Just want to add a practical tip from my experience - when paying grandparents with FSA funds, I created a simple spreadsheet to track everything the IRS and FSA administrator needed. I included columns for date of service, date of payment, amount, which grandparent provided care, and brief description of services. Also, I had each grandparent sign a simple "childcare provider agreement" that outlined the arrangement. Nothing fancy, just a one-page document stating they're providing childcare services, their SSN, address, and acknowledgment they'll report the income. My FSA administrator loved having this documentation when I submitted for reimbursement. One more thing - check if your state has any specific requirements. Some states require childcare providers to be registered even if they're family members, though this is pretty rare for informal grandparent care.

Great question! Yes, you can absolutely use your Dependent Care FSA to pay grandparents for childcare. Here are the key points to remember: **Requirements:** - Grandparents cannot be claimed as dependents on your tax return - You'll need their Social Security Numbers for your tax filing - Keep detailed records of all payments and services provided - They must report this as income on their tax returns **Tax implications for grandparents:** - Income over $400/year requires paying self-employment tax (about 15.3%) - They'll report it on Schedule C as self-employment income - For retirees on Social Security, this could potentially affect their benefits depending on total income **Documentation tips:** - Get receipts for each payment with date, amount, and services provided - Consider having them sign a simple childcare provider agreement - Track dates of care, not just payment dates The good news is you don't have to worry about withholding taxes or treating them as employees. Just make sure everyone understands the tax reporting requirements before you start. It's definitely worth using those FSA funds rather than losing them!

Better question is do you qualify for HOH? Make sure you meet all requirements - supporting someone, paying more than half household costs, unmarried etc

Just to add to what others have said - the IRS cares about your actual residence, not your ID address. But definitely keep good records like lease agreements, utility bills, bank statements showing your address, etc. If you get audited, you'll need to prove you maintained the household at that address for more than half the year. The documentation is way more important than what's printed on your license!

Be very careful with this strategy - while it can work legally, the IRS scrutinizes income deferral arrangements closely. The key test is whether you have "constructive receipt" of the income in 2023. For your arrangement to pass IRS scrutiny, you need: 1. A formal written agreement stating your employment begins January 1, 2024 2. Clear documentation that you have NO legal right to demand payment in 2023 3. The employer's payroll system should not even have you as an employee until 2024 However, there's a potential red flag in your situation: you mention doing actual work for Company Y in October-December 2023. If the IRS views this as earned compensation that you're artificially deferring, they could challenge the arrangement. The safer approach would be to structure any 2023 activities as unpaid training or onboarding rather than compensable work. Also consider: - Document legitimate business reasons for the January start date (not just tax avoidance) - Ensure Company Y doesn't accrue the expense in 2023 on their books - Keep records of all agreements and communications Given the complexity and your multiple tax goals (student loans, IRA rebates, energy credits), I'd strongly recommend getting professional tax advice before proceeding. The potential savings need to be weighed against audit risk and penalties if the IRS disagrees with your position.

This is a really well-thought-out tax strategy! I've seen similar arrangements work successfully, but there are a few additional considerations that might help strengthen your position: Since you mentioned Company Y is "fine with officially starting employment on 1/1/24 for payroll purposes," I'd recommend getting this in writing as part of a formal offer letter. The documentation should explicitly state that your W-2 employment begins January 1, 2024, and that you have no entitlement to compensation before that date. One thing that caught my attention is your mention of the 24% federal tax bracket. With your strategic income deferral, make sure you're not accidentally pushing yourself into a higher bracket in 2024 when the deferred income hits. You might want to run some projections to ensure the overall tax impact across both years still achieves your goals. Also, regarding the Inflation Reduction Act rebates - double-check the income limits and timing requirements. Some of these programs have specific rules about when income is measured, and you want to make sure your deferral strategy actually helps you qualify. The student loan payment recalculation based on 2023 taxes is probably where you'll see the most immediate benefit from this approach. Just remember that when those payments do go up in 2025 (based on your higher 2024 income), you'll want to be prepared for that adjustment. Overall, with proper documentation and legitimate business reasons for the January start date, this approach should work. The key is making sure everything is structured correctly from the beginning rather than trying to fix it later.

This thread has been incredibly informative and I'm so glad I found it! I'm in a very similar boat - just got married this year, been self-employed for about 4 years with consistent SEP IRA contributions, and my new spouse has a 403(b) through their nonprofit job. I haven't filed our joint return yet (we got an extension), but after reading this discussion I'm now worried our tax preparer might make the same mistake. They seemed unsure when I mentioned my SEP IRA during our initial consultation and said they'd "need to look into it" since I'm now married. Based on all the great advice here, I'm going to be proactive and bring IRS Publication 560 to our next meeting, along with a simple summary of why SEP IRA rules are different from Traditional IRA rules. I really appreciate everyone who shared their specific experiences and resources - especially the mentions of the comparison charts and which tax software works best for this situation. It's both reassuring and concerning that this seems to be such a common misconception among tax professionals. Makes me realize how important it is to stay informed about your own tax situation rather than just blindly trusting whoever you hire!

I'm dealing with this exact same issue right now! Just got married last month and my husband has a 401k through his employer. I've been maxing out my SEP IRA contributions for the past three years as a freelance graphic designer, and when I mentioned this to our new CPA, they immediately said I'd lose the deduction because of my husband's retirement plan. Reading through all these responses has been such a relief - I was starting to doubt myself even though everything I researched pointed to SEP IRAs being treated differently. The distinction about SEP IRA contributions being "employer contributions" that you make to yourself as a self-employed person really clarifies why the spousal retirement plan rules don't apply. I'm definitely going to print out the relevant sections from IRS Publication 560 and have that conversation with our CPA. If they can't provide specific documentation for their position, I think it might be time to find someone who specializes more in self-employment taxation. This thread has given me so much confidence to push back on what seems to be incorrect advice. Thank you to everyone who shared their experiences and especially to the tax preparer who provided the professional perspective!

I've been running my single-member LLC for 8 years now, and honestly what matters most isn't which account you pay from but how you RECORD it in your books. The IRS cares about proper documentation more than anything. I pay all my quarterly taxes from my personal account after taking a distribution from my business. In my bookkeeping software, I record the transfer as "Owner's Draw" not as a business expense. This keeps everything clean for tax purposes. The one time I got audited (for something unrelated), the IRS agent actually commented that my bookkeeping was well-organized because I had a clear separation between business expenses and personal tax payments. Just my 2 cents from someone who's been through the ringer!

This is such a common question for new LLC owners! I went through the same confusion when I started my freelance business last year. After talking to my CPA and doing some research, here's what I learned: For a single-member LLC, you're absolutely right that it's a pass-through entity, so technically either method works. However, I've found it's cleaner to transfer money to my personal account as an owner's draw and then pay the taxes from there. This way, my business books clearly show the transfer as a distribution rather than a business expense (since these are personal income taxes, not business taxes). The key is just being consistent and documenting everything properly. I keep a simple spreadsheet tracking my quarterly estimated payments and the corresponding owner's draws, which has made tax filing much smoother. Your friend isn't wrong about keeping things "clean" but paying from personal after a proper transfer is equally clean and actually makes more accounting sense in my opinion. Good luck with your Q4 payment!