Based on what everyone's shared here, it sounds like the key is really treating this as a legitimate business from day one. I'd recommend starting with a solid business plan that shows your intent to expand beyond just family rentals - maybe outline how you'll advertise on platforms like Turo, Facebook Marketplace, or even local classified ads within the first 6 months. One thing I haven't seen mentioned is that you'll want to check your state's requirements for car rental businesses too. Some states require special licenses or permits for vehicle rental operations, even small ones. Also, make sure your auto insurance covers commercial rental activity - most personal policies don't, and you could be looking at serious liability issues if something happens during a rental. The documentation piece that Mohammad mentioned about his brother's audit is crucial. I'd suggest keeping a detailed log of every inquiry, rental, and business expense from the very beginning. Even if someone calls asking about rates but doesn't rent, document it. This shows you're actively trying to build a customer base beyond family members. For the Section 179 deduction, remember that's only available if the vehicle is used more than 50% for business purposes. With just monthly rentals to your parents, you might not hit that threshold, so regular depreciation might be your only option initially.

One thing I'd add to all this great advice is to make sure you understand the hobby loss rules (Section 183). The IRS has a "3 out of 5 years" test where if your business doesn't show a profit in at least 3 out of 5 consecutive years, they might reclassify it as a hobby and disallow your business deductions. This is especially important for a single-car rental business with limited customers. You need to show that you're genuinely trying to make money, not just offsetting the costs of owning a second car. Keep detailed records of your marketing efforts, rental inquiries (even the ones that don't convert), and any steps you take to expand the business. Also, regarding the $24,000 car purchase - if you do go the Section 179 route, there are annual limits on the deduction ($1,160,000 for 2023, but with phase-out rules). For luxury vehicles there are also additional restrictions, though your price range probably won't trigger those. I'd strongly recommend consulting with a tax professional before making the purchase, especially given the family rental aspect. A few hundred dollars in professional advice upfront could save you thousands if you get audited later.

has anyone looked into the tax treaty between Paraguay & the US? that could be super important for determining how ur income gets taxed. also check if Paraguay has a territorial tax system (only taxes income earned within the country) or worldwide. also whats ur citizenship? that matters a ton for how this all shakes out. if ur a US citizen u cant escape US tax filing no matter what u do lol

One thing I haven't seen mentioned yet is the potential impact of the UK's IR35 rules on your situation. Since you're working remotely for a UK recruitment company, they might still consider you a "disguised employee" rather than a genuine contractor, which could affect how your income is classified and taxed. The UK has been cracking down on contractors using offshore structures to avoid employment taxes, especially in the recruitment/staffing industry. Even if you set up a US LLC, HMRC might still view your relationship with the UK company as employment rather than B2B services. This could create complications because: 1) The UK company might be required to operate PAYE (Pay As You Earn) and deduct taxes 2) You might still be liable for UK National Insurance contributions 3) The income classification could affect how it's treated under any tax treaties Before you commit to the LLC structure, I'd strongly recommend getting clarity from the UK company about how they plan to classify and pay you. Some companies won't work with contractors through foreign entities specifically because of IR35 concerns. You might want to consult with a UK tax advisor who specializes in IR35 alongside your international tax planning, as this could significantly impact the effectiveness of any offshore structure you choose.

Great question about S Corp distributions! Just to add another perspective - make sure you're also considering the timing of when you take the distribution. If you're planning to take it near year-end, you'll want to ensure your basis calculation accounts for the current year's income that will be allocated to you on your K-1. Also, since you mentioned this is for home renovations, keep in mind that taking the distribution doesn't create any additional tax deductions for the home improvement expenses - those would generally need to be personal expenses unless part of your home is used for business. One more thing to consider: if your S Corp has been profitable and you're planning future distributions, you might want to establish a regular distribution schedule to avoid large lump sums that could affect your personal tax bracket in any given year.

One additional consideration for your $50k distribution - make sure you understand how it might affect any business loans or credit lines you have. Some lenders have restrictions on distributions that could put you in violation of loan covenants, especially if the distribution significantly reduces the company's cash reserves. Also, since you mentioned the business has accumulated $300k in assets, you might want to consider keeping some cash in the business for future opportunities or unexpected expenses. IT consulting can be cyclical, and having that financial cushion has probably served you well over the past 5 years. Have you considered whether taking the full $50k at once is optimal, or if spreading it across multiple distributions might be better for both tax and business cash flow purposes? Sometimes a series of smaller distributions gives you more flexibility to adjust if business conditions change.

Former IRS employee here. The "TAX PERIOD BLOCKED FROM AUTOMATED LEVY PROGRAM" typically means your account was temporarily removed from automated collection actions. This can happen for various reasons - often when a taxpayer has made contact with the IRS, when the account is under review, or sometimes due to hardship indicators. The "INITIAL LEVY IMPOSED" is more concerning. However, before an actual levy is executed, you should receive several notices, with the final one being a "Final Notice of Intent to Levy." This notice gives you 30 days to request a Collection Due Process hearing. Given the timeline (these entries are from 2019 and 2021), and the fact you haven't had any bank accounts frozen, it's possible the levy was prepared but never executed, or it was attempted against an account that no longer existed. Your best option is to immediately call the IRS and request an installment agreement. For a $5,400 debt, $100/month is very reasonable and should be approved without much issue. You can also apply online through the IRS website for installment agreements under $50,000.

I'm going through something similar and this thread has been incredibly helpful! One thing I wanted to add - when you call the IRS to set up your payment plan, make sure you have all your information ready: your Social Security number, the exact amount you owe, and a realistic monthly payment amount you can stick to. Also, don't be surprised if the first representative you talk to can't help with everything. Sometimes you need to ask to speak with someone in Collections or request a supervisor if you're not getting the answers you need. The IRS employees are generally helpful once you get to the right person. For what it's worth, your situation sounds very manageable. You've been filing on time, you have a plan to put your refund toward the debt, and you're being proactive about setting up payments. That shows good faith effort which the IRS typically responds well to. The stress is totally understandable though - tax debt anxiety is real! But you're taking the right steps to resolve this.

One thing nobody's mentioned yet is that you should consider whether giving bonuses vs increasing your own draw/distribution makes sense from a business structure perspective. If you're an S-Corp or LLC with pass-through taxation, money left in the business ultimately gets taxed on your personal return anyway. The real question becomes whether paying employment taxes on bonuses (as a business expense) is better than paying potentially higher income tax rates on distributions to yourself. This analysis gets complicated and depends on your specific tax bracket, business structure, state taxes, and other factors. In some cases, it's actually better to pay yourself and then gift amounts to employees (though this has other implications).

Has anyone used bonus structures that involve profit-sharing or equity instead of straight cash bonuses? I've heard these can sometimes be more tax-efficient while also encouraging employees to think like owners.