One more thing to consider - if you do end up filing jointly to get the EITC, make sure you calculate your income correctly. I got audited last year because my husband and I didn't include some of his gig work income, and it changed our EITC amount. The IRS is really strict about EITC claims.

I went through this exact situation two years ago! The rules are frustrating but clear - you cannot claim EITC when married filing separately if you're living together. I learned this the hard way when I tried to file separately to maximize my refund. However, I'd strongly recommend running the numbers both ways before deciding. Even without the EITC, filing separately might still make sense in your situation, especially with your husband's old tax debt. But honestly, when I calculated everything (including the EITC we'd lose), filing jointly saved us about $2,800 more than filing separately, even after accounting for some complications. The injured spouse form (8379) that Alana mentioned is definitely worth looking into if you're worried about your refund being seized for his debt. That way you could potentially file jointly, keep the EITC, and still protect your portion of the refund. It's a bit more paperwork, but it might be the best solution for your situation.

Has anyone used the IRS online payment system when filing Form 8832? There's a user fee for late elections if you request a private letter ruling, but the IRS website is so confusing about how to actually pay it.

I went through this exact same situation with my LLC about 6 months ago! At $85,000 projected income, you'll definitely want to run the numbers carefully before electing corporate treatment. One thing that really helped me was creating a simple spreadsheet comparing the tax scenarios. As a single-member LLC (assuming that's your situation), you'd pay self-employment tax on the full $85K under default treatment. But with corporate election, you'd face potential double taxation if you take distributions. The sweet spot for corporate treatment is usually when you can justify a reasonable salary (subject to payroll taxes) that's lower than your total profit, leaving the remainder as retained earnings taxed at corporate rates. But at $85K, this might not provide much benefit. Also, don't forget about state considerations - some states have minimum franchise taxes for corporations that could eat into any federal tax savings. I'd strongly recommend running the actual numbers with a tax pro before making the election, especially since you can't easily reverse it once made. The 75-day window Keith mentioned is crucial - mark your calendar! And if you do elect corporate treatment, make sure you're prepared for the additional compliance requirements like corporate tax returns and payroll processing.

Wait a minute... I'm confused. I thought if you make less than $400 in self-employment income you don't need to report it? Or is it $600? I do handyman work sometimes and get cash but didn't think I needed to report small amounts.

I went through something very similar about 3 years ago - underreported cash income from freelance work by about $18k. I was absolutely terrified when I got the audit notice, convinced I was going to prison. Here's what actually happened: I hired a tax attorney (best money I ever spent), was completely honest about everything, and ended up paying about $4,200 in back taxes plus another $3,800 in penalties and interest. No criminal charges, no jail time - just a very expensive lesson. The key things that helped my case: I had legitimate business expenses I could deduct that reduced the actual tax owed, I was cooperative throughout the process, and my attorney helped me present everything in the best possible light. The IRS agent even told me that my willingness to be upfront about the mistake worked in my favor. You're doing the right thing getting an attorney. Be 100% honest with them about everything, gather all your bank statements and any business expense receipts you have, and try not to panic. Criminal prosecution for amounts like this is really rare when there's no pattern of ongoing fraud.

My accountant told me that since I'm now a nonresident alien, my 401(k) distributions are always non-ECI and go on Schedule NEC. Is this wrong??

I went through this exact situation two years ago and can confirm that the consensus here is correct - your 401(k) distribution should be reported as ECI on Line 17a of Form 1040-NR. The key principle is that retirement distributions maintain the same tax character as the income that funded them. Since your contributions were made while you were working in the US (and thus earning effectively connected income), the distribution retains that ECI character even though you're now a nonresident alien. I initially made the mistake of reporting mine on Schedule NEC as non-ECI income, but after researching Revenue Ruling 79-388 and consulting with an international tax specialist, I filed an amended return to correct it. The IRS accepted the amendment without any issues. One important note: make sure to check if your tax treaty has any special provisions for retirement distributions. Some treaties provide for reduced withholding rates or other benefits that you don't want to miss out on. Also, keep detailed records of your employment history in the US, as this documentation supports the ECI classification if the IRS ever questions it. Don't let your accountant's advice in the comment below go unchallenged - this is a specialized area where many general practitioners get it wrong.

Has anyone had to renew multiple ITINs for family members all at once? We're preparing for this year and realized my in-laws and my sister all need renewals (they have different middle digits). Can I submit multiple W-7 forms with one tax return or do I need to do them separately?

I went through this same situation with my elderly father last year. His ITIN had middle digits 72 and hadn't been used since 2019 when I stopped claiming him as a dependent for a few years. When I started claiming him again in 2023, I discovered his ITIN had expired. The key thing to remember is that the "three consecutive years" rule applies regardless of whether the ITIN holder files their own return or is claimed as a dependent. Since your grandpa's ITIN wasn't on ANY tax return from 2020-2022, it definitely expired on 12/31/2023. I'd recommend getting started on the renewal process soon since you're planning to claim him again for 2024. You can submit the W-7 renewal form along with your tax return, but make sure you have all the required documentation ready. The process took about 8 weeks for us, but it was worth doing it right the first time rather than having to refile later.