Did anybody mention that you might be able to use a MiXed method? Im pretty sure you can use standard mileage for business drives and then actual expenses for personal use on the same car. My buddy does this for his real estate business.

I feel your pain on this one! This is such a common trap that catches new business owners off guard. The IRS really should make this rule more prominent when people are filing their first year of business taxes. One thing worth double-checking - make sure you're calculating your actual expenses correctly for 2024. Beyond the obvious gas and maintenance, don't forget about: - Depreciation (this is usually the biggest one people miss) - Business percentage of insurance premiums - Registration and license fees - Loan interest if you financed the vehicle - Parking fees and tolls for business trips - Any modifications made for business use I've seen cases where people thought they were way behind on actual expenses but were actually much closer to standard mileage once they included everything properly. That said, if there's still a significant gap and you're planning to keep driving high business miles, selling and getting a different vehicle for business use might genuinely be your best financial move. Just make sure to start fresh with proper mileage tracking from day one with any new vehicle!

Just a heads up - I lived in Korea for 12 years and moved back to the US last year. Korean banks will also want your father to file a W-8BEN with them to claim the reduced treaty rate on any interest earned from Korean accounts. Otherwise, Korean financial institutions will withhold at their domestic rate (around 15.4% currently). It's a two-way street with these treaties - he needs to claim the treaty benefits with BOTH the US and Korean tax authorities. Also, make sure he's reporting any Korean bank accounts on FBAR if the aggregate total exceeds $10,000 at any point during the year. The penalties for missing that are brutal!

This is a complex situation that involves multiple layers of US tax compliance. Based on what you've described, your father needs to address several critical issues beyond just the treaty benefits: 1. **Formal expatriation process**: Since he's been a green card holder for 30 years, he needs to file Form I-407 to abandon permanent resident status and Form 8854 for expatriation tax purposes. The exit tax provisions could apply given his long-term resident status. 2. **Treaty benefits**: Yes, Article 13 of the US-Korea tax treaty does provide for a reduced 12% withholding rate on interest income instead of the standard 30%. He'll need to file Form 1040-NR and Form 8833 to claim these benefits. 3. **Korean tax obligations**: Don't forget he may also have Korean tax filing requirements as a returning resident. Korea generally taxes worldwide income for residents. 4. **FBAR reporting**: If he maintains US bank accounts or investments totaling over $10,000, he'll need to file FBAR (FinCEN Form 114) annually. Given the complexity and potential penalties involved (especially with expatriation requirements), I'd strongly recommend consulting with a tax professional who specializes in international tax and expatriation before filing anything. The costs of professional help will likely be far less than potential penalties for non-compliance.

One crucial aspect that hasn't been fully addressed is the depreciation deduction for foreign rental property. If you do rent out your Costa Rica property, you can depreciate the building (not the land) over 27.5 years for residential rental property, just like US rental property. However, there's a major catch with foreign property depreciation: depreciation recapture rules still apply when you sell, but you can't use like-kind exchanges (1031 exchanges) to defer the gain since those only work for US property. This means you'll eventually pay ordinary income tax rates (up to 25%) on all the depreciation you claimed, plus capital gains on any appreciation. Also, make sure to keep detailed records of the property's basis in both USD and Costa Rican colones, including any improvements. Currency fluctuations can create additional gains or losses when you eventually sell, and the IRS requires you to track the USD basis for tax purposes. Given your $125k income, if you're planning to rent the property even occasionally, the depreciation deduction could provide meaningful tax benefits in the short term - just be aware of the long-term tax implications when you sell.

Don't forget about the potential impact on your state taxes too! If you're currently a resident of a state with income tax, buying foreign property and spending significant time there could affect your state tax residency status. Some states have very aggressive rules about maintaining residency for tax purposes. If you start spending several months a year in Costa Rica, you might inadvertently trigger a state tax audit where they question whether you're still a bona fide resident. This is especially important if you're in a high-tax state like California or New York. On the flip side, if you're able to establish that you've become a non-resident of your current state (while being careful not to become a resident of another state), you could potentially save on state income taxes on your $125k salary. The key is understanding your current state's rules about what constitutes residency - it's usually based on factors like days present, where your permanent home is located, where you're registered to vote, etc. Some states use a 183-day test, others are more complex. This is another area where the interplay between your remote work situation, time spent at the Costa Rica property, and tax planning could create opportunities or pitfalls depending on how it's structured.

One option that hasn't been fully explored here is restructuring your compensation strategy. Since you can't use Section 127 as a sole owner, consider whether increasing your W-2 wages (while keeping them reasonable) makes sense for your overall tax situation. You'd pay more in payroll taxes, but you'd have more after-tax income to put toward student loans. Another angle - if your business has strong cash flow, you might want to look into whether any of your student loan interest qualifies for the business interest deduction if the education was directly related to your business operations. This is different from the personal student loan interest deduction and has different limitations. Also, don't overlook the possibility of setting up a legitimate education assistance program now with proper documentation, even if you can't use it immediately. If you plan to hire employees within the next couple years, having the framework in place could be valuable. Just make sure any program you establish truly meets the non-discrimination requirements and isn't primarily for your benefit as the owner.

I've been following this discussion and wanted to add something that might be helpful for future planning. While Section 127 won't work for you as a sole owner now, there's an interesting strategy some S-Corp owners use when they're genuinely planning to expand their workforce. You can establish what's called a "cafeteria plan" under Section 125 that includes educational benefits as one component. This is broader than just Section 127 and can potentially include student loan assistance as part of a comprehensive benefits package. The key is that it needs to be part of a legitimate plan to offer benefits to future employees, not just a workaround for the owner. The documentation requirements are pretty strict though - you'd need business projections showing planned hiring, job descriptions for anticipated positions, and a timeline for implementation. If you're audited, the IRS will want to see that this was a genuine business expansion plan, not just a tax avoidance scheme. Another consideration: some states are starting to offer their own student loan repayment assistance programs for small business owners who meet certain criteria. It's worth checking if your state has anything like that, especially if your business is in a field they're trying to encourage (like tech, healthcare, or green energy). The tax landscape for small business owners and education expenses is definitely frustrating, but there may be more options opening up in the coming years as lawmakers recognize the burden on business owners who invested in their own education.

I'm dealing with something similar, but in reverse - my employer is correctly treating my continuing education as non-taxable, but I'm worried they might be doing it wrong since I see so many people having issues like yours. I'm an RN working in pediatric oncology, and my hospital pays for specialized certification courses and conference attendance. They've never included any of this in my W-2, treating it all as working condition fringe benefits. But reading through this thread has me second-guessing whether they're handling it correctly. The education is definitely related to my current position - it's all pediatric oncology-specific training that directly improves my ability to care for my current patient population. But I'm wondering if there are specific documentation requirements I should be aware of to make sure we're both protected if there's ever an audit? Has anyone here had experience with the IRS actually reviewing these types of exclusions? I want to make sure my employer and I are on solid ground, especially since some of these courses can be pretty expensive.

As someone who's been through a similar situation with employer-paid education benefits, I wanted to share what ultimately worked for me. The key is understanding that you have multiple avenues to resolve this, even when HR initially pushes back. First, try approaching your employer one more time, but this time with specific documentation. Print out IRS Publication 15-B, Section 3, which covers working condition fringe benefits for education. Highlight the part that explains education qualifies when it "maintains or improves skills needed in your present work." For RN-to-NP programs, this often applies since you're building upon your existing nursing knowledge base. If your employer still won't budge, you're not stuck. You can file your return showing the W-2 as issued, but then claim the adjustment by filing Form 4852 (Substitute for Form W-2) along with a detailed explanation of why the education qualifies as a non-taxable working condition fringe benefit. Include documentation like your job description, the education program details, and how it relates to your current nursing role. The fact that your employer is paying for this education actually strengthens your case - it suggests they see value in the education for your current position. Keep all documentation about your nursing program and how it enhances your current ICU skills, as this will be important if there are ever any questions. Don't let HR's initial resistance discourage you. Many HR departments aren't well-versed in the nuances of education benefit taxation, especially for healthcare professionals. You have legitimate options to get this resolved correctly.