Just to add another data point - this EXACT issue is why I stopped using TurboTax for my foreign tax returns. I switched to TaxAct which actually lets you override the amount on line 19 without jumping through a million hoops.

I went through this exact same issue last year! The key thing to understand is that Form 1116 doesn't automatically force you to use all your foreign tax credits - you absolutely can elect to carry forward excess amounts. Here's what worked for me: On Form 1116 Part III, line 19 is where you enter the amount of foreign tax credit you want to claim for the current year. Most tax software defaults to the maximum allowable amount, but you can manually enter a lower amount if you want to preserve credits for future years when you might have higher tax liability. Since you mentioned having different categories (like passive income), make sure you're filling out separate Form 1116s for each category. The carryover election is made separately for each category. One tip - if your tax software won't let you override line 19, look for an "override" or "manual entry" option in the forms section. Every major tax software has this capability, though they sometimes hide it pretty well! If all else fails, you might need to file a paper return to have complete control over your foreign tax credit elections. Keep detailed records of your carryover amounts since they can be used for up to 10 years. Good luck with your return!

According to the National Taxpayer Advocate's 2023 Annual Report to Congress (available at taxpayeradvocate.irs.gov), identity theft cases now average 195 days to resolve. I've personally seen this timeline play out with multiple clients. Here's what typically happens: 1. Initial processing delay: 4-6 weeks 2. Case assignment to ITVA unit: 2-4 weeks 3. Investigation period: 3-4 months 4. Resolution and refund processing: 4-6 weeks The IRS has implemented a new Identity Theft Victim Assistance (IDTVA) program that's supposed to streamline these cases, but in practice, I'm still seeing similar timeframes to previous years.

I went through this exact situation in 2023 and can share some hard-learned lessons. First, make sure you keep detailed records of EVERYTHING - every phone call, letter received, and date submitted. The IRS lost my paperwork twice during the process. Second, if you haven't already, request an IP PIN (Identity Protection PIN) for future tax years - this prevents someone from filing with your SSN again. Third, consider setting up credit monitoring if you haven't already, as tax identity theft often indicates broader identity compromise. The investigation timeline is unfortunately unpredictable right now, but stay persistent with follow-ups every 30 days. Document each interaction. Good luck, and don't give up - you will eventually get your refund, even if it takes longer than expected.

Has anyone here actually been audited regarding prepaid expenses? My CPA is super conservative and basically refuses to let me prepay anything except trivial amounts. Says it's a "red flag" but I think he's being overly cautious.

Great question about prepaying expenses! I actually work as a tax preparer and see this situation all the time with small business clients. The key is understanding that legitimate prepayments are perfectly acceptable - it's not about gaming the system, it's about timing your cash flows strategically. One thing I'd add to the excellent advice already given: consider prepaying your quarterly estimated taxes for next year if you expect similar income levels. You can make your Q1 estimated payment in December and deduct it immediately, which can provide significant tax savings without any compliance risk. Also, don't overlook professional development expenses - conference fees, certification renewals, or training courses scheduled for early next year can often be prepaid in December. These are usually clear-cut deductions that auditors rarely question. Just make sure whatever you prepay represents a genuine business expense you would incur anyway. The IRS doesn't care about the timing strategy as long as the underlying expenses are legitimate and properly documented.

One thing to consider is the timing of when your son plans to sell these investments. Since he'll inherit your cost basis (what you originally paid ~14 years ago), he'll owe capital gains tax on the full appreciation when he sells. Given that the investments have grown from $9,000 to $105,000, that's potentially significant capital gains tax. If he's planning to hold these investments long-term anyway, the gift approach works well. But if he wants to liquidate soon after receiving them, you might want to factor in the tax impact on his side. Sometimes it makes sense to sell some positions while they're still in your names (especially if you're in a lower tax bracket) and gift the cash proceeds instead, depending on your respective tax situations. Also, make sure your brokerage can handle the transfer properly with correct basis reporting. Some brokers are better than others at tracking gifted securities and providing the right tax documents.

You're dealing with a common but tricky situation. The good news is that gifting stocks directly to your son won't trigger capital gains for you - it's not considered a taxable event for the giver. However, your son will inherit your original cost basis (around $9,000), so he'll owe capital gains tax on the full $96,000 appreciation when he eventually sells. Given the $105,000 value, you have two main paths: 1) **Spread it over 3 years**: Gift $38,000 worth of shares annually (you and your wife each using your $19,000 annual exclusion). This avoids any gift tax paperwork entirely. 2) **Transfer everything at once**: You'd need to file Form 709 for the amount over $38,000, but likely wouldn't owe actual gift tax unless you've already used up significant portions of your lifetime exemption ($13.99 million per person in 2025). Before deciding, definitely check what tax bracket your son is in for capital gains. If he's in a higher bracket than you are, it might actually be more tax-efficient to sell some of the most appreciated positions while they're still in your names, then gift the proceeds. This strategy works especially well if you're in the 0% or 15% long-term capital gains bracket. Also, make sure your brokerage can properly document the gift with correct basis reporting for future tax filings.

Great thread! I went through this same process last year when I incorporated my app business in Ontario. One thing that really helped me was keeping detailed records of exactly what types of transactions I was processing through the App Store - Apple's revenue reports can be quite detailed if you dig into them. For the W-8BEN-E form, I found Part II (disregarded entity or branch receiving the payment) was often left blank for simple Canadian corporations, but make sure you understand whether this applies to your situation. Also, don't forget that once you file the W-8BEN-E, it's generally valid for three years unless your circumstances change significantly. One gotcha I ran into: if you ever take on US investors or partners, you'll need to update your beneficial ownership information and potentially refile. The form is tied to your ownership structure, not just your corporate registration location. For anyone still struggling with the classification between business profits vs royalties, I'd recommend documenting your decision-making process. The CRA and IRS generally want to see that you've made a reasonable, consistent interpretation of the treaty provisions.

This is such a helpful thread! I'm in the early stages of incorporating my app business in Alberta and this W-8BEN-E stuff has been keeping me up at night. One question I haven't seen addressed - does the timing of when you file the W-8BEN-E with Apple matter? I'm still operating as a sole proprietor right now but plan to incorporate next month. Should I wait until after incorporation to file the corporate form, or can I file it in advance? Also, for those who've been through this - how long does it typically take Apple to process the form and start applying the correct withholding rates? I want to make sure I time this right so I don't end up with messy tax situations spanning across my transition from individual to corporate status. The breakdown of business profits vs royalties that @Sophia Gabriel provided is super valuable - I had no idea there were different rates for different types of app revenue streams!