Great question about S-Corp retirement contributions! I went through this exact same analysis last year with my single-member S-Corp. Here's what I learned that might help: You're absolutely right that you can contribute much more than 10%. With your $85,000 salary, you could max out at about $21,250 with the SEP-IRA (25% of compensation). However, I'd strongly recommend looking into a Solo 401(k) instead - it would let you contribute around $44,250 total ($23,000 employee deferral + ~$21,250 employer contribution). One thing to consider: since you're generating $120K in profits but only taking $85K salary, you might want to evaluate if increasing your salary slightly could boost your retirement contributions. Yes, you'll pay more payroll taxes, but the additional tax-deferred savings often outweigh the extra FICA costs. Also, at 42, you're actually in a good position to catch up! You'll get catch-up contributions starting at 50 (additional $7,500 for 401k), and with your strong business income, you have time to build substantial retirement savings. The key is making sure your salary remains "reasonable compensation" for your industry. Since you mentioned graphic design, $85K sounds reasonable, but you might have room to optimize the salary/distribution split for maximum retirement contributions.

I've been following this discussion and wanted to add some perspective as someone who's helped several S-Corp owners optimize their retirement strategies. One aspect that hasn't been fully addressed is the timing consideration for your situation. Since you're 42 and feeling behind on retirement savings, you might want to consider a hybrid approach for the next few years: 1. **Immediate action**: Switch to a Solo 401(k) to maximize current year contributions (as others mentioned, you could go from your current ~$8,500 to potentially $44,250) 2. **Medium-term strategy**: Once you've built up some retirement savings momentum, evaluate whether a defined benefit plan makes sense (as Emma Davis suggested). At your income level and age, you could potentially defer $75,000-$100,000+ annually. 3. **Salary optimization**: Your calculation approach is generally correct, but don't forget that higher salary also increases your Social Security benefits calculation base. At 42, those future benefits have value too. Also consider that as a graphic designer, your "reasonable compensation" could potentially support a salary higher than $85K depending on your specific role, client base, and geographic market. The IRS looks at what you'd pay someone else to do your job - if you're doing business development, client management, creative direction, AND the actual design work, $85K might be conservative. The key is documenting your rationale and comparing to industry standards in your area. Services like salary.com or PayScale can provide supporting documentation for whatever salary level you choose.

Has anyone else considered just taking money from their 401k as a loan instead of doing an IRA withdrawal? I was in a similar situation last year and ended up borrowing from my 401k instead. The advantages were that I didn't have to pay taxes on it, and I'm essentially paying the interest back to myself. The downside is you typically have to pay it all back if you leave your job.

Thanks for all the helpful info everyone! Just to clarify my understanding - so I can withdraw up to $10,000 TOTAL across both my Roth and traditional IRAs using the first-time homebuyer exemption, not $10k from each account. And with my Roth IRA, I can also take out all my contributions penalty-free anytime regardless of the exemption, which gives me more flexibility. One follow-up question - does the order matter? Like should I exhaust my Roth contributions first before using the $10k exemption on earnings? Or would it be smarter to use the exemption on my traditional IRA since those withdrawals would be taxable anyway? I'm trying to minimize my overall tax burden while maximizing what I can access for the down payment.

Has anyone used the IRS Direct Pay system recently? Last time I tried it was super buggy and kept giving me errors when I entered my bank info.

Just to add some clarity on the payment methods - you're absolutely right that you can split your payment multiple ways! I did exactly this last year with a $6,200 tax bill. I used two different credit cards ($2,000 each through different processors to stay under the limit per processor), then paid the remaining $2,200 via Direct Pay from my checking account. The key things to remember: 1) Each payment processor has its own 2-card limit, so you can technically use up to 6 credit cards if you go through all three processors, 2) Direct Pay/bank transfers have no fees, and 3) You can spread the payments out over time as long as everything is received by the due date. One tip - I spaced my payments about 3-4 days apart just to make sure each one processed cleanly in their system. All showed up correctly on my account transcript. The credit card processing fees (around 1.87-2.5% depending on the processor) did eat into my rewards a bit, but it was still worth it for the cash flow management and keeping my individual card balances reasonable.

Thanks so much to everyone who contributed to this thread! As someone who's been lurking here for a while but never posted before, I have to say this is exactly the kind of detailed, real-world guidance that makes this community so valuable. I'm actually in a somewhat similar situation - currently on an H1B visa and considering an EV purchase next year. Reading through all these responses has given me a much better understanding of how the Clean EV credit works for non-residents and the various considerations around visa status changes. A few key takeaways that really stood out to me: 1. The confirmation that non-resident aliens CAN claim the EV credit as long as they have US tax liability - this wasn't clear to me from the IRS publications alone 2. The income threshold using the lesser of current/prior year AGI is really helpful for planning purposes 3. The importance of keeping detailed documentation, especially around visa status change timing 4. The resources mentioned (taxr.ai and Claimyr) sound incredibly useful for getting definitive answers on complex situations @Javier Mendoza - it sounds like you're all set! The dealer verification and successful rebate processing is a great sign that everything was handled correctly. The professional insights from @Astrid Bergström, @Daniel Washington, and others really seem to confirm that your situation is solid. For anyone else following this thread with similar questions, the consensus seems clear: don't let visa status uncertainty stop you from claiming credits you're legitimately entitled to, but do make sure you have proper documentation and consider professional guidance for complex situations. Thanks again to everyone for sharing such detailed experiences and expertise. This community is awesome!

This has been such an incredibly helpful and comprehensive discussion! As someone who works in immigration law and frequently gets questions about tax implications of visa status changes, I wanted to add one more perspective that might be useful. The intersection of immigration status and tax benefits is always complex, but this thread has done an excellent job breaking down the key issues. @Javier Mendoza, your situation is actually more straightforward than it might initially appear - the Clean EV credit eligibility was locked in when you made your purchase and the dealer processed your rebate based on your qualifying 2023 income. One thing I haven't seen mentioned is that the IRS has been issuing more guidance on these types of situations lately, partly because of increased EV adoption among visa holders. The fact that Form 8936 explicitly references 1040NR shows they anticipated these scenarios. For your E3 visa transition, you're in a good position tax-wise. E3 holders generally have fewer complications than some other visa categories when it comes to tax treatment, and your FICA tax obligations starting in November/December 2024 align perfectly with your status change timing. The resources mentioned throughout this thread (taxr.ai for document analysis and Claimyr for IRS contact) really are valuable for complex situations. Having that official confirmation can be worth its weight in gold when you're dealing with multiple intersecting areas of law. Bottom line - you've got solid eligibility, proper documentation, and excellent guidance from this community. Your 2024 filing should be smooth sailing!

I work with tax transcripts regularly, and I can clarify that the normal sequence for an offset is: 826 code (offset applied) → 971 code (notice issued) → 5-14 day processing period → 846 code (remaining refund issued). The exact timing depends on which cycle your return is processed in. Returns are processed in 7-day cycles, and each taxpayer is assigned to a specific cycle. Based on current processing times, you should see your 846 code within exactly 14 days of the 826 code appearing, assuming there are no other issues with your return. I'd start getting concerned only if you don't see the 846 by day 21.

Thanks everyone for sharing your experiences! This is really helpful. I'm on day 5 since my 826 code appeared, so it sounds like I'm still well within the normal timeframe. @Ali Anderson - that 14-day timeline is exactly what I was looking for. I'll mark my calendar and try to be patient instead of checking my transcript every day (which is honestly what I've been doing). It's reassuring to know that seeing the 826 and 971 codes together actually means things are moving forward, not that something went wrong. I'll update this thread when my 846 code appears in case it helps anyone else going through the same thing.