Quick clarification question - I'm a US citizen working in Japan and visit home for about 3 weeks every Christmas. For Form 2555, do I need to prorate my foreign housing exclusion for those days I'm in the US, or can I claim the full amount?

Great question! As someone who's been helping expats with Form 2555 for years, I can confirm that you should use 365 days as your qualifying period. Since you've been a bona fide resident of Spain since 2012, your 22-day visit to the US for your mom's surgery doesn't disrupt that status. The key factors the IRS looks at for bona fide residence are: 1) Your permanent home is in Spain, 2) You have no definite plans to return permanently to the US, and 3) Your temporary visit had a clear purpose (family emergency) with intent to return to Spain. You're correctly reporting those US days in Part II Question 14 - that's just for documentation. But for your qualifying period calculation, you remain a bona fide resident for all 365 days of 2024. This means you can exclude the full amount of your foreign earned income (up to the annual limit), regardless of those 22 days spent in the US. The IRS Publication 54 specifically addresses this scenario. After 12+ years of residence in Spain, brief visits for family emergencies absolutely don't change your bona fide residence status. You're good to go with 365 days!

Yes, you should definitely set aside money for taxes on that $3,500 interest income! Since it's not subject to FICA taxes (as others have confirmed), you'll only owe regular income tax on it, but that can still be a decent chunk depending on your tax bracket. For $3,500 in interest, if you're in the 22% bracket, that's about $770 in additional tax owed. The IRS generally wants you to make estimated payments if you'll owe more than $1,000 when you file, so you might be getting close to that threshold. Like Dylan mentioned, adjusting your W-4 withholding at your main job is often easier than quarterly payments for smaller amounts like this. You can use the IRS withholding calculator to figure out exactly how much extra to have withheld. Just remember - no FICA on the interest, but definitely plan for the income tax hit!

Just to add another perspective - I'm a tax preparer and see this confusion all the time. The key distinction is that FICA taxes (Social Security and Medicare) fund specific benefit programs that are tied to your work history. Since you don't "earn" Social Security credits from passive income like interest, dividends, or capital gains, these aren't subject to FICA. However, there's one exception worth noting: if you have a business account earning interest (not a personal savings account), and that interest is considered part of your business income, it could potentially be subject to self-employment tax in certain circumstances. But for regular personal savings account interest like what you're describing, it's definitely just regular income tax - no FICA. The IRS Publication 15-A has the full details if you want to dive deeper into what constitutes "wages" for FICA purposes.

I'm so sorry for the loss of your father, Lily. What you're going through is incredibly difficult, and it's completely natural to feel overwhelmed by the tax implications on top of everything else. The great news is that you haven't made any mistakes at all. Memorial funds like yours are very common, and the IRS has clear guidance for these situations. What you've created is what tax professionals call a "temporary memorial fund" or "conduit arrangement" - essentially, you're just collecting donations temporarily and passing them through to their intended purposes. Here's what you should know to put your mind at ease: • The EIN was necessary for banking purposes, but it doesn't make your memorial fund a taxable business • Donations collected aren't considered your personal income or business income • Money distributed to the college for the scholarship won't create tax issues (since it's going to an established educational institution) • Funds used for legitimate funeral expenses are generally not taxable Since you're planning to distribute all the money and close the account, you most likely won't need to file any tax returns with that EIN. The IRS recognizes that temporary memorial funds serve a specific charitable purpose and aren't profit-making enterprises. My advice: Keep detailed records of every donation and distribution (photos of checks, receipts, etc.), but don't stress about complex tax filings. You're honoring your father's memory in a beautiful way, and that's what matters most. If you want absolute certainty, you could always contact the IRS directly or consult with a tax professional, but based on what you've described, you're handling everything perfectly.

I'm so deeply sorry for the loss of your father, Lily. Dealing with grief while trying to navigate unfamiliar tax territory is incredibly overwhelming, and your concerns are completely understandable. You absolutely did not make a mistake! What you've set up is exactly what thousands of families do every year - it's called a temporary memorial fund, and it's a recognized arrangement by the IRS. The banker was correct that you needed an EIN for the account, but this was purely for banking compliance, not because you were creating a taxable business entity. Here's what should give you peace of mind: • Your memorial fund is considered a "pass-through" or "conduit" arrangement - you're temporarily collecting donations to distribute for specific memorial purposes • The donations aren't taxable income to you personally or to the fund • Money going to the scholarship (through the college) won't create any tax complications • Funeral expense distributions are generally not considered taxable income • Since you're distributing everything and closing the account, you most likely won't need to file any tax returns with that EIN The most important thing is to keep good records - save copies of all donation checks, keep receipts for funeral expenses, and get documentation from the college for the scholarship portion. This protects you if any questions ever arise, though they rarely do for legitimate temporary memorial funds. Your father would be so proud of how thoughtfully you're honoring his memory. Please don't let tax worries diminish this beautiful tribute you've created. You're handling everything exactly right during an incredibly difficult time.

This is a great breakdown of the RSU tax reporting requirements! I wanted to add one important point that might help others avoid a common mistake I made last year. Even though your company reports the full RSU value (all 130 shares in your example) as income on your W-2, make sure you're not accidentally reporting this income again elsewhere on your tax return. I initially thought I needed to report the RSU vesting as "other income" in addition to what was on my W-2, which would have been double-counting. The W-2 income reporting handles the compensation aspect entirely. The only separate reporting you need to do is for the actual stock transactions (like the 26 shares sold for tax withholding) on Schedule D. Also, keep good records of your vesting dates and fair market values - you'll need these for calculating your cost basis when you eventually sell the remaining shares. Most brokers provide annual summaries that make this easier, but it's worth downloading and saving the individual transaction details as backup.

Great question, Derek! I went through this exact same confusion with my RSUs from Microsoft last year. Based on what you're describing with Fidelity automatically selling shares to cover taxes, you're definitely dealing with a "forced sale" situation rather than net settlement. Here's what you need to know: Your company should already be reporting the full fair market value of all 130 RSUs as ordinary income on your W-2 for the year they vested. This covers the tax on the compensation aspect. However, you'll also need to report the sale of those 26 shares that were sold for tax withholding on Schedule D. The tricky part is that your 1099-B from Fidelity might show an incorrect cost basis (often $0) for those sold shares, which would make it look like you have a big capital gain when you actually don't. Since you already paid ordinary income tax on the full value through your W-2, the cost basis for those sold shares should equal the fair market value on the vesting date. If the 1099-B basis is wrong, you'll need to use Form 8949 to make the adjustment. Most people miss this and end up paying tax twice on the same income. The remaining 104 shares you keep have a cost basis equal to their FMV on vesting date, so when you eventually sell those, any gain/loss is calculated from that point. Hope this helps clarify things!

I just wanted to add my experience since I was in the exact same boat last year. After reading through all these helpful responses, I can confirm that line 26 is definitely the right place for your extension payment. What really helped me was looking at the actual Form 1040 instructions (Publication 1040) rather than just the form itself. The instructions for line 26 explicitly mention including "any estimated tax payments you made with Form 4868" which is exactly what your $2,800 payment was. One thing I learned is that even though the line says "estimated tax payments," the IRS considers your extension payment to be a type of estimated payment since you're estimating what you owe and paying it in advance of filing your actual return. It all gets sorted out when they process your return and calculate your final tax liability. Don't stress too much about it - the IRS computer systems are pretty good at matching payments to returns using your SSN, even if there are small discrepancies. Just make sure you enter the exact amount you paid ($2,800 in your case) and you should be all set!

I went through this exact same confusion two years ago and it drove me crazy! You're absolutely right that the form used to be clearer about extension payments. Line 26 is definitely the correct place for your $2,800 extension payment. What helped me understand it was realizing that from the IRS's perspective, both quarterly estimated payments and extension payments serve the same purpose - they're advance payments toward your tax liability. That's why they combined them on one line. Make sure you have your Form 4868 confirmation handy when you file, just in case there are any questions later. The IRS should automatically match your payment to your return using your SSN, but having that backup documentation gives you peace of mind. One tip: if you're using tax software, some programs will actually ask you specifically if you made an extension payment and then automatically add it to line 26 for you. But if you're doing it by hand, just enter the $2,800 on line 26 and you're good to go!