Just a heads up - make sure the brokerage you choose is comfortable with this situation. I tried to help my NRA spouse open an account with a smaller brokerage, and despite providing all the correct documentation, they ultimately refused because their compliance department wasn't familiar with the tax election process. We eventually went with Schwab who had more experience with international clients and understood the distinction between tax residency and immigration status. They knew exactly what to do with the W-9 for someone with a foreign passport once we explained our tax election.

I'm dealing with a very similar situation right now! My husband is from the UK and we're planning to make the election to file jointly for our 2025 taxes. This thread has been incredibly helpful - I had no idea about the distinction between tax residency and immigration status for these purposes. One question I have is about timing - do we need to wait until we actually file our joint return to open the IRA account, or can we open it now based on our intent to make the election? Also, has anyone dealt with this situation where the NRA spouse doesn't have any US earned income yet? I'm wondering if the spousal IRA contribution rules still apply in this case. Thanks to everyone who shared their experiences - it's so much more helpful than the conflicting advice I've been getting from different sources!

This is such a fascinating topic! As someone who's always wondered about the tax implications of these viral giveaway videos, I really appreciate all the detailed explanations here. One thing I'm curious about - has anyone seen any official statements from MrBeast or his team about how they handle the tax reporting side of things? I imagine they must have a whole system in place given the volume of prizes they give out. It would be interesting to know if they automatically collect tax information from winners or if it's left up to the recipients to figure out on their own. Also, for the people mentioning the difficulty of reaching the IRS - I had no idea there were services to help with that! The phone system is absolutely brutal when you actually need to talk to someone. Good to know there are options besides spending entire days on hold.

This whole thread has been super educational! I never realized how complex the tax situation gets with these big YouTube giveaways. One angle I haven't seen mentioned yet is what happens if you're a minor when you win one of these prizes. Like, MrBeast sometimes gives money to kids in his videos - do the parents have to report it on their tax return? And what about international winners? I've seen him give prizes to people in other countries in some of his videos. Also, reading about all the phone troubles with the IRS makes me wonder if there are other government agencies that are similarly hard to reach. Seems like a systemic problem that really needs fixing when taxpayers can't even get basic questions answered without using third-party services. The whole non-cash prize situation with houses and cars is honestly terrifying from a tax perspective. Imagine being handed keys to a dream house only to realize you now owe six figures in taxes you don't have! Really makes you think twice about entering those kinds of contests.

Just fyi, if u have a regular job where taxes are taken out, you can also adjust your W-4 to have extra withholding taken from your paycheck instead of doing the quarterly payments. Thats what I do for my side gig. Way easier than figuring out quarterly payments!!!

This is really helpful advice everyone! I'm in a similar situation with freelance writing work that brings in maybe $800-900 per year. Reading through these responses, it sounds like I don't need to stress about quarterly payments at my income level, but I definitely need to make sure I'm reporting everything on Schedule C. The suggestion about adjusting W-4 withholding is brilliant - I never thought about that option. Since I have a regular day job, that would be so much easier than trying to calculate quarterly payments for such irregular income. Has anyone here actually done the math on how much extra to withhold? I'm wondering if there's a simple way to estimate it.

Has anyone tried using the simplified home office deduction ($5 per square foot up to 300 sq ft) vs itemizing all home expenses? I'm trying to figure out which would be better for my clothing reselling business... I use about 150 sq ft for inventory storage and photography.

For your situation with $11,500 in sales and $6,700 in expenses, you're definitely on the right track with Schedule C as a sole proprietor. That puts you at about $4,800 in profit, which means you'll owe self-employment tax on that amount (about $679). A few specific tips for clothing resellers: - You can absolutely keep purchasing receipts together rather than matching each item individually. The IRS cares about your total Cost of Goods Sold, not item-by-item tracking. - Don't forget to deduct platform fees (eBay, Poshmark, etc.), shipping supplies, storage containers, and even a portion of your internet bill if you use it for business. - Consider opening a separate business checking account - it makes tracking so much easier and looks more professional if you ever get audited. At your current profit level, sole proprietorship is definitely the most cost-effective structure. The extra complexity and costs of an LLC or S-corp wouldn't be worth it until you're making significantly more profit. Keep good records and you'll be fine!

One thing I learned the hard way - be super careful about claiming too much of your house as rental property if you ever want to claim the capital gains exclusion when selling! If you claim 60% as rental, you might only be able to exclude 40% of your gains from capital gains taxes when you sell. Also, make sure you're tracking the dates that rooms are actually rented vs. vacant. If a room sits empty for a few months while you're looking for a tenant, the expenses during that time are still deductible as long as the room is being actively marketed for rent.

Great question about the capital gains exclusion! You're right to think about maximizing deductions, but it's all about timing and your long-term plans. If you're planning to sell within a few years, you might want to be more conservative with your rental percentage claims. But if you're planning to keep the property long-term, maximizing current deductions usually makes more sense. The key is that you can qualify for the capital gains exclusion on your primary residence portion as long as you've lived in the home as your main residence for at least 2 of the last 5 years before selling. So if you're claiming 60% rental use, you'd potentially pay capital gains on 60% of your profit, but exclude up to $250k (or $500k if married) of gains on the 40% personal use portion. Run the numbers both ways - sometimes the annual tax savings from higher rental deductions outweigh the future capital gains hit, especially if you're in a high tax bracket now. A good tax professional can help you model different scenarios based on your specific situation and timeline.