Has anyone mentioned the potential built-in gains tax implications yet? If the S Corp had appreciated assets at the time of conversion, there could be tax consequences that offset some of the charitable deduction benefit.

This is a complex transaction that requires careful documentation and planning. In addition to the excellent points already raised about appraisals, AGI limitations, and private inurement, I'd strongly recommend your client consider getting a formal legal opinion on the conversion structure. One thing I haven't seen mentioned is the potential impact on any existing S Corp elections or tax attributes. If the S Corp had NOL carryforwards, suspended losses, or other tax attributes, these would typically be lost in the conversion process. Also, make sure the conversion was done properly under state law - some states have specific procedures for converting profit entities to non-profits that must be followed exactly. The IRS has been increasingly scrutinizing these types of conversions, especially when substantial value is involved and the former owner maintains control. I'd also suggest reviewing Revenue Ruling 2004-51 and the regulations under Section 501(c)(3) regarding private benefit restrictions. Given the complexity and audit risk, this might be worth bringing in a specialist in exempt organization law for a second opinion.

Has anyone used a nanny payroll service? I'm thinking of signing up for one to handle all this tax stuff. Seems like it might be worth the money for peace of mind.

I went through this exact same dilemma last year and ended up learning the hard way that the IRS really doesn't mess around with household employee classifications. What helped me understand it was thinking about the "control test" - if you're setting your nanny's schedule, telling them what tasks to do with your kids, and they're working exclusively in your home with your supplies, then you're exercising the kind of control that makes them an employee, not a contractor. The threshold everyone mentioned ($2,600 annually) is key - once you hit that, you're definitely in employer territory. But honestly, even below that threshold, misclassifying can still get you in trouble if audited. I ended up going with a nanny payroll service after trying to handle it myself for a few months. Yes, it's an extra monthly cost, but the peace of mind is worth it. They handle all the quarterly filings, generate proper pay stubs, and make sure I'm compliant with both federal and state requirements. One thing I wish someone had told me earlier - you can still claim the Child and Dependent Care Credit even when properly employing your nanny as an employee. You just need their SSN and to report the wages correctly. The tax benefits don't disappear just because you're doing it the right way!

Has anyone looked into whether it's better to just renounce your green cards and go back to a nonresident alien status for estate planning? I know it sounds extreme but if you have significant assets, the estate tax hit as green card holders might be worse than if you were NRAs with primarily foreign assets?

The key issue you're facing is that green card holders don't get the unlimited marital deduction that US citizen couples enjoy. However, you do still get the full $12.92M estate tax exemption per person, which is significant. One strategy worth exploring is "equalization" of your estates - restructuring asset ownership so each spouse has roughly equal net worth (ideally under the exemption amount). This way, when the first spouse passes, their assets pass to the surviving spouse without exceeding the exemption limit. You might also consider making annual gifts to each other using the annual exclusion ($17,000 for 2023, $18,000 for 2024) to help balance the estates over time. Since you're married, you can also elect gift splitting to effectively double the annual exclusion amounts. Another option is establishing separate trusts for children or other beneficiaries now, rather than waiting until death. This removes assets from both of your taxable estates entirely while you're both alive to make those decisions together. The timing of citizenship could also be strategic - even if one spouse becomes a citizen, that opens up QDOT planning options for the non-citizen spouse. But as others mentioned, be careful about the exit tax implications if you later change your mind about US tax residency.

Have you checked if you're marked as "may be claimed as a dependent" in your tax software? Even if your parents aren't actually claiming you, if you check that box saying you CAN be claimed as a dependent, you won't qualify for the AOC. This happened to me - super frustrating, but an easy fix!

quick question - does anyone know if you have to subtract ALL scholarships from your qualified education expenses, or just the ones that were specifically for tuition? i got an athletic scholarship that's technically for "being a student athlete" not specifically for my tuition???

Has anyone had success with just converting their passive losses to active by selling the property? I know when you sell, you can typically deduct accumulated passive losses against any type of income. Might be worth considering if this property is already a headache with non-paying tenants.

One thing nobody's mentioned - if you're married and your spouse qualifies as a real estate professional, their status can apply to your jointly owned properties too. My wife works full-time in property management (easily meets the 750+ hours), so all our rental properties are treated as non-passive activities. Might be worth considering if your spouse has real estate involvement.