Looking at all these responses, it sounds like you have three solid options to compare: staying on the domestic partner plan with the tax hit, getting your own ACA plan with unemployment subsidies, or considering marriage if that was already in your future plans. From a purely financial perspective, I'd strongly recommend getting actual quotes for an ACA plan before deciding. Since you just lost your job, your projected 2024 income might qualify you for substantial subsidies that could make individual coverage much cheaper than the ~$500+ monthly tax hit you'd face on your fiancée's plan. Here's what I'd do in your shoes: 1) Get that detailed breakdown from HR that Camila mentioned to make sure their $1,668 calculation is correct, 2) Get ACA quotes on healthcare.gov using your projected annual income including any unemployment benefits, and 3) Calculate the real after-tax cost of the domestic partner option using your fiancée's actual marginal tax rate plus FICA. The marriage route is definitely the cleanest solution tax-wise if you were planning to get married anyway - employer health benefits for spouses are completely tax-free. But if you weren't ready for that step, don't let health insurance be the only reason to rush it. Whatever you choose, make sure to act quickly since you mentioned your current coverage ends soon. Both ACA enrollment and adding you to your fiancée's plan will take some processing time.

I've been following this thread and wanted to share some additional considerations that might help with your decision. One thing I haven't seen mentioned yet is the potential impact on your fiancée's other tax benefits if her income increases by $1,668 monthly due to the imputed income. That extra $20,000+ in annual income could potentially push her into a higher tax bracket or affect eligibility for certain deductions and credits. For example, if she's close to income thresholds for student loan interest deduction, IRA contribution limits, or other phase-outs, this could create additional hidden costs beyond just the direct tax on the imputed income. Also, regarding the ACA option - make sure to factor in the potential differences in coverage quality. Employer plans often have better networks and lower deductibles compared to marketplace plans, even with subsidies. You might save money on premiums but end up paying more out-of-pocket for actual care. One more timing consideration: if you do decide on the domestic partner route, ask HR if there's any flexibility on the start date. Sometimes you can delay the coverage start by a few days to align with when your current coverage ends, which might save you from paying for overlapping coverage or having a gap. The documentation point that Malik made is really important too - I'd also suggest keeping records of any communications with HR about how they calculated the fair market value, just in case you need to justify it to the IRS later.

The IRS can also cross-reference your income reported on Schedule C with your claimed retirement contributions to see if they're reasonable. If you're claiming max contributions but only reporting modest business income, that might trigger questions. Make sure your profit sharing contributions actually align with your reported business profits!

Another important point about IRS verification - they also use data matching algorithms that compare your reported retirement contributions across multiple forms. For example, if you claim a solo 401k deduction on your 1040 but the amounts don't match what's reported on your business return, that can trigger automated flags. I learned this the hard way when I made an error calculating my maximum employer contribution. The IRS computer systems caught the discrepancy between my Schedule C net profit and the employer contribution I claimed. Even though it was an honest mistake, I had to provide extensive documentation to prove my contributions were legitimate. My advice: run your numbers through multiple calculators before making contributions, and keep a spreadsheet showing exactly how you calculated both your employee and employer contribution limits. This saved me during my correspondence with the IRS because I could show my methodology even though I made an arithmetic error.

For anyone dissolving a C-corp soon - remember that timing can be crucial for tax purposes! We intentionally delayed our liquidation to January so the tax impact hit in the following year. This gave shareholders more time to plan for the capital gains taxes. Also, if your corporation has accumulated E&P (earnings and profits), distributions will be taxed as dividends until E&P is exhausted, before being treated as return of capital. This sequencing can significantly impact the tax treatment of your liquidation. You must exhaust your E&P through dividend distributions before you can distribute amounts that are treated as return of capital or liquidation proceeds.

One important detail that hasn't been mentioned yet - when completing Form 5452 for liquidation distributions, make sure you're consistent with how you report the distributions across all shareholders AND on the corporation's final Form 1120. The IRS will cross-reference these forms, so if you report $X as liquidation distributions on Form 5452, that same amount should appear on the corporation's final return. Also, remember that the corporation must provide each shareholder with their Form 1099-DIV by January 31st following the year of liquidation - these forms will show the liquidation distribution amounts in box 8 or 9. A common mistake is forgetting to file Form 966 within 30 days of adopting the plan of liquidation. This is separate from Form 5452 and is required even for small family corporations. The IRS can impose penalties if Form 966 is filed late, so don't overlook this step in your dissolution timeline.

Anyone know if we're supposed to enter these 1042-S values in local tax software? I use the Australian equivalent of TurboTax and there's nowhere obvious to put "foreign tax paid" from these forms.

Great breakdown from everyone here! As someone who's been through this exact situation, I want to emphasize that the 1042-S is really just a "receipt" showing what happened with your US-source income and withholding. The key thing to check is Box 7a (withholding rate) against your country's tax treaty rate. Australia has a pretty favorable treaty with the US - for most types of income like AdSense, the rate should be 0% or very low. If you're seeing 30% withholding, that means your W-8BEN wasn't properly processed or there was some other issue. One thing I learned the hard way: even if everything looks correct on your 1042-S, make sure you're reporting this income on your Australian tax return. The ATO can cross-reference this data, and you'll want to claim any foreign tax credits for whatever was withheld. Keep these forms with your tax records - they're essentially proof of income and tax paid that you may need later. If you're getting different withholding rates year over year for the same income source, that's usually a red flag that something needs to be fixed with your W-8BEN.

Has anyone used TurboTax for backdoor Roth reporting? I'm trying to DIY this and it keeps giving me errors when I enter my recharacterization.

I went through almost the exact same situation last year! The key thing that saved me was getting everything properly documented on Form 8606. Since you did both the 2023 recharacterization AND the 2024 conversion in the same tax year, you'll need to be extra careful about the sequencing. For your 2023 amended return: You'll report the recharacterized contribution as a nondeductible traditional IRA contribution on Form 8606. This establishes your basis. For your 2024 return: You'll show the conversion on Form 8606 Part II, using the basis you established from 2023. Any earnings that accumulated between your original contributions and the conversion date will be taxable. The tricky part is that some tax software doesn't handle this cross-year complexity well. Make sure your preparer understands that the 2023 recharacterization creates nondeductible basis that carries forward to reduce the taxable portion of your 2024 conversion. If they miss this connection, you could end up paying tax on money that should be tax-free. I'd strongly recommend double-checking their work on Form 8606 - specifically that they're correctly calculating your nondeductible basis from the recharacterized 2023 contributions.