Has anyone actually gotten FreeTaxUSA to correctly calculate the tax credit for income tax withheld on 1042-S? I tried reporting it as suggested here but my refund calculation seems off.

I went through this exact same situation two years ago! As a tax resident filing jointly, FreeTaxUSA definitely works for 1042-S reporting, but you need to be careful about a few things that haven't been mentioned yet. First, double-check that your 1042-S shows the correct tax treaty benefits applied (if any). Sometimes universities mess this up even for tax residents. If you see treaty benefits applied when you shouldn't have them as a resident, you'll need to contact your university's payroll office to get a corrected 1042-S. Second, when entering the fellowship income as "Other Income" on Schedule 1 Line 8z as Chloe mentioned, make sure to also check if any of it qualifies for the American Opportunity Tax Credit or Lifetime Learning Credit. Fellowship money used for qualified education expenses can sometimes still allow you to claim these credits for other educational expenses you paid out of pocket. Also, since you mentioned HSA contributions - fellowship income actually counts as earned income for HSA contribution purposes, which is great news if you're trying to maximize your HSA contributions for the year. The combination of FreeTaxUSA plus getting official IRS guidance through something like Claimyr (as Sophie mentioned) is honestly your best bet for peace of mind on a complex situation like this.

Great question! I went through this exact situation two years ago when I moved back to Germany but kept my US savings account open. A few additional tips that helped me: 1. Make sure you have Form 1042-S from your bank showing the interest paid - this will help you complete Schedule NEC accurately. 2. Since you're Canadian, definitely claim the treaty benefit on Schedule NEC. The US-Canada treaty typically eliminates tax on bank interest for Canadian residents, so you'll likely owe zero US tax. 3. Keep good records of when you left the US permanently in 2024 - you'll need this date for Schedule OI and it affects your filing requirements. 4. Don't forget that even if you owe no tax due to the treaty, you still need to file the 1040-NR to claim that benefit properly. The process is much simpler than it looks when you only have bank interest. Focus on the personal info, Schedule NEC for the interest income and treaty claim, Schedule OI for the residency info, and you should be good to go!

One thing to be careful about is the timing of when you report the interest income. Since you moved back to Canada in 2024, you'll need to determine if any of the interest was earned while you were still a US resident versus after you became a nonresident. If you were in the US for part of 2024, you might need to file both a resident return (Form 1040) for the period you were in the US and a nonresident return (1040-NR) for the period after you left. This is called a "dual status" year and requires careful attention to the dates. However, if you left early in 2024 and all your bank interest was earned after establishing Canadian residency, then you'd file only the 1040-NR as others have mentioned. The key is documenting exactly when you established Canadian tax residency and ceased being a US tax resident. Also worth noting - even though the Canada-US treaty likely eliminates your US tax liability on the bank interest, you'll still need to report this income on your Canadian tax return since Canada taxes its residents on worldwide income.

H&R block charged me $450 last year for basically typing numbers from my forms into their computer. This year I did it myself with TurboTax and paid $120. Self employed too with some investment stuff. The software asks the same questions the human did tbh.

Wow, $675 is absolutely outrageous for a straightforward self-employment return! I had a similar experience with H&R Block a few years ago - they quoted me $550 for what was essentially just a Schedule C and basic forms. I ended up walking away and never went back. The reality is that most self-employed people with simple situations can easily handle their own taxes with good software. The "complexity" they charge you for is really just filling out Schedule C, which asks pretty straightforward questions about your income and business expenses. Unless you have multiple businesses, complex depreciation schedules, or unusual deductions, you're paying hundreds of dollars for data entry. I've been doing my own self-employment taxes for the past 3 years using various software options and have saved thousands compared to what these chain preparers were charging. The software walks you through everything step-by-step and often catches deductions that the rushed preparers at these big chains miss anyway.

Just to add another perspective as someone who went through this exact transition - don't forget to factor in the potential COBRA option from your wife's employer when she leaves. You have 60 days to elect COBRA coverage, which might bridge you while you're setting up marketplace coverage. COBRA is usually expensive (you pay the full premium plus 2% admin fee), but it can be worth comparing to marketplace options, especially if you have ongoing medical needs with current providers. The advantage is you keep the same plan and network temporarily. However, in most cases, marketplace coverage with premium tax credits will be significantly cheaper than COBRA. I ended up saving about $400/month by going with a marketplace plan instead of COBRA, even after factoring in the credits. One more thing - if your wife does any freelance or consulting work after leaving her job, even minimal income, she could potentially qualify for the self-employed health insurance deduction that someone mentioned. This is a really valuable "above-the-line" deduction that you can take even while using the standard deduction. Worth exploring if she has any self-employment income at all.

I've been through this exact situation and want to emphasize something that might not be immediately obvious - you should run the numbers on marketplace coverage BEFORE your wife gives notice at her job. The reason is that once you know what your monthly costs will be with premium tax credits, it might actually influence the timing of her departure or even whether she transitions to part-time first. In my case, we discovered that our marketplace premium after credits would only be about $180/month for our family, which made the financial decision much easier. Also, here's a pro tip I learned the hard way: if you end up qualifying for substantial premium tax credits, consider setting aside a small amount each month in case you need to pay some back at tax time. Even though there are repayment caps, it's better to be prepared. I put away about $50/month just in case, and it gave me peace of mind. One last thing - make sure to keep detailed records of when your wife's coverage ends and when your new coverage begins. You'll need this information for your taxes to show you had qualifying coverage and avoid any penalties. The marketplace will send you Form 1095-A which you'll use when filing.

I'm dealing with a similar situation with my consulting LLC right now. One thing I learned from my tax attorney that might help - the IRS has a special "late election relief" procedure under Revenue Procedure 2013-30 that's separate from the regular reasonable cause provisions. This procedure allows you to make a late entity classification election if you meet certain requirements, including that you haven't filed a tax return for the year you want the election to be effective for, OR if you have filed, that you filed consistently with the requested election. The key advantage is that you don't have to prove "reasonable cause" - you just have to meet the procedural requirements. There's a $3,271 user fee, but if you qualify, it's often easier than trying to argue reasonable cause. Given your June-to-June fiscal year and $380k revenue, this might be worth exploring before going the reasonable cause route. The procedure has specific timing requirements though - generally you need to file within 3 years and 75 days of the requested effective date. Have you already filed your LLC tax return for the year you want to elect C corp status for? That could impact which approach makes more sense.

Just wanted to add another perspective from someone who went through this process recently. I'm a CPA and helped several clients navigate retroactive entity elections over the past year. One thing that hasn't been fully emphasized in this thread - the choice between LLC, S corp, and C corp taxation isn't just about current year tax savings. You need to think about your long-term business strategy: - If you're planning to bring in outside investors eventually, C corp status makes that much easier - If you want to offer employee stock options down the road, C corp structure is typically preferred - But if you're planning to distribute most profits to owners, pass-through taxation (LLC or S corp) usually wins For your specific situation with $380k revenue growing to $500k, I'd strongly recommend modeling out at least 3 scenarios over a 5-year period before making the election. The "right" choice depends heavily on your distribution strategy and growth plans. Also, regarding the retroactive election - Rev. Proc. 2013-30 is definitely your best bet if you qualify. The reasonable cause route is much more unpredictable, and I've seen plenty of those get denied even with what seemed like solid justification. One last tip: if you do go the C corp route, make sure you understand the accumulated earnings tax implications if you retain too much profit without a business purpose. That can bite you later if you're not careful.