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!

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 The amount on your CP2000 might be outdated if you're close to the deadline.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.

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.

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!

Has anyone actually successfully gotten an Offer in Compromise accepted? I hear they reject like 60% of applications and the process takes forever.

I went through a similar situation last year with a $28k unexpected tax bill. Here's what I learned after talking to multiple tax professionals and the IRS directly: The payment plan is almost always your best bet when you have retirement funds available. The IRS considers your IRA as an asset you could access, which makes OIC approval very unlikely in your case. Even if you could qualify for an OIC, the application fee alone is $205 (non-refundable even if rejected), and the process typically takes 8-12 months during which interest and penalties continue accruing. For the payment plan, you can request up to 72 months as others mentioned. The key is to apply ASAP - the longer you wait, the more interest accumulates. You can apply online at irs.gov/payments if you owe less than $50k, which makes the process much faster. Regarding your IRA - only consider touching it as an absolute last resort. Even without early withdrawal penalties, you'd still owe income tax on any distribution, which could push you into a higher tax bracket for that year. Plus you lose all future tax-deferred growth on those funds. My advice: Set up the payment plan first, then reassess your financial situation in 6-12 months. If you find you're struggling with the payments, you can always modify the plan later or consider a partial IRA withdrawal at that point.

As someone who's filed dual status returns for 3 years now, my biggest advice is to make sure you keep track of your "residency starting date" documentation. The date you became a US resident for tax purposes might not be the exact date you physically arrived in the US. For example, if you pass the substantial presence test later in the year, that becomes important. I recommend keeping copies of your I-94, visa approval, first US paycheck, utility bills, lease, etc., in case you ever get questioned about your residency start date.

Great point about documentation! I learned this the hard way when the IRS questioned my residency start date during an audit. They wanted to see proof of when I actually established US tax residency versus when I first entered the country. One thing to add - if you're on an H-1B or similar work visa like Connor, your residency start date is typically the later of: (1) your first day of US employment, or (2) when you meet the substantial presence test. Since Connor started working in May 2024, that's likely his residency start date, making January-April his nonresident period and May-December his resident period. Also, don't forget about Form 8843 if you were a student or had any exempt days during your nonresident period. And if you have any foreign bank accounts with more than $10,000 total at any point during the year, you'll need to file FBAR (FinCEN Form 114) regardless of your dual status situation. The filing requirements for foreign accounts apply to US tax residents, so once you became a resident in May, all your worldwide accounts became reportable.

This is such a helpful thread! I'm in a very similar situation but with a twist - my husband and I both have family HDHPs through our respective employers, and we're covering different kids (from previous marriages). From what I'm reading here, it sounds like we'd each be able to contribute the full family limit ($8,300 each for 2025) since we have separate qualifying plans. But I'm worried about the IRS marriage limitation rule someone mentioned earlier. Has anyone dealt with this specific scenario where both spouses have family HDHPs covering different dependents? I want to make sure I understand the rules correctly before we max out both accounts. The last thing I want is to deal with excess contribution penalties!

This thread has been incredibly helpful! I'm a tax professional and see this exact question come up frequently with my clients. Just wanted to confirm what others have said here is correct. When spouses have separate HSA-qualified HDHPs (whether both family plans or a mix of family/individual), each spouse can contribute up to their respective plan's maximum limit. The "marriage limitation" that caps total family contributions at the family limit ($8,300 for 2025) only applies when spouses are covered under the same HDHP or when one spouse lacks qualifying coverage. One additional tip I always give clients: make sure to keep good documentation of your separate coverage throughout the year. The IRS may ask for proof that you maintained separate qualifying HDHPs if they review your HSA contributions. Also, remember that these contribution limits are annual limits, so if either of you changes jobs or coverage mid-year, you'll need to prorate based on the months of coverage under each plan type. For anyone still unsure about their specific situation, IRS Publication 969 has the detailed rules, or consider consulting with a tax professional who can review your actual plan documents.