Just wanted to mention - don't forget to look at the hidden costs of moving states. I moved my LLC from California to Nevada thinking I'd save on taxes. But then I had to register as a "foreign entity" doing business in California anyway, AND pay the Nevada fees. Ended up paying MORE overall plus had the headache of maintaining registrations in two states. Sometimes the "tax-saving" strategies end up costing more than they save. Make sure you account for ALL costs before making big changes.

As someone who's dealt with franchise tax issues across multiple states, I'd strongly recommend getting professional advice before making any major structural changes. Your $320k revenue puts you in a tricky spot where small changes can have big impacts. A few things to consider: First, make sure you're calculating your franchise tax correctly. In Texas, you can deduct cost of goods sold OR compensation - whichever is greater - from your total revenue before calculating the tax. Many small businesses miss this and overpay. Second, timing matters. If you're close to a threshold, sometimes you can defer revenue or accelerate expenses to stay below certain levels, but this needs to be done carefully and legitimately. Third, consider whether you actually need the LLC structure. If you don't have significant liability concerns and can handle the self-employment tax implications, a sole proprietorship avoids franchise tax entirely in Texas. Before relocating or restructuring, run the numbers on ALL costs - not just the franchise tax. Include registered agent fees, additional accounting costs, potential loss of business relationships, and the time value of managing multi-state compliance. Sometimes paying the franchise tax is actually the most cost-effective option.

This is a really common confusion that trips up a lot of new investors! The key distinction everyone's highlighting is spot-on: short-term capital gains are always unearned income, even though they're taxed at ordinary income rates. I went through this exact same confusion when I started trading options and crypto. What helped me remember the difference is thinking about it this way: "earned income" literally means you earned it through your labor/work - like wages, salary, tips, or self-employment income. Everything else (interest, dividends, capital gains, rental income, etc.) is "unearned income" because you didn't trade your time and labor for it directly. The tax rate is just how much you pay - it doesn't change what type of income it is. So your $4,500 will get added to your other income and taxed at your marginal rate, but it won't help you qualify for things that require earned income. One practical tip: when you're doing tax planning throughout the year, it helps to think of earned vs unearned income as two separate buckets with different rules. This becomes really important if you're trying to maximize retirement contributions or qualify for certain tax credits.

This thread has been incredibly helpful! I'm in a similar situation as a new investor and was making the exact same mistake. I had about $3,200 in short-term gains last year and was planning my taxes thinking it was all just "regular income." What really clicked for me reading through everyone's explanations is that the IRS has very specific definitions that don't always align with how we think about things intuitively. Just because I'm actively trading and spending time researching doesn't make it "earned" income in the tax sense. The practical implications are huge too - I was about to contribute to my IRA based on my total income including the trading gains, which would have been a costly mistake. Now I know I can only contribute based on my actual W-2 wages. One question though - does anyone know if this changes if you elect Mark-to-Market accounting as a trader? I've heard conflicting info about whether that affects the earned vs unearned classification or just how you report the gains and losses.

Has anyone had success entering K-1 information into FreeTaxUSA? I used TurboTax last year but the fees were ridiculous, so I'm switching. Just wondering if the K-1 entry is user-friendly on other platforms.

Great question about K-1 forms! As someone who's dealt with several over the years, I can tell you they get easier to understand with practice. Here's my simplified approach: First, don't panic about the blank boxes - they're just not applicable to your situation. Focus only on the boxes with numbers. The key boxes to pay attention to are: - Box 1: Ordinary business income (goes to Schedule E) - Box 2: Net rental real estate income (Schedule E) - Box 3: Other net rental income (Schedule E) - Box 4: Guaranteed payments (Schedule E) - Box 5: Interest income (Schedule B if over $1,500, otherwise directly on 1040) - Box 6: Dividends (Schedule B) - Box 9: Net Section 1231 gain (Form 4797) - Box 11: Section 179 deduction (Form 4562) Box 20 is crucial - it contains "other information" with various codes that can affect your taxes significantly. Don't ignore the attached statements either, as they often contain important details about basis adjustments, at-risk limitations, or special allocations. Since you're using TurboTax, it should walk you through each relevant box and place the amounts correctly. Just make sure you have all the supplemental statements handy when you start entering the data.

5 Has anyone run into issues with the 4-year limit on the AOTC? My parents claimed it for me for 3 years already, and now I'm in my 4th year of college. I'm worried because I took a semester off, so technically I might need a 5th year to graduate. Will we lose out on the credit for my final year?

One thing to keep in mind is that the AOTC can only be claimed for the first four years of post-secondary education, and the student must be enrolled at least half-time in a degree program. Since you mentioned you're living at home and attending college full-time, you should be fine on the enrollment requirement. Also, make sure your mom knows that only "qualified education expenses" count toward the AOTC - this includes tuition and required fees, plus required books and supplies. Room and board, transportation, and optional expenses don't qualify, even if they're education-related. The fact that you both contributed to paying doesn't complicate things as much as you might think. The IRS treats all qualified expenses as if they were paid by the person claiming you as a dependent. So your mom can claim the full credit based on the total qualified expenses, regardless of who actually wrote the checks.

Has anyone had success claiming WOTC for long-term unemployment recipients? I'm finding it really hard to get proper documentation proving they've been unemployed for 27+ weeks. What specifically counts as proof?

Just wanted to add some practical advice from someone who's been claiming WOTC for about 3 years now. The biggest mistake I see small business owners make is not asking the right questions during the hiring process. You can't just assume someone qualifies - you need to actually ask potential hires about their veteran status, unemployment history, SNAP benefits, etc. I created a simple questionnaire that I have all candidates fill out that covers the main target groups. It's not invasive, just straightforward questions like "Are you a veteran?" and "Have you been unemployed for 6+ months?" Also, keep really good records! The IRS can audit these credits, so document everything. I keep a file for each WOTC employee with their original application, the 8850 form, certification from the state, and all supporting docs. It's saved me headaches during audits. One more tip - don't forget about the credit for hiring people from rural renewal counties. It's one of the lesser-known target groups but if your area qualifies, it can apply to a lot more potential hires than you'd think.