One thing that hasn't been mentioned yet is the importance of keeping detailed records of your Robinhood cash sweep deposits. As an NRA, you'll want to maintain documentation showing that the interest truly comes from bank deposits rather than other investment activities. I'd recommend downloading your monthly statements from Robinhood that show the cash sweep transactions and which partner banks your funds were deposited into. This documentation will be helpful if the IRS ever questions the exempt status of your interest income. Also, be aware that if you have other types of interest income from Robinhood (like from bonds or other securities), those would be treated differently and might not qualify for the bank deposit exception. The 1099-INT should break down the different types of interest, so make sure you're only applying the exemption to the actual bank deposit interest from the cash sweep program.

As a fellow NRA dealing with similar tax questions, I want to emphasize something that helped me understand this better: the key distinction is between "portfolio interest" and "bank deposit interest" - both can be exempt for NRAs, but under different rules. For Robinhood's cash sweep program, you're almost certainly dealing with bank deposit interest since they explicitly state they sweep uninvested cash into FDIC-insured deposit accounts at partner banks. This falls squarely under the bank deposit interest exemption in IRC Section 871(i)(2)(A). However, I'd strongly recommend verifying this by looking at the specific language on your 1099-INT form. Box 1 should show the interest amount, and there might be additional codes or descriptions that clarify the source. If it says something like "cash sweep interest" or references partner banks, you're good to go with the exemption. One last tip: even though it's exempt from federal tax, don't forget to check if your state has any reporting requirements if you have any U.S. state tax obligations. Most states follow federal treatment for NRAs, but it's worth confirming.

Quick question about the timing - if I operate as an LLC now but want to switch to S-Corp, can I do that midyear or do I need to wait until January to make the change? I just learned about this strategy and don't want to wait 6 months if I don't have to...

I made this exact transition from LLC to S-Corp election about 18 months ago when my consulting business hit similar revenue levels. The strategy absolutely still works, but you need to be strategic about it. For your $135K revenue, you'll likely want to pay yourself somewhere in the $70-85K range as W-2 salary (this varies by industry and location). The key is documenting WHY that's reasonable - look up comparable positions on salary websites, consider your education/experience, hours worked, etc. The tax savings can be significant - you'll save about 15.3% in self-employment taxes on the distribution portion. But factor in the additional costs: payroll processing (~$100/month), S-Corp tax return preparation (~$800-1500), and your time for compliance. One tip that saved me headaches: set up your payroll to pay yourself the same amount each month rather than trying to optimize it quarterly. Makes bookkeeping much cleaner and looks more legitimate to the IRS. Also, make sure you're actually taking those distributions regularly throughout the year, not just on paper at year-end. The paperwork isn't terrible once you get systems in place, and the tax savings usually justify the extra complexity at your income level.

Seriously, don't skip professional liability insurance if you're starting a tax prep business! I learned this the hard way when I made a calculation error on a client's Schedule C that resulted in them owing penalties. The client threatened to sue for the penalties plus damages. Insurance saved me thousands. Also, make sure you understand and use proper engagement letters with every client that clearly outline your responsibilities and theirs. This includes what happens if there's an audit, who's responsible for providing accurate information, and your fee structure.

Great advice from everyone here! I'm in a similar position - worked at a regional CPA firm for a few years but thinking about branching out on my own. One thing I'd add is to consider starting very small and growing gradually. Maybe begin with just 20-30 clients your first year to really understand the business side of things. Also, don't underestimate the technology costs beyond just tax software. You'll need secure file storage, client portals for document sharing, appointment scheduling systems, and potentially a separate business phone line. These costs can add up quickly but are essential for running a professional operation. One last tip - consider specializing in a particular niche rather than trying to be everything to everyone. Whether it's small business owners, freelancers, or people with rental properties, having expertise in specific areas can help you command higher fees and build a reputation.

I just wanted to jump in here as someone who received a CP24 notice about 5 weeks ago and can confirm what everyone else is saying - the actual timeline is WAY better than what the IRS tells you! My refund arrived in exactly 16 days, not the 4-6 weeks they quoted. What really struck me reading through this thread is how consistent everyone's experiences have been. Almost everyone is reporting 2-3 weeks instead of the full 6 weeks, and most adjustments seem to be in the taxpayer's favor with additional credits or corrections that increase the refund amount. The CP24 essentially means the IRS already did the hard work of reviewing your entire return and found something they could fix automatically without needing any additional paperwork from you. That's actually great news! In my case, they caught that I had missed the Recovery Rebate Credit, which added an extra $1,400 to my refund. Based on your August 25th letter date and everyone's shared timelines here, I'd expect your money to arrive sometime in the first or second week of September - well ahead of your car repair needs. The waiting is definitely the most stressful part, but the CP24 is actually one of the better IRS notices to receive since it usually means more money is coming your way!

I just wanted to share my recent CP24 experience since it sounds like you're going through the exact same thing I did a few months ago! I received my CP24 notice in early July and was really stressed about the timeline since I also had some urgent expenses coming up. The good news is that my refund actually arrived in just 21 days - much faster than the 4-6 weeks they quoted in the letter. The IRS had found that I qualified for additional education credits that I had completely missed when filing, which increased my refund by about $800. What really helped me was understanding that the CP24 means your return has already been fully reviewed and processed - they're just making a final adjustment. The hard work is already done! I also found that checking "Where's My Refund" with the exact adjusted amount from the CP24 letter (not my original amount) gave me much more accurate status updates. Based on your August 25th letter date and all the positive timelines people are sharing here, you should definitely have your car repair money by early September rather than waiting until October. The CP24 is actually good news - it usually means they found something that benefits you! Try not to stress too much about the timeline, these adjustments typically process much faster than their conservative estimates.

Great question! As a newcomer to this complex topic, I'm learning a lot from this discussion. One thing I'm wondering about is whether there are any state-level implications to consider in addition to the federal tax rules everyone's discussing? I live in California, which I know has its own gift and inheritance tax rules. Would the cost basis carryover rules work the same way for state taxes, or could there be additional complications when gifting stock across state lines? For example, if your aunt lived in a different state when she originally purchased the Microsoft shares, or if your daughter will be attending college in another state where she might establish residency? Also, since several people mentioned the importance of documentation - is there a specific format or type of documentation that the IRS expects for gifted securities? I want to make sure I'm prepared if I ever find myself in a similar situation with family stock transfers. This thread has been incredibly helpful for understanding how complex these multi-generational transfers can be!

As someone new to this community and dealing with a similar gifted stock situation, this thread has been incredibly enlightening! I'm currently trying to navigate the cost basis rules for some Tesla shares my uncle gifted me last year, and reading about everyone's experiences has helped me understand I need to be much more proactive about documentation. One question I haven't seen addressed yet: what happens if the original giftor (in your case, your aunt) passes away before you complete the gift to your daughter? Does this affect the cost basis calculation at all, or would the carryover basis rules still apply the same way? I'm asking because my uncle is elderly and I want to make sure I understand all the potential scenarios before making any decisions about re-gifting portions of the Tesla stock to my own children. Also, for those who mentioned using tax preparation services, has anyone worked with a CPA who specializes in multi-generational wealth transfer? I'm wondering if the complexity of these situations warrants paying for specialized expertise rather than trying to navigate it through general tax software or services. Thank you all for sharing your experiences - it's clear this is much more complicated than I initially thought!