Hey quick question - are you guys using any particular software to track which 7216 consents you've received from which clients? We're switching to CCH Axcess this year and I'm curious if it has good tracking features for this.

Paolo, I feel your pain on the sudden volume increase! Three firms in 6 months is a lot to absorb. For 7216 consents, I'd definitely recommend keeping them separate from engagement letters - it gives you more flexibility and ensures clients actually read what they're consenting to regarding their data. One thing that's helped us tremendously is batch processing the consents. We send them out in waves based on client complexity (simple returns first, then more complex ones) rather than trying to handle everything at once. This way you can focus your team's limited bandwidth more strategically. Also, don't underestimate the power of setting clear expectations upfront. We now tell clients during the initial call that they'll receive both an engagement letter AND a separate consent form for data sharing, and we explain why both are necessary. This has cut down on the "why am I signing two things?" questions that used to eat up so much admin time. Have you considered bringing in temporary seasonal help specifically for document management and client communication? Sometimes an extra pair of hands just for tracking paperwork can free up your core team to focus on the actual tax prep work.

I'm in almost the exact same situation - US citizen living abroad (in my case, Costa Rica) running a consulting business with exclusively US clients. After going through this maze last year, I can confirm that you should be able to claim QBI on at least part of your income. The key insight that my tax advisor helped me understand is that the "effectively connected" test isn't about where you physically sit when doing the work - it's about the economic reality of serving the US market. Since your clients are US companies and you're providing services into the US economy, that creates the necessary business connection. However, I learned the hard way that you really need to run the math on different FEIE/QBI combinations. In my case, with $135k in consulting income, I found that excluding only $95k with FEIE and claiming QBI on the remaining $40k actually saved me more in total taxes than maxing out the FEIE at $120k. The QBI deduction on the larger amount more than offset the additional income tax I paid on the non-excluded portion. One practical tip: make sure you're tracking all your business expenses properly because they reduce your income before you even get to the FEIE/QBI decision. I was able to deduct coworking space fees, VPN subscriptions for accessing US client systems, international wire transfer fees, and even a portion of my rent for my home office here in Costa Rica. Also, since marketing consulting can fall under SSTB rules, keep good documentation showing that your work is primarily advisory/strategic rather than hands-on creative execution, just in case it ever comes up in a review.

The consensus here is spot on - you should definitely qualify for QBI as a US citizen with US-based clients, even while living in Portugal. The "effectively connected with US trade or business" test focuses on economic substance, not physical location. However, I want to add one critical consideration that could significantly impact your decision: Portugal's tax treaty with the US and how it affects your overall tax strategy. Portugal has been attracting many digital nomads with programs like D7 visa and NHR (Non-Habitual Resident) status, which can provide substantial Portuguese tax benefits for foreign-sourced income. If you qualify for NHR status in Portugal, you might pay 0% Portuguese tax on your US consulting income for up to 10 years. In this scenario, you'd want to carefully model whether claiming the full amount as US income (and maximizing QBI) versus excluding it with FEIE makes more sense, especially since FEIE could potentially create issues with maintaining your Portuguese tax benefits. The math gets complex because you need to consider US federal taxes, potential US state taxes (if you maintain residency), Portuguese taxes, and how the treaty prevents double taxation. Given your $142k income level, the optimal strategy might be different than for someone in a country without favorable tax treatment for foreign income. I'd strongly recommend consulting with a tax professional who understands both US expat taxation AND Portuguese tax law, particularly around NHR status if you're eligible. The interaction between these systems could dramatically change which approach saves you the most money overall.

Just wanted to add one more important detail that I learned the hard way - make sure you understand what qualifies as a "first-time homebuyer" for IRS purposes. It's not just about never owning a home before. You (and your spouse if married) must not have owned a principal residence during the 2-year period ending on the date you acquire your new home. So if you owned a home 18 months ago, you wouldn't qualify yet. Also, the $10,000 is a lifetime limit per person, so if you're married, you and your spouse can each use up to $10,000 from your respective IRAs for a total of $20,000. But if you're single, you're stuck with the $10,000 limit across all your accounts combined. Make sure to keep detailed records of everything - when you withdrew the money, what you used it for, and proof that you meet the first-time homebuyer requirements. The IRS can be pretty strict about documentation if they audit you later.

Important clarification about married couples and the $20K limit! Each spouse can only withdraw up to $10,000 from their own IRA accounts - you can't have one spouse withdraw $20K from their single account just because they're married. The benefit only applies if both spouses have their own retirement accounts. So if you're married and only one of you has an IRA, you're still limited to $10,000 total for the first-time homebuyer exemption. Both spouses need to have their own IRA accounts to get the full $20,000 benefit ($10K from each person's accounts). Also worth noting that the "qualified acquisition costs" this money can be used for include more than just the down payment - you can use it for closing costs, financing fees, and other expenses related to buying or building the home. Just make sure to keep receipts for everything since the IRS may ask for documentation later.

I'm dealing with a similar WEP overpayment situation right now and this thread has been incredibly helpful! One thing I wanted to add - if you're having trouble getting clear answers from Social Security about exactly how much you've repaid and what documentation you'll receive, try requesting a "benefit verification letter" from your my Social Security account online. This letter shows your complete payment history and can help you track exactly what you've repaid so far. I found this really useful when trying to figure out if I should amend previous years' returns or take the current year deduction. Having the exact numbers made it much easier to calculate which approach would save me more money. Also, for anyone still struggling with the IRS phone system - I can confirm that calling early in the morning (right when they open at 7 AM) seems to have better success rates than calling later in the day, though it's still frustrating. The automated system is brutal but persistence does sometimes pay off.

I've been following this thread closely because I'm in a very similar situation - Social Security overpaid me due to incorrect WEP calculations and I'm now repaying through their installment plan. What's been most helpful from reading everyone's experiences is understanding that there are really two main approaches: taking the itemized deduction on Schedule A for the current year, or filing amended returns for the years when you received the overpayments. One thing I wanted to add that hasn't been mentioned yet - if you're married filing jointly and the Social Security overpayment pushed your household into a higher tax bracket in previous years, the amended return approach becomes even more attractive. In my case, the extra Social Security income in 2021 pushed us from the 12% bracket into the 22% bracket for part of our income. By filing an amended return to remove that overpayment, we're getting back taxes that were paid at the higher rate. Also, for anyone still trying to get through to the IRS by phone - I found that calling the practitioner priority line (if you have a tax professional helping you) tends to have shorter wait times. If you don't have a tax pro, some of the online services mentioned in this thread might be worth trying, especially if you're dealing with a time-sensitive situation like I was when Social Security threatened to increase my monthly withholding. The documentation aspect cannot be overstated - I've been keeping copies of everything, including screenshots of my online Social Security account showing the repayment schedule. This has been invaluable when trying to calculate the tax implications of each approach.

I shorted Apple last year and paid out dividends. The way I handled it (confirmed by my CPA) was: 1. Report the full dividend amount from my 1099-DIV on Schedule B 2. The dividend I paid on my short sale gets added to the cost basis of the short position 3. When I closed my short position, the adjusted basis meant I had a smaller gain So you're not really "deducting" it directly from your dividend income. You're adjusting the cost basis of the short sale transaction, which affects your capital gain/loss instead.

This is a great question that catches a lot of people off guard! I went through the same confusion when I first started shorting stocks. The key thing to understand is that you cannot simply net the $27 against your $125 in dividend income on your tax return. Here's what you need to do: 1. **Report the full $125 on Schedule B** - This matches what your broker reported to the IRS on your 1099-DIV 2. **Add the $27 to your short position's cost basis** - The dividend payments you made while shorting increase the cost basis of that short sale 3. **The tax benefit comes when you close the short position** - Your capital gain will be $27 less (or capital loss $27 more) when you eventually close the position Think of it this way: the IRS wants to see dividend income and capital gains/losses reported in their proper categories. You're not losing the tax benefit of that $27 - you're just getting it through the capital gains calculation instead of directly reducing dividend income. Make sure to keep good records of these payments so you can properly adjust your cost basis when you close the short positions!