Something everyone missed - make sure you're setting aside money for taxes with EVERY payment you receive! I recommend 30% minimum to cover federal, state, and self-employment taxes. I learned this the hard way my first year freelancing and ended up with a huge tax bill I couldn't pay.

Great advice from everyone here! As someone who's been freelancing for a few years now, I'd add that it's worth opening a separate business checking account specifically for your freelance income and expenses. This makes tracking everything SO much easier come tax time. Also, don't forget about business deductions! Home office expenses, equipment, software subscriptions, professional development courses - these can really add up and reduce your tax liability. Keep detailed records of everything work-related. One more tip: consider making your estimated payments slightly higher than required if you can afford it. I'd rather get a small refund than owe money at the end of the year, especially since freelance income can be unpredictable.

Just a heads up - if you do need to file an amended return for 2021, you still have time. The deadline is generally within 3 years of the original filing date, so you likely have until April 2025. But I'd get moving on the explanation to the IRS right away to stop any collection actions.

I'm dealing with a very similar situation right now with my 2022 taxes! The IRS is claiming I didn't report about $18k in stock compensation, but like you, it was already included in my W-2. One thing that helped me understand what happened - I called my HR department and they explained that when you have "sell to cover" set up, the company reports the full value of the vested shares as income on your W-2 (which gets taxed as regular income), but then Fidelity also sends a 1099-B to the IRS showing the "sale" of those same shares to cover taxes. The IRS computer systems see both and think you earned the money twice. I'm still working through my response, but my HR rep said this is super common and they deal with it all the time. She recommended I include a letter from HR explaining their stock compensation reporting process along with my W-2 and 1099-B copies. Might be worth reaching out to your HR department too - they probably have template letters for exactly this situation since it happens so frequently with employees who have stock compensation.

I'm actually preparing taxes for my cousin who's in almost the same situation (F1 with pending I-485). Does anyone know if using a tax service like H&R Block is worth it for this kind of complicated situation? Or should I just use something like TurboTax?

Just went through this exact situation last year! As someone who had F1 status with pending I-485 and received foreign tuition payments, I can confirm what others have said - you don't need to report the $40k tuition payment as income since it went directly to your university. However, there are a couple of additional things to keep in mind with your mixed immigration status: 1. Make sure you're filing as a resident alien for tax purposes if you meet the substantial presence test, even though you're still on F1 visa. Your pending I-485 doesn't automatically make you a tax resident, but your physical presence might. 2. Keep detailed records of the wire transfer and your I-20 form showing the tuition amount. If USCIS asks for tax compliance documentation during your I-485 process, having clear proof that this was educational funding (not unreported income) will be important. 3. Double-check if your parents sent any additional money for living expenses directly to you - that would still be considered a gift and not taxable, but good to track separately from tuition payments. The key thing is that since the money never touched your accounts and went straight to an educational institution using proper F1 documentation, it's clearly not income to you. Good luck with both your taxes and your green card application!

I just searched through 3 different tax textbooks and NONE of them had a simple name for this stupid tax thing. How are regular people supposed to understand the tax code when even the "simplified" explanations are so complicated? And why does rental property depreciation get a special 25% rate anyway? Regular income can be taxed much higher, and normal capital gains much lower. The whole system seems designed to be confusing on purpose.

As someone who just went through this exact same confusion last year, I feel your pain! I ended up calling it "the rental property tax penalty" when explaining it to my family, which isn't technically accurate but gets the point across. What really helped me understand it was thinking of it this way: every year you owned that rental, you got to deduct depreciation from your taxes (whether you actually claimed it or not). That saved you money on your tax bill each year. Now when you sell at a profit, the IRS is basically saying "hey, remember all that money we let you save on taxes? We want a piece of that back." The 25% rate is actually better than if they taxed it as regular income (which could be much higher), but worse than regular capital gains rates. It's like a middle-ground compromise. For explaining to your spouse, I found it easiest to say: "It's a special tax on the depreciation benefits we got while owning the rental." Much simpler than the full legal terminology!

Welcome to the US tax system! Your situation is actually pretty common for new green card holders. Just wanted to add a couple of practical tips from my own experience with international transfers: 1. When you do transfer the money, consider doing it in smaller chunks (like $7k-8k at a time) rather than all $21k at once. This won't change your tax obligations, but it can sometimes get you better exchange rates and lower transfer fees depending on your banks. 2. Make sure to get a detailed transfer receipt showing the exchange rate used and any fees charged. These can be useful for your records, especially if you need to document the transaction later. 3. If your German bank charges high fees for international transfers, definitely look into services like Wise or Remitly - they often save hundreds of dollars on large transfers like yours. The good news is that Germany has a tax treaty with the US, so if you did have any taxable income from interest on that account while you were a US resident, you could potentially claim foreign tax credits to avoid double taxation. But for the principal amount you earned while working there, you're all set - no US taxes owed on the transfer itself!

Just wanted to share my experience as someone who went through a very similar situation last year. I moved from Canada to the US with about $35k in savings and was equally confused about the tax implications. The key thing that helped me was understanding the difference between "pre-immigration assets" (money you earned before becoming a US tax resident) and income earned after you become subject to US taxation. Your $21k from working in Germany falls into that first category, so transferring it won't create a US tax liability. However, I'd strongly recommend keeping very detailed records of everything - not just for the FBAR filing, but also in case you ever need to prove the source of funds during future immigration processes or if the IRS has questions. I kept copies of my Canadian employment contracts, tax returns from Canada showing the income was properly reported there, and bank statements showing the money sitting in my account before I moved to the US. One practical tip: when I made my transfer, I used a combination of Wise for the bulk amount and kept about $5k in my Canadian account initially. This way I could test the process with a smaller amount first and also had some buffer time to make sure I understood all the US reporting requirements before moving everything over. The whole process ended up being much less scary than I initially thought, but having good documentation made me feel much more confident about everything!