Review your entries in the Personal Info section of TurboTax. These entries determine what filing status TurboTax will use and whether TurboTax will use itemized deductions or the standard deduction.    When you select Married Filing Separately, TurboTax asks follow-up questions. If you select that either you or your spouse itemize deductions, TurboTax displays the following statement: "Note: You both must itemize your deductions on each of your returns, or both of you must take the standard deduction. If only one of you wants to itemize, you should consider filing as Married Filing Jointly."   Depending on other factors, it may still be better to file jointly. If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), you will need to split your community income evenly even if filing separately; the rules vary by state. Also, some tax benefits aren't available for Separate filing status.   You can use TurboTax Online to test different scenarios before deciding to file jointly or separately. Click here for more information from TurboTax on how to decide which filing status to choose.   Click here for tax tips for community property states.    

First of all do not be confused- your distribution was from a 401(k) NOT an IRA.  It makes a bug difference.   There is a one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/2023)   For the Disaster recovery distribution: A qualified disaster recovery distribution is a distribution to a qualified individual that is made from an eligible retirement plan on or after the first day of the incident period of a qualified disaster and before the date that is 180 days after the latest of the following three dates: Dec. 29, 2022 The first day of the incident period with respect to the qualified disaster, or The date of the disaster declaration with respect to the qualified disaster. See Access retirement funds in a disaster | Internal Revenue Service.

In TurboTax Online, file an extension by following these steps:   View the entries down the left side of the screen at Tax Tools. Select Tools. Select File an extension. In addition, Free Federal tax extension is available here.   Extension for personal state income taxes here.   An extension does not give you more time to pay, it is only an extension of time to file.

Sometimes there is a delay in the refund meter after you have input your entries into the TurboTax program.   Try previewing your actual return as it is a more accurate reflection of your return.    You can get to your tax return in TurboTax desktop as follows: Switch to Forms Mode, and then  (see screenshots below for additional guidance) Scroll through your forms in the left panel and  Click on the form you want to preview (Example Form 1040)   You can get to your Tax Return in TurboTax Online as follows:  Go to "Tax Tools" in your left panel, Select "Tools" and then  Select "View Tax Summary" and  Select "Preview Form 1040"   Click here for "How do I update and print a new W-4?"   Click here for "Why do I owe taxes?"   Click here for "Video: Why Would I Owe Federal Taxes?

The only things that may be deductible as stated on your closing statement for a home purchase would be property taxes and "points", which may be deductible as mortgage interest. Both of these may be reported on your Form 1098 however, so you need to be sure you don't double up your entries. Also, prepaid property taxes reported on your closing statement are not deductible, so you have to be careful regarding that.

Did you complete your DC tax return first?     Virginia and District of Columbia are reciprocal states.   Just be sure to fill out your Personal Info correctly during the program interview; i.e., that you are a resident of Virginia, and that you worked in Washington, D.C.   Also, when completing your state tax returns, be sure to finish the non-residential return first (District of Columbia), and then the residential return second (Virginia).  Doing this will insure that VA will give you credit for any tax that your employer withheld in DC.     In the future...   "A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.   If your employer has withheld taxes for the work state instead of the resident state, you'll have to file for a refund from your work state. You'll still file your resident return that also includes that income and pay tax on it.   TurboTax handles reciprocal states and will generate the correct state(s) based on your personal information and your W-2."   "As a worker in a reciprocal state, you can fill out that state's exemption form and give it to your employer if you don't want them to withhold taxes for your work state. If you do this, make sure your employer also withholds taxes for your resident state, otherwise you may get hit with underpayment penalties come tax time."   Form D-4A Certificate of Nonresidence in the District of Columbia   For more information, please see TurboTax FAQ: What is a state reciprocal agreement?   For more information, please see TurboTax FAQ: Which states have reciprocal agreements?

Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, and mortgage insurance that you paid in 2024   You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February or you may be able to import the 1098 from the lender’s website.     Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.      2024 STANDARD DEDUCTION AMOUNTS SINGLE $14,600    (65 or older/legally blind + $1950) MARRIED FILING SEPARATELY            $14,600    (65 or older/legally blind + $1550) MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1550) HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1950)       There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.   Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home ownership deductions.   Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.   Your down payment is not deductible.   Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.   Home improvements, repairs, maintenance, etc. for your own home are not deductible.  (With possible exceptions for certain energy credits) (BUT——do make sure you keep careful written records/invoices, etc.  of any improvements you make to the home for someday when you sell it.)   Homeowners Association  (HOA) fees for your own home are not deductible.