I completely understand your confusion - this is one of those things that seems more complicated than it actually is! You're absolutely correct that those VMFXX dividends don't need to be reported on your taxes. Since VMFXX is the settlement fund within your Roth IRA, any earnings there are just as tax-sheltered as earnings in your VTTSX fund. Think of it this way: your Roth IRA is like a special tax-free zone, and VMFXX is just the "lobby" of that zone where your money waits before moving to the main investment floor. Everything that happens in that lobby is still within the tax-free zone. One tip for peace of mind: you can actually adjust how long money sits in VMFXX by setting up automatic investing with a shorter frequency if you want. But honestly, those small dividends you're earning while waiting are just a nice little bonus that will compound tax-free over the decades. You're doing great with your investment strategy - stick with it!

As someone who works in tax preparation, I can confirm everything others have said here is absolutely correct! Those VMFXX dividends are completely tax-sheltered within your Roth IRA container. What might help ease your mind even further: Vanguard is required by law to send you a 1099-DIV for ANY taxable dividend income. Since you're not receiving one for your VMFXX earnings, that's Vanguard's way of confirming these dividends aren't taxable. They have sophisticated systems that track which accounts are tax-sheltered and which aren't. I see this confusion constantly during tax season - new investors panic about small transactions they see in their retirement accounts. The beauty of the Roth IRA is its simplicity: contribute after-tax dollars, and then forget about taxes until you're retired and taking distributions (which will be tax-free if done correctly). Those tiny money market dividends are just working in your favor, compounding tax-free over the decades ahead. Keep up the excellent work with your consistent investing approach!

Everyone's talking about adjusting allowances, but FYI the W4 form completely changed in 2020. It doesn't use allowances anymore. Now you fill out different steps about multiple jobs, dependents, and other adjustments. You'll need to fill out the new form which asks for dollar amounts in some sections rather than the old allowance numbers. The IRS calculator should give you instructions based on the new form format.

I was in almost the exact same situation last year - new job after unemployment and accidentally claimed 0 allowances on my W4. The stress is real when you see those huge tax withholdings! Here's what I learned: You're absolutely allowed to adjust your withholding to reflect your actual tax situation. The key point everyone's making about being unemployed for half the year is spot-on - your total annual income will be much lower than what payroll assumes when they see your current salary. I ended up using the IRS withholding calculator just like you did, and it suggested a similar adjustment. Changed my W4 from 0 to 4 allowances (this was before the new form) and it worked out perfectly. Got a small refund instead of the massive one I was heading toward. Don't stress about the legal aspect - adjusting your W4 for legitimate reasons like unemployment periods is exactly what the system is designed for. The IRS wants you to pay the right amount throughout the year, not massively overpay. Just make sure to use their official calculator and you'll be fine.

Would filing Form 8832 affect how we handle self-employment taxes? Right now we're each paying self-employment tax on our respective shares, but I'm concerned changing our classification could impact how that works.

I went through this exact situation last year with my business partner. We had also mistakenly filed our EIN as a single-member LLC when we were clearly operating as equal partners from day one. After researching extensively and consulting with a tax attorney, here's what we learned: Your new accountant is absolutely correct about needing to file Form 8832. The IRS requires this formal election to change your tax classification from a disregarded entity (single-member LLC) to a partnership. The key thing to understand is that even though you've been operating as a partnership in practice, the IRS only knows what you told them on your EIN application. Without Form 8832, there's a mismatch between your actual business structure and your tax classification that could cause problems down the road. We filed Form 8832 with a detailed explanation of our mistake, and it was processed without any issues. The form allows you to make the election retroactive to when you first started operating as a multi-member LLC, which should align your tax treatment with your actual business operations from the beginning. Don't try to just file partnership taxes without correcting the classification first - it will likely trigger correspondence from the IRS asking for clarification, which will delay your filing and potentially create more complications.

Quick question about e-filing in this situation - has anyone successfully e-filed with no full-year state residency? When I tried last year, TurboTax kept giving me errors and forcing me to choose a "home state" even though I didn't have one.

This is actually a pretty common situation for people with mobile lifestyles! You're correct that you can be a non-resident or part-year resident in all states you lived in without being a full-year resident anywhere. One thing to double-check though - make sure you understand Colorado's rules about "domicile" vs "residency." Even if you weren't there 183+ days, if Colorado considers itself your domicile (basically your permanent home base where you intend to return), they might still try to claim you as a full-year resident for tax purposes. Since your mail goes to your friend's place there and you're returning there, you might want to clarify this with Colorado's tax department. Also, since you've been in South America since September, depending on how your income was structured and how long you stay abroad, you might qualify for some foreign income exclusions on your federal return. Worth looking into if you're doing any work while traveling. Keep all your documentation (lease agreements, employment contracts, travel records) - the IRS and state agencies love clear timelines when dealing with multi-state situations like yours.

I'm going through the exact same thing as you, Philip. Filed our ERC claim in October 2023 and we're now at 6 months with just one generic "processing delay" letter. What's really frustrating is that our business is in a tough spot financially and we were counting on this money to help with cash flow. From what I've been reading and hearing from other business owners, the IRS is being extremely cautious with ERC claims now because of all the fraud that happened. They're manually reviewing almost everything, which is why legitimate claims like ours are taking so long. I've heard some people are waiting 12+ months now. I know it doesn't help much, but you're definitely not alone in this. The uncertainty is the worst part - not knowing if there's an issue with your claim or if it's just stuck in the massive backlog. Hang in there, and hopefully we'll both see some movement soon.

I'm in a very similar situation and completely understand your frustration. We filed our ERC claim in August 2023 and are now at 8 months with virtually no communication from the IRS beyond that initial acknowledgment letter. What I've learned from talking to other business owners and our CPA is that the IRS is essentially treating every ERC claim like a potential audit case now. They're manually reviewing documentation, cross-referencing with PPP loans, and being extremely thorough because of all the fraudulent claims that flooded the system. The good news is that if you received that letter saying they need more time, it typically means your claim passed the initial fraud screening and is being reviewed by an actual person rather than being automatically rejected. The bad news is that this manual review process is what's causing these massive delays. I know it's incredibly stressful when you're counting on that money for business operations. We're in the same boat - made decisions based on expecting this credit and now we're scrambling with cash flow. But from everything I've heard, legitimate claims are eventually getting processed, it's just taking much longer than anyone anticipated. Hang in there!