You're absolutely correct that loan repayments aren't taxable income - you're just getting your own money back. And unfortunately, these repayments can't be counted toward EITC since they're not "earned income" from work. Just wanted to add one important point that others haven't mentioned: if you're lending money to family members regularly, it's smart to keep simple records even for interest-free loans. A basic written note stating the loan amount, date, and repayment terms can save you headaches if the IRS ever questions large deposits in your bank account. Also, if your brother ever can't pay you back, having documentation helps if you need to claim it as a non-business bad debt deduction. Nothing fancy required - even a simple text message thread discussing the loan terms could work as documentation.

Great question! You're absolutely right - loan repayments are not taxable income since you're just getting your own money back. The IRS doesn't consider this "new" income. Regarding EITC, loan repayments unfortunately can't count as earned income. The EITC specifically requires income from employment, self-employment, or certain disability benefits. Since loan repayments aren't wages or earnings from work, they don't qualify. One tip: even though this was an informal family loan, consider keeping some basic documentation (even just text messages about the arrangement) in case you ever need to explain large deposits to the IRS. It's not required, but it can save headaches if questions come up later. If you had charged your brother interest, only that interest portion would be taxable income - but since it sounds like this was interest-free, there's nothing to report on your taxes at all.

An important detail that nobody has mentioned yet - when your company recalculates the Annual Lease Value, make sure they use the REDUCED value for the ENTIRE calendar year, not just from the point they make the correction. My company initially only applied the new lower value from July onward (when I brought it to their attention) but the IRS rules clearly state the redetermination applies for the whole year. Had to have another conversation with payroll to get them to apply it retroactively to January. Also worth noting - if you're still with the same employer and using the same car in 4 more years, you'll get ANOTHER recalculation at the 8-year mark. The value keeps stepping down as the car ages.

Great question about leased vehicles! Yes, the 4-year recalculation rule absolutely applies to employer-provided leased vehicles too. The IRS doesn't distinguish between owned and leased vehicles for Annual Lease Value calculations - what matters is that you're receiving the personal use of a company vehicle as a fringe benefit. Your employer should still recalculate the Annual Lease Value based on the current fair market value of the specific vehicle you're driving, even though they don't own it. The fact that it shows up on your W-2 confirms they're treating it as a taxable fringe benefit under the ALV method. The recalculation should reflect what that particular car (with its current mileage, condition, and age) would be worth if you were to purchase it today, not the original lease value or what the company pays in lease payments. This often results in significant savings since leased vehicles typically depreciate just like owned vehicles. Make sure your HR/payroll team understands this applies to leased vehicles - some companies mistakenly think the lease situation changes the rules, but it doesn't according to IRS Publication 15-B.

I've been following this thread closely as someone who works in retirement planning, and I wanted to add a few practical points that might help with your decision-making process. First, regarding the recharacterization timeline - while you have until your tax filing deadline, many brokerages need 2-3 weeks to process recharacterization requests, especially during busy tax season. So don't wait until the last minute if you go that route. Second, I'd suggest calculating your estimated quarterly taxes for the remainder of the year given your income jump. The IRS safe harbor rules mentioned earlier are crucial - paying 110% of last year's tax liability (since you'll likely exceed $150k AGI) can protect you from underpayment penalties even if your income increases dramatically. Finally, consider opening a Solo 401(k) instead of or in addition to a SEP-IRA. As a consultant, you can contribute both as employer and employee, potentially allowing higher contribution limits than a SEP-IRA in some cases. Plus, Solo 401(k)s don't interfere with backdoor Roth conversions the way SEP-IRAs do. The income volatility you're experiencing is becoming the new normal for many professionals. Having a systematic approach like the buffer strategy mentioned above, combined with quarterly tax and contribution reviews, will serve you well in future years.

One thing that hasn't been mentioned yet is the importance of documenting your income timeline for the IRS. Since your eligibility changed mid-year due to landing new clients, keep records of when those contracts were signed and when payments actually started. This documentation can be helpful if the IRS ever questions the timing of your contributions versus your income changes. Also, given your dramatic income increase, you might want to consider maxing out other tax-advantaged accounts first before worrying about the Roth situation. With $40k monthly income, you could potentially max out a Solo 401(k) ($69,000 for 2024), which would significantly reduce your MAGI and might actually bring you back within Roth contribution limits. The math works like this: $480k gross income minus Solo 401(k) contribution minus business expenses minus self-employment tax adjustments could potentially get your MAGI low enough that you don't need to recharacterize at all. It's worth running those numbers before you make any moves with your existing Roth contributions. Sometimes the solution isn't fixing the "problem" but rather changing other variables in the equation!

one thing nobody mentioned - a lot depends on which states r involved!! some states r SUPER aggressive about claiming residents (looking at u California and New York) while others barely care. where r u now and where u thinking of going?? that makes a huuuge difference in how careful u need 2 be!!

You're smart to think about this ahead of time! One important thing to add - even if you maintain residency in your home state, you'll still need to be aware of the temporary state's rules for non-residents earning income there. Some states have "convenience of employer" rules where they'll tax remote work income even if you're just temporarily present. Also, consider setting up a paper trail that shows your intent to return home. Keep paying bills at your parents' address (even if it's just a small utility or subscription), maintain memberships in local organizations, keep your car registered in your home state, etc. The more ties you maintain, the stronger your case for keeping your original state residency. And definitely keep that detailed calendar someone mentioned - not just for tax purposes, but because if you do need to file as a part-year resident anywhere, you'll need to know exactly how much income was earned in each state during your time there.

I'm wondering whether the company match counts towards the annual 401k contribution limit? Like if the limit is $22,500 for 2025, does the employer match count against that or can I still contribute the full amount myself?

This is a great question that trips up a lot of people! The "401k co match" line on your paycheck is definitely showing you the employer contribution - it's money your company is adding to your retirement account, not taking from your pay. One thing I'd add to the other helpful responses: keep an eye on your contribution percentage to make sure you're getting the maximum match available. Many employers have a "vesting schedule" too, which means you might not be 100% entitled to that match money until you've worked there for a certain period (usually 2-6 years). The vesting info should be in your plan documents. Also, that $95 match suggests you're probably contributing a decent amount yourself - just make sure you understand whether your company matches dollar-for-dollar up to a certain percentage, or if they have a different formula. It's worth reviewing your benefits package annually to make sure you're maximizing this free money!