Has anyone formed an LLC just for the prototype phase? I'm wondering if I should form an LLC now to start getting these deductions, or if I can just track my expenses and form the LLC later when I'm closer to having a sellable product?

Great question about startup costs! One thing I haven't seen mentioned is the timing aspect of when you can actually claim these deductions. You can't just spend money on prototype development and immediately deduct it - the IRS requires that your business has "begun operations" to claim startup cost deductions. For your prototype situation, here's what I learned when I went through something similar: The expenses you incur before your business begins operations are considered "startup costs" under Section 195. However, you can only deduct them in the tax year when your business actually starts operating (even if you don't have sales yet). The good news is that "beginning operations" doesn't require sales - it just means you're actively engaged in the business activity you intend to pursue. So if you're seriously developing prototypes with the intent to launch a business, that could qualify. My advice: Start keeping detailed records NOW of all prototype expenses, even if you haven't formed a business entity yet. Include invoices, receipts, and documentation of your business plan/intent. When you do officially start operations, you'll be able to claim up to $5,000 of those pre-operational costs as a current year deduction, with any excess amortized over 15 years. Also consider consulting with a tax professional about whether some of your prototype costs might qualify for R&D credits instead of (or in addition to) startup cost treatment - sometimes that can be more valuable depending on your situation.

I've been in a similar situation and want to share what I learned from my tax professional. The key thing is that the IRS distinguishes between "negligence" and "fraud." Missing a small 1099 accidentally falls under negligence at worst, which typically just results in the additional tax owed plus minimal interest. For amounts under $100, the IRS often won't even pursue it unless it's part of a larger pattern. They have cost-benefit calculations too - it's not worth their resources to chase down $7 in additional tax from a $30 interest payment. One pro tip: if you're really worried, you can request transcripts from the IRS that show what 1099s they have on file for you. You can do this online through their website or by calling. This way you can double-check if you missed anything before they catch it through their matching system. The anxiety is worse than the actual consequences for honest mistakes with small amounts. Don't lose sleep over it!

I was in almost the exact same situation last year - total financial chaos and constantly worried I was missing something. Here's what I learned from experience: The IRS wage and income transcript request is a game-changer. You can get it online instantly through their website (irs.gov) if you can verify your identity, or by mail which takes about 10 days. It's completely free and shows you exactly what 1099s, W-2s, and other income documents they have on file for you for any given tax year. I discovered I was missing a tiny 1099-INT for $18 from an old savings account I'd forgotten about. Filed an amended return voluntarily and the whole thing cost me maybe $4 in additional tax. No penalties, no drama. The transcript request saved me months of anxiety. Now I do it every year before filing just for peace of mind. Highly recommend this approach if you're a fellow worrier like me!

Something that confused me when I first started my business was that "filing" and "paying" are sometimes different deadlines. You might need to FILE by a certain date but PAY by another date... or sometimes pay BEFORE you file (like with estimated taxes). The IRS website has a tax calendar that might help: https://www.irs.gov/tax-calendars

As someone who moved to the US and started a business here, I can relate to your confusion! The tax system is definitely complex. One thing that really helped me was understanding that business tax obligations go beyond just annual filing - there are also monthly employment tax deposits if you have employees, and various state and local tax requirements that vary by location. I'd recommend starting with the IRS Small Business and Self-Employed Tax Center (https://www.irs.gov/businesses/small-businesses-self-employed) - it has a good overview of different business types and their requirements. Also consider getting an EIN (Employer Identification Number) early even if you don't have employees yet, as many banks and vendors require it. The learning curve is steep, but once you understand the basics it becomes much more manageable. Don't hesitate to consult with a tax professional for your first year - the peace of mind is worth the cost!

Anyone know if you need to fill out a separate Form 8889 for each HSA, or can you combine them? I'm in a similar situation with multiple HSAs and honestly the form instructions are like reading hieroglyphics to me.

I went through this exact same situation last year with dual employer HSA contributions! The stress is real, but you're handling it correctly by getting the excess distribution sorted first. One thing that tripped me up initially - make sure when you report on Form 8889, you enter your contributions exactly as they appear on your W-2s and HSA statements, even if they exceed the limit. The form will calculate the excess for you in Part III. Don't try to "correct" the numbers yourself by only reporting the allowed amount. Also, double-check that your HSA provider sends you a 1099-SA for the excess distribution with the right reason code (should be code 2 for excess contributions). If they mess this up, it can cause headaches later with the IRS. You've got this! The worst part is behind you once you get that excess removed before the filing deadline.

Has anyone considered doing a Roth conversion toward the end of December? I'm wondering if there's a strategic advantage to that timing - like having more time to save for the tax bill while still getting it done within this tax year.

One strategy I haven't seen mentioned yet is the "Roth conversion ladder" approach. Instead of converting a large chunk all at once, you can systematically convert smaller amounts each year up to the top of your current tax bracket. This keeps you from jumping into higher brackets while still making steady progress. For your situation with $95k income, you're likely in the 22% bracket. You could convert enough each year to fill up that bracket before hitting 24%, then repeat the process annually. This takes longer but can save significant tax dollars over time. Also, consider doing your conversion early in the year rather than late. This gives the converted funds more time to grow tax-free in the Roth environment, and if the market takes a hit later in the year, you won't have paid taxes on gains that subsequently disappeared. Some people even do "recharacterizations" if their converted investments lose value, though the rules around this have gotten more restrictive.