That's rough! Do you think it would have been better to roll your SEP IRA into a 401k first, then do the backdoor Roth? I've heard that can help avoid the pro-rata issue.

Yes, rolling your SEP IRA into a 401(k) first would have completely avoided the pro-rata issue! Since 401(k)s aren't included in the pro-rata calculation, you could have then done a clean backdoor Roth conversion with just your non-deductible traditional IRA contributions. This is actually a common strategy called "reverse rollover" - moving your pre-tax IRA money into an employer plan to clear the way for future backdoor Roths. Not all 401(k) plans accept rollovers from IRAs though, so you'd need to check with your plan administrator first. For anyone reading this who has significant pre-tax IRA balances and wants to do backdoor Roths going forward, definitely look into this option before doing your conversions!

Great questions! For the December 31st balance rule, it's based on the year you actually do the conversion. So if you convert in January 2025, you'd use your December 31, 2024 balances for the pro-rata calculation. The timing within the year doesn't matter - whether you convert in January or December, you use that year's ending balances. And yes, you absolutely need to file Form 8606 for any year you make non-deductible contributions, even if you don't convert! This form tracks your "basis" (the after-tax money you've contributed) which is crucial for future conversions. Missing these forms can cause major headaches because the IRS won't know about your non-deductible contributions when you eventually convert. If you missed filing Form 8606 in past years, you should file amended returns to include them. There might be penalties, but it's better to fix it now than deal with bigger problems later when the IRS assumes all your conversions are fully taxable.

I used H&R Block software for this exact situation last year. The software itself didn't have specific guidance for ITIN-to-SSN amendments, but it did let me file the 1040-X. I had to manually write in the explanation about the ITIN rejection and new SSN in Part III. The tricky part was that the software didn't prompt me to include the supporting documents (SSN card copy, rejection notice, etc.), so I had to remember to print and mail those separately. Honestly, for something this specific, I'd consider paying a tax pro who specializes in international student taxes - it's worth the peace of mind.

This is incredibly helpful! I'm actually in a very similar situation right now - got my ITIN rejected and just received my SSN last week. Quick question about the cover letter you mentioned - did you keep it brief or include detailed explanations about your visa status and timeline? I'm worried about providing too much information versus not enough context for the IRS processor. Also, did you face any issues with state taxes during this process? I filed state returns in two different states last year and I'm not sure if I need to amend those as well or if the SSN change only affects federal returns.

That's a good point I hadn't considered. Is it too late to negotiate my rate if I've already agreed to a certain amount? Has anyone successfully gone back to renegotiate after realizing the tax implications?

It's never too late to renegotiate, especially if you can frame it in terms of the value you provide. I wouldn't directly say "I didn't realize taxes would be so high" as that might seem unprofessional. Instead, approach it as "Based on the work I've been doing and the value I'm providing, I'd like to discuss adjusting my rate to $X." The best time to have this conversation is after you've proven your worth but before starting a new project phase. Alternatively, you could ask for additional responsibilities to justify the higher rate. Most clients expect contractors to increase their rates periodically, especially if you're doing good work. Just be professional and confident when you ask - the worst they can say is no.

I've heard about the S-Corp approach but isn't there a lot of extra paperwork and fees involved? Like you have to run payroll, file separate tax returns, pay state fees, etc. Is it really worth it for someone making under $100k?

You're right about the extra paperwork and costs. Generally, the S-Corp election becomes worth it when you're making around $60k+ in net profit, but it varies by state. The break-even point depends on your state's corporate fees, payroll processing costs, and additional accounting expenses. The main costs include: quarterly payroll taxes, annual corporate tax return (usually $500-1500 if you hire someone), state annual fees (varies widely by state), and potentially payroll software. But if you're saving $6500 like @d69e71ffdcaf mentioned, those costs are easily justified. One tip: you don't have to decide immediately. You can make the S-Corp election retroactively for the current tax year up until March 15th of the following year. So you could see how much you make this year and then decide if it makes sense.

I've used it! Uber for Business commuter program DOES qualify because it's specifically designed to meet the IRS requirements. Companies can set up dedicated commuter routes and schedules that satisfy the 80% mileage and half-capacity requirements. It's different from just taking regular UberXL rides. With the business commuter program, your employer essentially creates virtual "vanpools" with consistent routes, schedules, and passenger groupings. Much more efficient than individual rides and properly structured to qualify for pre-tax benefits.

This is really helpful advice! I'm curious about something you mentioned - when you say some employers have partnerships with services like Via that operate "more like traditional transit," what specifically makes those different from UberXL in the IRS's eyes? Is it just that they have fixed routes, or are there other factors that make them qualify when regular rideshare doesn't? Also, for the vanpool arrangement with coworkers - would that need to be formally set up through the employer, or could employees organize it themselves and still have it qualify for the pre-tax benefits?

Select "dental services" for braces in TurboTax. Orthodontic work falls under dental services rather than general medical services. The software should then prompt you for the total amount paid and any insurance reimbursements. Make sure you're itemizing deductions rather than taking the standard deduction, or else the medical expenses won't help you tax-wise.

This is such great advice about strategic timing! I never thought about bunching payments in a high-income year. My husband is expecting a promotion next year which would bump us into a higher tax bracket, so maybe we should consider prepaying more of our daughter's remaining treatment then. Quick question though - do you happen to know if there's a limit to how much you can prepay? Like, could I theoretically pay for the entire remaining 18 months of treatment upfront, or does the orthodontist/IRS have restrictions on that?