Don't forget the depriciation recapture issue if you own your home! If you take the home office deduction using 8829 and then sell your house, you might have to pay back some of those deductions. Doesn't apply to renters tho.

Great thread! I've been wrestling with this same issue for my consulting business. One thing I'd add is to keep really detailed records throughout the year - don't wait until tax time to figure this out. I use a simple spreadsheet to track my home expenses monthly (rent, utilities, insurance, etc.) and calculate what percentage relates to my office space. Also, if you're just starting out and your home office setup isn't perfectly exclusive (like the OP's bedroom situation), you might want to stick with the simplified method for your first year while you figure out a more dedicated space. It's better to take a smaller, defensible deduction than risk an audit over the exclusive use requirement. You can always switch to the actual expense method with Form 8829 in future years once you have a proper setup. The key is consistency - whatever method you choose, use it for the entire tax year and document everything!

Has anyone considered the impact on financial statements when switching? Our bank requires quarterly statements and I'm worried changing to cash would make our business look less profitable on paper since we carry a lot of receivables.

The key thing to remember with your $4.2M revenue is that you're well under the new $25M threshold, so you have flexibility with both accounting methods and inventory treatment. Since you're already functionally operating on cash basis (recording sales when paid, expenses when you pay for inventory), making it official could simplify your compliance. For C corps with inventory like yours, cash method often provides better cash flow management since you're not paying tax on income you haven't collected yet. Given your retail operation, this could be significant if you have seasonal patterns or customers with longer payment terms. I'd recommend getting a concrete analysis of your specific numbers - look at your year-end receivables vs payables to estimate the potential tax impact in the year of change. The Section 481(a) adjustment calculation is crucial here since it determines how much income gets deferred or accelerated when you switch. Also consider your growth trajectory - if you're approaching the $25M threshold, you might be forced back to accrual eventually, so factor that into your decision.

A bit off-topic, but for future reference - if you invest through certain EU brokers that have proper tax treaty implementation processes, they'll automatically withhold at the correct treaty rate (15% for Portugal) if you have your W-8BEN on file. I switched to IBKR specifically for this reason after having the exact same problem with my previous broker. Also, for Portuguese tax filing - make sure to include the foreign income in Anexo J of your IRS declaration. The Portuguese finanças can be very picky about how foreign tax credits are claimed!

I faced this exact situation last year as a US tax professional helping international clients. Here's what I recommend: 1. **Start with your broker first** - Request Form 1042-S and any withholding statements they can provide. This is often sufficient for most tax authorities. 2. **If you need IRS documentation directly**, you have two main options: - File Form 1040NR (even if you don't owe additional tax) to create an official record, then request a tax transcript - Submit a written request to the IRS for a "Letter of Certification" showing taxes withheld on US-source income 3. **For the written request**, include: - Copy of your broker statements showing dividends and withholding - Letter explaining you need proof of US taxes paid for foreign tax credit in Portugal - Your contact information and Portuguese tax ID 4. **Mail to**: Internal Revenue Service, Austin Service Center, International Returns Section, 3651 S Interregional Hwy 35, Austin, TX 78741 The process typically takes 30-60 days, but this documentation should satisfy the Portuguese tax authority's requirements for your foreign tax credit claim. Make sure to keep copies of everything you submit!

I went through this exact situation just 6 months ago with a $2,800 refund held for missing GST returns. The 10-week timeline is unfortunately standard, but I found a few things that helped speed up the process: 1. **Document everything** - Get reference numbers for every call you make and ask for written confirmation that your GST returns were received and are being processed. 2. **Call the dedicated Business Enquiries line early in the morning** - I had better luck getting through around 8:15 AM when they first open rather than later in the day. 3. **Ask specifically about "expedited processing due to financial hardship"** - Since you mentioned needing the money for essential vehicle repairs for your business, this could qualify. They have internal procedures for these situations but agents won't always volunteer this information. 4. **Get your accountant involved** - If they have CRA Represent a Client access, they can often get faster responses through professional channels than you can as an individual. The good news is that once the hold is released, the refund usually processes within 2-3 business days. Keep calling every 2 weeks to check status and document each interaction. Persistence really does pay off with CRA issues.

I'm dealing with a similar situation right now - CRA holding my $2,100 refund for missing GST returns. After reading through all these responses, I tried calling the Business Enquiries line this morning using some of the strategies mentioned here. I specifically asked to speak with a supervisor about "expedited processing due to financial hardship" and explained that the delay was affecting my ability to pay essential business expenses. The supervisor was much more helpful than the front-line agents I'd spoken to before and said she could flag my account for priority review. She also gave me a specific timeline - said to expect the hold to be reviewed within 3-4 weeks instead of the original 10 weeks I was quoted. She emphasized that I should call back if I don't see movement by then and reference the priority flag she placed on my account (confirmation number BH-2025-0411-7834). For anyone else in this situation, I'd definitely recommend asking for a supervisor right away rather than accepting the standard timeline from the first agent. The difference in helpfulness was night and day. Will update if I hear anything sooner than expected!

Def a scam but ngl this is kinda hilarious. Usually they try harder with the whole 'youre going to jail' routine

Classic scam call! The IRS will NEVER call you without sending official mail first. Real IRS communications are always formal and documented. That "keep on" message is probably some confused scammer who doesn't even know what they're supposed to be saying lol. Just ignore it and don't give out any personal info if they call back. Your refund status can be checked on the official IRS website - much safer than random phone calls!