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Something nobody's mentioned - make sure you look into Sweden's "183-day rule" for tax residency. If you're there more than 183 days in a calendar year, Sweden will consider you a tax resident regardless of your intentions. Also, keep very detailed records of your entry/exit dates, housing arrangements, and maintain copies of your study program documentation. The IRS loves to challenge Foreign Earned Income Exclusion claims and good documentation will save you headaches.
One thing to keep in mind is that even if you can't use Form 673 right away, you might still be able to get a refund later when you file your tax return. The withholding from your paychecks early in the year (before you qualify for the Foreign Earned Income Exclusion) would be treated as prepayments toward your tax liability. When you file your 2025 return and claim the FEIE for the portion of the year you qualify, any excess withholding would be refunded to you. It's not ideal from a cash flow perspective, but it means you won't lose that money permanently. Also, since you're going to be a student in Sweden, make sure to look into whether any of your income might qualify for different treatment under the tax treaty's student provisions. Sometimes student income has special rules that might affect your overall tax situation.
That's a great point about the refund! I hadn't thought about the cash flow aspect - it's good to know I won't permanently lose the withheld money even if I can't stop withholding right away. Regarding the student provisions in the tax treaty, do you know if there are specific income limits or types of work that qualify? I'll be working remotely for my US company while studying, so I'm not sure if that would be considered "student income" under the treaty or just regular employment income. Also, would the student provisions potentially be better than using the Foreign Earned Income Exclusion, or would I typically want to use whichever gives me the bigger tax benefit?
Has anyone here used a specific tax form or schedule to report the RSU loss? I'm trying to figure out if this goes on Schedule D or if there's another form I should be using for RSU-specific losses where I couldn't sell immediately due to company restrictions.
This is handled on Schedule D just like any other capital loss. Your RSU income (value at vesting) will be on your W-2, and the sale of shares gets reported on Schedule D. Your cost basis is the value on vesting date (which you already paid income tax on), and your sale proceeds are what you actually received when selling. The difference is your capital gain/loss. There's no special form for RSUs with trading restrictions - it's just a normal capital transaction. Make sure your broker reports the correct cost basis though, sometimes they get this wrong with RSUs.
This is such a frustrating situation, but you're definitely not alone in dealing with this! I had a similar experience where my RSUs dropped 20% during a blackout period and I felt like I was being taxed on money that evaporated. One thing that helped me was working with my tax preparer to make sure I was tracking everything correctly. Since you're dealing with both income tax on the vesting value AND capital losses on the sale, it's important to keep detailed records of: 1. The exact vesting date and share price 2. The date restrictions were lifted 3. Your actual sale dates and proceeds 4. Any shares you're still holding Also, don't forget that if your total capital losses exceed $3,000 in a year, you can carry the excess forward to future tax years. Given how volatile some stocks have been lately, those carried-forward losses might come in handy for offsetting future gains. It really is an unfair system when you're essentially penalized for company policies you have no control over, but at least the capital loss treatment helps offset some of the pain. Hang in there!
This is really helpful advice, especially about keeping detailed records! I'm just starting to deal with RSUs at my new job and this thread has been eye-opening. I had no idea about the potential for being taxed on value you can't actually access due to trading windows. One question - when you mention carrying forward capital losses, is there a limit to how many years you can carry them forward? I'm wondering if it makes sense to try to time when I realize other capital gains to take advantage of the losses from RSU drops. Also, does anyone know if there are any proposed changes to how RSUs are taxed? It seems like this situation affects a lot of people, especially with so many companies going public and having insider trading restrictions.
I went through this exact situation last year. One tip: if you're paying electronically, you still need to mark the payment option on the response form and include your payment confirmation number if you've already paid. Don't leave that section blank or they might think you're not planning to pay!
Is there a way to check if they've received and processed your response to a CP2000? I'm wondering if there's an online status checker or something similar.
You can check the status through the IRS website at irs.gov using their "Get My Payment" tool if you've made a payment, or you can call the AUR line directly. However, it typically takes 4-6 weeks for them to process CP2000 responses, so don't panic if you don't see an update right away. You can also create an account on irs.gov to view your tax account transcript, which will eventually show when they've processed your response and applied any payments. Just be patient - the IRS moves slowly but they do process everything eventually!
Just wanted to add one more important point that I learned the hard way - when you're agreeing to a CP2000 and paying electronically, make sure you pay the FULL amount including any interest and penalties that have accrued since the notice was issued. The amount on your CP2000 might be outdated if you're close to the deadline. You can calculate the current balance using the IRS online payment system or call them to get the exact amount. If you underpay, even by a few dollars, they'll send you another notice for the remaining balance plus additional interest. Better to slightly overpay than underpay! Any overpayment will be refunded or can be applied to next year's taxes. Also, since your deadline is April 15th and that's coming up fast, I'd recommend sending that response TODAY via certified mail if possible. The IRS considers your response timely as long as it's postmarked by the deadline date.
This is really helpful advice! I didn't realize the interest keeps accruing after the CP2000 is issued. Quick question - when you say use the IRS online payment system to calculate the current balance, do you mean the EFTPS system or is there a different tool on irs.gov? I want to make sure I'm looking at the right place to get the most up-to-date amount owed.
Has anyone actually had their kids contribute to a Roth IRA from LLC earnings? My accountant mentioned possible complications with self-employment taxes if the kids are under 18 and it's a family business.
I've done this for my kids (14 & 16) for the past two years. The key is how your business is structured. In my single-member LLC, I hire them as W-2 employees, not as contractors. They don't pay FICA taxes, and they each contributed about $5,000 to their Roth IRAs last year.
This is a great question and I'm glad to see so many helpful responses already! I went through this exact scenario with my rental property business last year and learned a lot through trial and error. One thing I'd add to the excellent advice already given - make sure you're paying your kids a truly reasonable wage for the work they're doing. The IRS scrutinizes family employment situations closely, so paying your 15-year-old $50/hour for basic cleaning would definitely raise red flags. I researched what other teens in my area were earning for similar work and kept my kids' pay within that range. Also, consider having them open their own business checking accounts to deposit their paychecks. It creates a cleaner paper trail and helps teach them financial responsibility. My kids love watching their Roth IRA balances grow - it's been a great way to get them interested in investing and long-term financial planning. The documentation is key though. I keep detailed logs of not just hours worked, but specific tasks completed, materials used, and even photos of the work being done. Better to over-document than under-document when it comes to family employment!
This is really helpful advice! I'm just starting to think about this for my own situation. Quick question - when you mention having them open business checking accounts, do you mean separate accounts just for their work income? Or are you talking about them literally setting up their own small businesses? I want to make sure I understand the best way to structure this from a documentation standpoint. Also, how do you handle the tax withholdings? Do you actually withhold income tax from their paychecks or just let them handle it at year-end since they're probably not earning enough to owe much anyway?
Great question about the checking accounts! I meant separate personal checking accounts just for their work income - not business accounts. This helps keep their employment earnings separate from any allowance or gift money, which makes tax filing cleaner and creates a clear audit trail. For tax withholdings, I actually do withhold a small amount for federal income tax even though they likely won't owe anything. This way they get the experience of receiving a tax refund when they file their returns, which is a good learning opportunity. Plus it ensures we're following proper payroll procedures. Since they're typically in the 0% or 10% bracket, the withholdings are minimal anyway. The key is treating them like any other employee from a paperwork standpoint - W-4 forms, regular pay periods, proper withholdings, and W-2s at year end. It might seem like overkill for family members, but it's exactly what the IRS expects to see if they ever audit the situation.
Melissa Lin
Whatever you do dont use Jackson Hewitt, there even worse than H&R. File yourself and save the $$
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Lydia Santiago
β’THIS!!!! π They messed up my return so bad last year
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Romeo Quest
fun fact: you can file for free on the IRS website if you make under 73k
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Val Rossi
β’wait fr? why doesnt anyone talk about this more
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Lena MΓΌller
β’because tax prep companies spend millions lobbying to keep it quiet! They don't want people knowing they can file for free π
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