One thing to consider that hasn't been mentioned yet - if you do decide to get married, make sure to update your W-4 withholdings at work! Many couples forget this step and end up owing money at tax time or getting a huge refund (which means you gave the government an interest-free loan all year). With your combined income of $120,000 and a baby on the way, your tax situation will be quite different than when you were both single. The IRS has a good withholding calculator on their website, or you can use the new W-4 form which has been redesigned to be more accurate for married couples. Also, don't forget about Dependent Care FSA if either of your employers offers it - you can set aside up to $5,000 pre-tax for daycare expenses once the baby arrives. This is separate from the child care tax credit and can provide additional savings!

Great advice from everyone so far! As someone who works in tax prep, I'd add one more consideration that often gets overlooked - timing your wedding date strategically within December if you do decide to get married this year. Since your tax filing status is determined by December 31st, you could literally get married on December 31st and still file as married for the entire 2024 tax year. This gives you almost the full year to see how your finances actually play out before making the commitment. Also, with a baby due in May 2025, consider that you'll be eligible for the Child and Dependent Care Credit starting in 2025 if you have childcare expenses. This credit can be worth up to $2,100 for one child (20-35% of up to $8,000 in expenses, depending on your income). Combined with the Child Tax Credit of up to $2,000, having a child provides significant tax benefits. One last tip: if you do get married, make sure both of you understand the "kiddie tax" rules won't apply here since we're talking about your own child, but do keep documentation of all baby-related medical expenses throughout 2025 - some may be deductible if they exceed the threshold for medical expense deductions.

One thing to consider is that the situation might get more complicated if your royalty income continues to grow. Once you start getting into larger amounts ($10k+), some US companies get more strict about tax compliance. I'm a composer in Brazil and my initial small royalty payments were handled exactly like yours - no withholding, no forms. But when I had a track used in a popular show and my payments jumped to $12k, suddenly the distribution company got very concerned about proper documentation! They retroactively requested W8-BENs and threatened to withhold 30% from future payments until I complied.

This is actually a really important point about being proactive before your income grows. I'm a songwriter in the UK dealing with something similar - started small with streaming royalties but now getting sync placements that are pushing my US income much higher. What I learned is that even though the treaty protects you from owing tax, you still want to establish proper documentation early. I sent W8-BEN forms to all my US distributors even when they hadn't asked, and kept certified mail receipts as proof. When my income jumped last year and they suddenly got worried about compliance, I already had everything in place. The key is not waiting for them to figure out their obligations - take control of your own documentation. It's much easier to send the forms now when the amounts are smaller and there's no pressure, rather than scrambling when they panic over larger payments and threaten to start withholding at 30%.

Lot of good advice here but nobody has mentioned the importance of the LLC Operating Agreement! That document should specify your actual status in the company and might clarify if you're supposed to be treated as a member, manager, employee or some combination. Request a copy ASAP if you don't already have one. Also, if they're paying you from a different entity than the one you work for, that could indicate they're using a Professional Employer Organization (PEO) or some kind of employee leasing arrangement, which is actually pretty common and not necessarily shady. But if that's the case, they DEFINITELY should be withholding taxes!

This situation has several red flags that suggest potential tax fraud or worker misclassification. The fact that they're claiming you as an employee for COVID relief purposes while simultaneously refusing to withhold taxes is particularly concerning - that's essentially having it both ways for their financial benefit. Here's what I'd recommend doing immediately: 1. **Document everything** - Save all contracts, pay stubs, emails about your status, and any communications regarding the COVID relief claims. Screenshot or print anything that might disappear. 2. **Request your LLC documentation** - Get copies of the Operating Agreement, any amendments, and confirmation of the LLC's tax election (partnership vs. corporation). You have a right to this information as a purported member. 3. **Calculate your potential tax liability** - Since no taxes have been withheld, you're likely on the hook for both income taxes AND self-employment taxes (15.3%) if you're truly classified as a self-employed LLC member. This could be a substantial amount. 4. **Consider professional help** - This situation is complex enough that you might want to consult with both a tax professional and an employment attorney. Many offer free consultations and can help you understand your rights and obligations. The discrepancy between your "employment contract" language and their current claims about your status, combined with the different payment entity and COVID relief issues, suggests this company may not be handling worker classification properly across the board.

Great question! I went through an audit two years ago and can share what I learned firsthand. The IRS absolutely accepts digital receipts - in fact, the agent I worked with seemed to prefer them because they were clearer and more organized than my faded paper receipts. What matters most is that your receipts contain the "big four" pieces of information: date, amount, vendor name, and business purpose. Whether it's a PDF emailed receipt, a photo of a paper receipt, or a scanned copy doesn't matter as long as it's legible and complete. Regarding third-party verification - they didn't contact any of my vendors during my audit, but the agent did mention they could if needed. From what I understand, they typically only do this for larger amounts or if something seems inconsistent in your documentation. One tip that saved me: I started writing the business purpose directly on receipts (or in the filename for digital ones) right when I get them. Things like "office supplies for Q3 project" or "client meeting lunch with John Smith." This made the audit process much smoother because I didn't have to remember months later what each expense was for. Your anxiety about being prepared is actually a good thing - being organized ahead of time makes all the difference if you ever do get selected for an audit!

I've been through a couple of audits over the years and wanted to add one important point that hasn't been mentioned yet - make sure your digital receipts are stored in a format that won't become obsolete. I had some receipts saved in an old proprietary format that became difficult to open years later. Also, for anyone using smartphones to photograph receipts, make sure the images are high quality and well-lit. I've seen people get tripped up because their phone photos were too blurry to read clearly. The IRS needs to be able to see all the details - amount, date, vendor, what was purchased. One more tip: if you pay cash for business expenses (which I try to avoid), always ask for a receipt and make sure it shows the business name and tax ID if possible. Hand-written receipts from small vendors are fine as long as they contain the required information, but they need to look legitimate and professional.

Just wanted to add one more practical tip from my experience - make sure to keep copies of everything! When my parents gifted me money for my house, I created a folder with copies of the gift letter, bank transfer records, their Form 709s, and even screenshots of the IRS annual exclusion amounts for that year. This documentation became super helpful not just for the mortgage process, but also when I was doing my own taxes the following year. My tax software kept asking about large deposits, and having everything organized made it easy to show it was a documented gift. Plus, if you ever get audited down the road (unlikely, but still), you'll have a complete paper trail showing everything was done properly. The house buying process is stressful enough without worrying about tax compliance - sounds like you're being smart by researching this ahead of time!

This is such a comprehensive thread - thank you everyone for sharing your experiences! I'm actually in a very similar situation where my parents want to help with my down payment, but I had no idea about the Form 709 requirement or the gift splitting option. One thing I'm curious about that I haven't seen mentioned yet - are there any state tax implications to consider? I know gift taxes are federal, but I'm wondering if some states have their own gift tax rules that might affect this kind of family transfer. My parents live in a different state than where I'm buying the house, so I want to make sure I'm not missing anything on the state level. Also, for those who have been through this process, how far in advance did you start the paperwork? I'm hoping to buy in about 6 months and want to make sure we have enough time to get everything properly documented before I start the mortgage application process.