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Does anyone know if there's a way to recreate the Schedule P Part 2 if you didn't properly track this in prior years? I've got functional currency amounts but never maintained the separate dollar basis tracking until now.
Thanks! I've got all my prior forms so I'll dig through them. One more question - once I reconstruct the dollar basis amounts, do I need to amend any prior returns if I find I should have recognized 986(c) gains or losses that I didn't report?
That's a great question about amending returns. Generally, if you discover unreported Section 986(c) gains or losses from prior years, you should consider amending those returns, especially if the amounts are material. The IRS can assess penalties for underreporting foreign currency gains. However, if you're reconstructing everything now and going forward with proper tracking, you might want to consult with a tax professional about whether to amend or if there are any voluntary disclosure options available. The statute of limitations is typically 3 years, but it can be longer for international issues if there were substantial omissions. @1dc1fac72b82 You'll want to be careful about how you handle this reconstruction to avoid creating more problems down the road.
I've been dealing with Form 5471 for several years now and can confirm what others have said - you absolutely need to carry forward the dollar basis amounts from your 2022 Schedule P Part 2 ending balance to your 2023 beginning balance. Don't convert using 2023 rates. One thing I haven't seen mentioned yet is that you should also make sure you're properly categorizing any new 2023 inclusions by the correct PTEP category (Section 951(a), Section 951A, etc.) when you add them to your basis amounts. Each category needs to be tracked separately because they have different distribution ordering rules. Also, if you had any actual distributions during 2023, make sure you're reducing your basis amounts in the proper LIFO order and calculating the Section 986(c) gain/loss on the difference between your dollar basis and the dollar value of the distribution. This is where a lot of people mess up the currency calculations.
I'm currently dealing with a 570 code that appeared on my transcript 5 days ago. Reading through everyone's experiences here is really reassuring! I filed claiming the EITC and Child Tax Credit, so I'm guessing that might have triggered the review. Has anyone noticed if filing early vs. late in the season affects how long these reviews take? I'm trying to stay patient but it's hard when you're expecting that refund for bills.
I can relate to the anxiety of waiting! From what I've observed in my own experience and from reading other cases, filing timing doesn't seem to significantly impact review duration - it's more about the specific triggers and complexity of your return. The EITC and CTC combo you mentioned is pretty common and usually resolves within 2-3 weeks from what I've seen. Try to stay positive - most 570 codes are just routine verification and clear up without any action needed on your part!
I'm going through this exact same situation right now! Got the 570 code on my transcript about 10 days ago and have been checking obsessively every day since. Filed with both EITC and Additional Child Tax Credit, so I'm pretty sure that's what triggered the review. The waiting is honestly the worst part - not knowing if it's going to be 2 weeks or 2 months. Reading everyone's experiences here makes me feel a lot better though. Seems like most people get it resolved within 3 weeks or so. Fingers crossed we all get our refunds soon! đ¤
I totally understand that obsessive checking feeling! I'm in the same boat - got my 570 code about a week ago and I've been refreshing my transcript multiple times a day. It's so nerve-wracking not knowing the timeline. Your combination of EITC and Additional Child Tax Credit is really common and from what I've been reading here, those usually clear up pretty quickly. I'm trying to remind myself that no news is often good news with the IRS - if there was a major issue, they'd probably contact us directly. Hang in there! đ¤
Has anyone mentioned the fact that you might also get hit with underpayment penalties if you don't have enough withheld throughout the year? IRS expects you to pay as you earn, not all at the end of the year.
One thing I don't see mentioned here is that you should also consider whether you have any other deductions or credits that might help offset the tax impact of your bonus. If you're planning to use this money for a house down payment, you might want to look into whether you qualify as a first-time homebuyer for any tax benefits. Also, if you haven't already maxed out your 401k contributions for the year, increasing those contributions can help reduce your taxable income and partially offset the bonus. You could ask your employer to increase your 401k withholding percentage for the remaining months of the year to capture some of that bonus money before taxes hit it.
I went through exactly this transition last year! Left my SEP open with the existing money and started a 401k when I brought on employees. One thing to watch for - make sure you properly document the termination of new contributions to the SEP (even though there's no formal closure). I kept a corporate minute in my company records noting the board decision to freeze the SEP and establish the new 401k. My accountant said this creates a clear paper trail if there's ever a question about why we stopped SEP contributions for the business.
Smart tip about the corporate minutes! Did you also need to notify the financial institution where your SEP was held that you were discontinuing contributions? Or did you just stop sending money?
I didn't formally notify the financial institution - I just stopped making contributions. The SEP IRA custodian doesn't need to be told you're discontinuing contributions since there's no ongoing obligation to fund it anyway. They'll still send you statements and the account remains active for investment purposes. The corporate minutes were really just for our own documentation to show we made a deliberate business decision rather than accidentally forgetting to contribute. My CPA said it's good practice for audit defense, especially since we switched to offering a different retirement benefit to employees.
Great question! I actually went through a similar transition when my consulting business grew. You're on the right track - you can absolutely leave your existing SEP IRA open with the current funds and simply stop making new contributions when you switch to the 401(k) plan. Since you'll have employees in 2025, continuing SEP contributions would require you to contribute the same percentage for all eligible employees, which gets expensive fast. The 401(k) route gives you much more flexibility with different contribution levels and employee matching options. One practical tip: when you set up the new 401(k), check if the plan allows incoming rollovers from IRAs. If so, you might want to roll your SEP funds into the 401(k) to consolidate everything in one place. This can also help if you ever want to do backdoor Roth conversions later, since having money in traditional IRAs complicates that strategy due to the pro-rata rule. The transition timing is perfect since you're doing it at the start of a new tax year. Just make sure your 401(k) plan document is properly drafted to handle the contribution types you want (employee deferrals, employer matching, profit sharing, etc.).
This is really helpful, especially the point about checking if the new 401(k) allows incoming rollovers! I hadn't thought about the backdoor Roth implications either. Quick question - when you mention getting the 401(k) plan document "properly drafted," are there specific provisions I should ask for beyond the basic employee deferrals and matching? I want to make sure I don't limit my options down the road if the business continues to grow.
Nina Fitzgerald
This is such helpful information! I'm in a similar situation planning to move to Turkey later this year. Based on what everyone's shared, it sounds like buying the Apple Watch in the US before moving is definitely the way to go. I'm leaning toward the GPS-only aluminum model to minimize the tax impact. The 20-22% rate is much more reasonable than the 35%+ for cellular models. Plus with that temporary exemption program Sarah mentioned, I might be able to save even more if I time it right. Has anyone dealt with declaring multiple personal electronics when moving? I'll also be bringing my iPhone, iPad, and MacBook. I want to make sure I don't accidentally trigger any red flags at customs by having "too much" tech, even though it's all legitimately for personal use.
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Aaliyah Jackson
â˘Welcome to the community! For multiple personal electronics, you should be fine as long as you have documentation showing they're genuinely personal items. I brought my iPhone, iPad, MacBook, and Apple Watch when I moved to Turkey in 2024 without any issues. The key is having proof of purchase dates (ideally 3+ months old) and evidence of personal use - photos of you using the devices, wear patterns, personal data/apps installed, etc. Turkey allows reasonable personal electronics for relocated individuals, but customs officers do look for patterns that suggest commercial import. One tip: spread out your electronics across different bags/luggage rather than having them all in one tech bag. This makes it look more natural and less like you're importing to sell. Also, make sure everything is clearly used - don't bring anything in original packaging or with protective films still on screens.
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Zainab Ahmed
Great thread everyone! As someone who works in international tax consulting, I can confirm most of the information here is accurate. One additional tip for anyone planning this move: keep detailed records of when you first started using each device. Turkey's customs officials have become more sophisticated in recent years and sometimes cross-reference social media posts or digital footprints to verify personal use claims. I've seen cases where people had issues because they posted photos of their "new" Apple Watch on social media just weeks before traveling, even though they claimed months of ownership. Also, regarding the material classifications that Natalie mentioned - this is still true in 2025. The customs codes differentiate between aluminum (lower luxury classification) and premium materials like titanium or ceramic (higher luxury tax bracket). The difference can be 5-10% in total tax burden. For those using tools like taxr.ai, make sure you're inputting the exact model specifications including case material, as this significantly affects the final calculation. The tool should ask for these details if it's comprehensive.
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Honorah King
â˘This is incredibly valuable insight, thank you! I hadn't considered the social media aspect at all. That's a really smart point about cross-referencing digital footprints - I should probably avoid posting about any new tech purchases on my accounts if I'm planning to bring them as "personal items" later. The material classification detail is especially helpful. I was already leaning toward the aluminum model for cost reasons, but knowing it could save me an additional 5-10% in taxes makes it an even easier decision. One follow-up question for you as a tax consultant - do you know if there are any specific documentation requirements Turkey prefers for proving personal use? Like, are bank statements showing the purchase date sufficient, or do they prefer other types of evidence?
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