Has anyone dealt with the "testing period" for the last-month rule with HSAs? I'm in a similar situation and thinking about using that rule, but I'm worried about what happens if I can't maintain HDHP coverage for the full testing period next year.

Congratulations on your marriage! Your timing is actually pretty good for HSA planning since you're changing jobs early in the year. Here's what I learned from my own similar situation: First, you absolutely don't need to roll over your existing HSA - it's your money forever. I kept mine with the old provider since they had better investment options and lower fees than my new employer's HSA. For contribution limits with marriage, it depends on your coverage types. If you both keep individual/self-only HDHP coverage through your respective employers, you can each contribute the full individual limit ($3,850 for 2025). However, if either of you has family coverage, you're limited to one family contribution total ($7,750 for 2025) that you split between your accounts. Since you're changing jobs, track your coverage months carefully. You can only contribute based on months you actually have qualifying HDHP coverage. So if you start your new job in May, you'd prorate your contributions accordingly. One tip: coordinate with your spouse on contribution timing if you're both maxing out. We set up automatic contributions but made sure to monitor them monthly to avoid any accidental over-contributions, especially since employer contributions count toward your limits too. The IRS Publication 969 has all the detailed rules if you want to dive deeper into the specifics!

I went through almost this exact same situation last year with my ceramic pottery hobby! After doing a lot of research and talking to my state's tax office, here's what I learned: You're absolutely doing the right thing by collecting sales tax. In most states, sales tax is required on tangible goods regardless of whether it's a hobby or formal business - the state just wants their cut of the transaction. For the income reporting piece, you can still treat this as hobby income since $580 from occasional craft fair sales clearly falls into hobby territory. The fact that you're collecting sales tax doesn't change that classification - they're separate tax issues entirely. When you file your taxes, you'll report the total income (including the sales tax portion) on Schedule 1 as "Other Income." Then when you remit the sales tax to your state, you can deduct that payment, so the sales tax portion essentially washes out on your federal return. The key is keeping good records of what you collected versus what you remitted to the state. Most states have pretty simple filing requirements for small sellers - mine only requires annual filing since I'm under their quarterly threshold. Don't stress too much about crossing into "business" territory at your current level. The IRS looks at things like profit motive, time invested, and business-like operations. Occasional craft fair sales of $580 is clearly hobby activity!

I've been dealing with this exact situation for the past two years with my handmade soap business (well, technically still a hobby). What I've learned is that the number of events itself doesn't automatically trigger business classification - it's more about the overall pattern and your intent. The IRS uses what's called the "nine factors test" to determine hobby vs business status. Things like: whether you operate in a businesslike manner, your expertise level, time and effort invested, expectation of profit, success in similar activities, history of profits/losses, amount of profits relative to losses, your financial status, and personal pleasure derived from the activity. For context, I've done 12-15 craft fairs per year for the past two years, making about $2,800 last year. I still classify as a hobby because: I only do weekend events, I don't advertise or have a website, I make soap primarily for my own enjoyment, the income doesn't support my household, and I don't keep detailed business records beyond what's needed for taxes. The key is being honest about your motivations and operations. If you're just doing more fairs because you enjoy it and want to share your husband's work (not because you're trying to build a profit-making enterprise), you're likely still in hobby territory. Just keep good records and be consistent in how you treat it on your taxes!

Addendum: L4 is in an additional state that is not listed in the states column.

This thread has been incredibly helpful! I'm dealing with a similar situation for a 45-unit cooperative that's been filing Form 1120 for over a decade. After reading through all the responses here, I'm convinced we need to switch to Form 1120-C. One additional consideration I haven't seen mentioned yet - make sure to review any existing tax elections the cooperative may have made under their current 1120 filings. Some elections (like depreciation methods or accounting periods) might need to be reconsidered when switching to 1120-C, since cooperative tax law has different provisions for certain deductions. Also, if your co-op has significant commercial income (like rental income from ground-floor retail spaces), you'll want to carefully review how that's handled under Subchapter T. Non-patronage income is treated differently than patronage income for cooperatives. Has anyone dealt with mixed-use cooperatives (residential + commercial) when making this form switch? I'd be curious to hear about any specific complications that arose.

This has been an incredibly thorough discussion! I'm a CPA who specializes in cooperative and association tax matters, and I wanted to add a few practical considerations that might help others facing this decision. First, when evaluating whether to switch from Form 1120 to 1120-C, it's worth quantifying the potential tax impact before making the change. The patronage dividend deductions mentioned throughout this thread can be substantial, but the actual benefit depends on the cooperative's specific financial situation and cash flow patterns. One thing I'd strongly recommend is conducting a three-year lookback analysis using your historical financial data to estimate what the tax liability would have been under Form 1120-C versus Form 1120. This gives you concrete numbers to justify the change and helps set expectations for future tax planning. Also, be prepared for increased scrutiny in the first year after switching forms. The IRS may request additional documentation to verify the cooperative's eligibility for 1120-C treatment, so having your governing documents, bylaws, proprietary leases, and board resolutions well-organized is crucial. For those dealing with state tax implications (mentioned earlier in the thread), I'd suggest contacting your state's cooperative housing association or similar organization - many states have specific guidance documents for housing cooperatives that can clarify how federal form changes affect state-level requirements. Finally, consider the timing of the switch carefully. If your cooperative is planning any major capital improvements or refinancing, you might want to coordinate the form change with these events to maximize the tax benefits from the cooperative structure.

Don't forget to look into whether you qualify for the self-employed health insurance deduction! Even though your wife's employer provides the insurance, if you're paying any portion of the premiums (either directly or indirectly by reimbursing your wife), you may be able to deduct that amount on your Schedule C. I'm in a similar situation and was able to deduct about 40% of our family premium last year because that was determined to be "my portion" of the coverage. Talk to a tax professional about how to calculate and document this properly.

I've been following this thread closely since I'm in an almost identical situation - sole proprietor with coverage through my spouse's employer plan. Just wanted to add a few things that might help: First, definitely pursue the FSA option that Leo mentioned. We've been using one for three years now and it's been great for predictable expenses like glasses, dental work, and prescriptions. The key is to be conservative with your contribution since you can't roll over much to the next year. Second, on the self-employed health insurance deduction - this is real but requires careful documentation. You'll need a letter from your wife's HR department breaking down the premium allocation. In our case, the employer contributes $200/month toward employee-only coverage, but we pay an additional $450/month to add me and our kids. I can deduct a portion of that $450 as a self-employed person. One thing I haven't seen mentioned is that you can also deduct qualified medical expenses as business expenses if they're directly related to your work. For example, if you need ergonomic equipment for your home office due to a medical condition, that could be deductible. Obviously consult a tax pro for specifics. The bottom line is that while you can't get an HSA in your situation, there are still several ways to get tax advantages for healthcare costs as a self-employed person. It's worth spending some time (or money on professional advice) to make sure you're maximizing all available options.