That's not entirely accurate. While that's the general rule for US citizens, there's a special "last day of the year" rule that applies when one spouse is a nonresident alien. The couple can choose to treat the nonresident spouse as a resident for tax purposes, but it's an election they make, not automatic.

I formed my LLC in New Mexico while living in Thailand. The privacy is good (similar to Wyoming), and annual fees are low ($0 annual report fee). The problem came with banking - many banks weren't familiar with New Mexico LLCs and their privacy features, which made opening accounts harder. I eventually switched to Wyoming because it had better name recognition with financial institutions. If banking isn't a concern though, New Mexico is solid.

This is exactly the kind of detailed advice I was hoping for! Quick question about the Foreign Earned Income Exclusion - does that apply to LLC income or just W2/employment income? I'm planning to pay myself through the LLC but wasn't sure if consulting income through an LLC would qualify for the exclusion. Also, have you had any issues with Portuguese tax authorities regarding your US LLC income?

Great question about the FEIE! For single-member LLCs, the income is typically treated as self-employment income and reported on Schedule C, which can qualify for the Foreign Earned Income Exclusion as long as you meet either the physical presence test (330 days outside the US in a 12-month period) or the bona fide residence test. However, there's an important caveat - if your LLC income is considered "passive" rather than "earned" income, it might not qualify. Since you're doing consulting work, that should definitely count as earned income from your personal services. Regarding Portugal - yes, I do have to report my US LLC income to Portuguese tax authorities since I'm a tax resident here. Portugal has a tax treaty with the US that helps prevent double taxation, but I still need to file in both countries. The good news is that Portugal has the NHR (Non-Habitual Resident) program which can provide significant tax benefits for certain types of foreign income during your first 10 years of residency. I'd strongly recommend consulting with a tax professional who specializes in US-Portugal tax issues - the interaction between LLC taxation, FEIE, and Portuguese tax law can get complex quickly. The investment in proper tax advice upfront will save you headaches later.

That's an interesting point I hadn't considered! We did actually change insurance again in March 2023 when I got a new job with better coverage, but it's still an HDHP that's HSA-eligible. Would that still count as maintaining eligibility for the testing period, or does it have to be the exact same plan?

As long as your new coverage in 2023 still qualifies as an HDHP and you remained HSA-eligible, you should be fine for the testing period. It doesn't have to be the same exact plan - you just need to maintain HSA eligibility through December 31, 2023. If your new job's plan is HSA-eligible, you should be meeting the testing period requirements. Maybe double-check that the new plan truly meets all the HDHP requirements (minimum deductible, maximum out-of-pocket, etc.) to ensure it qualifies.

Does this actually work? I thought once the money was in your HSA, you couldn't move it to someone else's account, even your spouse's. Wouldn't that count as a distribution and then a new contribution?

You're absolutely right to question this - you actually CAN'T directly transfer money between spouses' HSAs. What the HSA provider likely helped with was a "recharacterization" of excess contributions, which is different from a transfer. Here's how it works: If you over-contributed to your HSA, you can remove the excess contribution plus any earnings before the tax filing deadline and treat it as if it was never contributed. Then your spouse could make a new contribution to their HSA (assuming they haven't maxed out their limit). So it's not actually moving money between accounts - it's removing an excess contribution from one account and making a fresh contribution to the other. The net effect looks like a transfer, but technically it's two separate transactions that keep everything IRS-compliant.

Did you use a tax pro to help with the audit or did you handle it yourself? I'm nervous about claiming these credits because I don't want to trigger extra IRS attention.

I handled it myself since I had all the documentation ready. The key was having the manufacturer's certification statement showing the heat pump met the efficiency requirements and the itemized receipt from my contractor. If you're worried, I'd recommend creating a folder (physical or digital) specifically for your energy credit documentation. Include the product details with efficiency ratings, contractor certification, receipt, and maybe even photos of the installed unit with its model number visible. With everything properly documented, it was actually a straightforward process to respond to the audit request.

Are you sure about splitting across years being better? I thought there was a lifetime limit to these credits, not just annual.

The Inflation Reduction Act actually removed the lifetime limits that existed under the old energy credit system! Under the current rules, the $2,000 annual limit for heat pumps resets each year, so you could theoretically claim it multiple times if you install qualifying equipment in different years. However, you're right to think about timing strategically. If you're doing multiple improvements, you want to make sure you can use all the credits. Since these are non-refundable credits, you need enough tax liability each year to absorb them. Vincent's approach of spreading installations across years makes sense if your annual tax liability is limited. For most people though, if you have sufficient tax liability, there's no advantage to waiting - you might as well get the improvements done and claim the credits as soon as possible.

That's an excellent point! I actually haven't finalized the new job offer yet, so I could potentially negotiate immediate HDHP coverage as part of my package. Do you know if there are specific questions I should ask their HR department to confirm their plan would qualify?

Ask their HR department these specific questions: First, ask if their plan is officially "HSA-qualified" - this is a specific designation, not just any high-deductible plan. Request the Summary of Benefits and Coverage document to verify the deductible meets 2024 minimums ($1,600 for individual coverage) and that the plan doesn't offer non-preventive coverage before the deductible is met. Second, confirm their policy on benefit start dates for new employees. Some companies have first-day coverage, others have waiting periods of 30-90 days. If there's a waiting period, ask if exceptions can be made, especially if you explain your HSA testing period situation.

This is such a smart point about the timing! I hadn't really thought about how leaving mid-month could affect the entire month's eligibility. Since I do have some flexibility with my departure date, pushing it to November 1st sounds like it could save me a lot of headache. Quick question though - if I leave November 1st and my new employer coverage also starts November 1st, would that satisfy the "no gap" requirement? Or do I need my old coverage to end October 31st and new coverage to start November 1st to avoid any technical gap? Also, does anyone know if there's a specific time of day that matters? Like if my employer coverage ends at 11:59 PM on October 31st and new coverage starts at 12:01 AM November 1st, is that considered continuous?