Has anyone actually calculated whether Roth or Traditional is better for a 1099 contractor? I'm in a similar situation but I'm not convinced Roth is automatically better just because I'm over the deduction limit for traditional contributions. Couldn't I still make non-deductible traditional contributions and benefit from tax-free growth, then strategically convert portions during lower-income years? I'm wondering if the math works out better that way vs paying full taxes now on Roth contributions.

Great thread! I wanted to add that I recently went through this exact same process. After reading through all the helpful suggestions here, I ended up calling Schwab directly using the retirement specialist department approach mentioned earlier. What I learned is that even though Schwab can technically handle Roth SEP contributions now, they require you to specifically request it during account setup - it's not offered as a default option. The rep I spoke with said many customers don't realize this and end up with traditional SEP IRAs when they actually wanted Roth contributions. One thing to keep in mind is that unlike regular Roth IRAs, there are no income limits for Roth SEP contributions. So even high earners can take advantage of this option, which makes it particularly valuable for successful 1099 contractors. I'd definitely recommend calling the retirement specialist departments at the major brokerages rather than going through general customer service. They seem much more knowledgeable about these newer options and can walk you through the specific forms needed.

I'm going through something very similar with our volleyball booster club right now! We also had our 1023-EZ rejected and were told we'd need to file the full 1023 with that hefty fee. Reading through all these responses has been incredibly helpful - I had no idea there were so many resources available. One thing I wanted to add that might help others: our rejection came with a very generic letter that didn't specify the exact issue. After reading the comments here about contacting the IRS directly, I'm definitely going to try using Claimyr to actually get through to someone who can explain what went wrong. The idea of waiting on hold for hours has been keeping me from trying, but if they can get me connected to the right department quickly, that seems worth the cost. I'm also curious about the fiscal sponsorship option that was mentioned - has anyone here actually used that arrangement? It sounds like it might be a good interim solution while we figure out whether to pursue our own 501(c)(3) status or just operate under another organization's umbrella permanently. Thank you everyone for sharing your experiences - it's reassuring to know we're not alone in dealing with this frustrating process!

I completely understand the frustration you're going through - our soccer booster club faced the exact same situation last year! After our 1023-EZ rejection, we were ready to give up entirely, but I'm so glad we didn't. The key insight that saved us was understanding that most 1023-EZ rejections are due to correctable errors rather than actual ineligibility. In our case, we had made two critical mistakes: we included projected fundraising income instead of only actual past receipts, and we hadn't clearly articulated our educational purpose in supporting the school's athletic program. Before spending the $875 on the full 1023, I'd strongly recommend taking advantage of some of the resources mentioned in this thread. We ended up using a combination approach - first, we used Claimyr to get through to an IRS specialist who explained exactly what went wrong with our application. Then we worked with a nonprofit accountant (found through our local SCORE office) to correct the issues and resubmit the 1023-EZ. The whole process took about 3 months, but our corrected 1023-EZ was approved, saving us hundreds of dollars and maintaining our small organization status. The nonprofit designation has been invaluable - not just for tax purposes, but for grant opportunities and donor confidence that we never had before. Don't lose hope! Your booster club serves an important educational purpose, and with the right guidance, you should be able to get this resolved without the full 1023 expense.

pro tip: bookmark https://taxr.ai and check it weekly. saves so much stress trying to decode these letters and transcripts yourself

Don't panic! This happened to me too when I filed early last year. The IRS verification of non-filing letters are automatically generated based on database snapshots at specific dates. Since you filed in January and this letter is dated February 9th, there's a good chance your return was still in their processing queue when they ran this check. The Philadelphia office handles a lot of these routine verification requests, and the timing is actually pretty standard for early filers. Just keep your filing confirmation handy and maybe check your account transcript in a week or two to see if it shows up as processed. No need to refile unless you get additional correspondence saying there was actually an issue with your submission.

What's the catch with Credit Karma Tax (Cash App Taxes now I guess)? I'm always suspicious when something is completely free with no income limits.

Just wanted to add another option that helped me last year - TaxAct's Free Edition. They offer completely free federal filing for simple returns (W-2, unemployment, basic deductions) with no income restrictions. I switched to them after TurboTax tried to charge me $120 for what should have been a straightforward return. TaxAct walked me through everything step-by-step and even caught a deduction I had missed. State filing was around $20, which is still reasonable. The interface isn't as flashy as some of the big names, but it gets the job done. They also have good customer support if you get stuck on something. Definitely worth considering if the other free options don't work for your situation!

Has anyone dealt with the practical aspects of getting ITINs for foreign members? I've found that to be one of the most time-consuming parts of the process.

One thing I haven't seen mentioned yet is the potential impact of tax treaties between the US and the foreign corporation's country of residence. If there's a favorable tax treaty in place, it could significantly reduce the branch profits tax rate or potentially eliminate it altogether. The standard branch profits tax is 30%, but many treaties reduce this to 5% or even 0% in some cases. Also, consider the timing of your ownership change carefully. If you make the switch mid-year, you'll need to file both a short-year partnership return (Form 1065) for the period with multiple members AND treat the remainder of the year as a disregarded entity/branch operation. This creates additional complexity and potential for errors. I'd strongly recommend consulting with a tax professional who specializes in international business structures before making this change. The compliance burden and potential penalties for getting foreign-owned entity reporting wrong can be substantial.