Has anyone dealt with Canadian RRSP accounts when making the first-year choice? I've heard there's a special form you need to file to avoid the US taxing these accounts as regular investment income.

I went through this exact same situation when I moved from Toronto to Austin in September 2024! The first-year choice election was definitely the way to go - it saved us thousands compared to filing as non-residents. A few things to keep in mind that I learned the hard way: Make sure you calculate the 31 consecutive days and 75% presence test carefully. Since you arrived in August, you should easily meet this. Also, don't forget that making this election means you'll be considered US residents from January 1, 2024 forward for tax purposes, so you'll need to report ALL worldwide income including your Canadian employment from early in the year. The foreign tax credit on Form 1116 will help offset the Canadian taxes you already paid, but gather all your Canadian tax documents (T4s, Notice of Assessment, etc.) because you'll need them. One tip: if you had any Canadian investment accounts (TFSAs, RRSPs, etc.), there are additional forms and elections to consider. The US-Canada tax treaty has some helpful provisions but you need to be proactive about making the right elections. Filing jointly with the full standard deduction made a huge difference for us compared to the non-resident alternative. Definitely worth consulting with someone who knows cross-border tax if you have a complex situation, but the first-year choice sounds perfect for your circumstances.

been dealing w this for 2 months now...its ridiculous how broken the system is fr

Code 570 is basically the IRS putting a temporary hold on your refund while they review something. It's super frustrating but unfortunately pretty common. The good news is it's usually not a major issue - just takes time to resolve. I'd recommend checking your transcript regularly to see if any other codes pop up that might give you more info about what specifically they're reviewing. Also make sure you haven't missed any notices in the mail since those usually explain what they need from you.

Has anyone else's accountant told them to just stay as a pass-through LLC until hitting a specific profit threshold? Mine said not to worry about S-corp election until I'm consistently making $80k+ in profit. She said the extra accounting fees and payroll costs would eat up any tax savings before that point.

As someone who went through this exact decision with my small consulting LLC last year, I'd definitely recommend starting as a pass-through entity given your projected $45-50k revenue. The math just doesn't work out favorably for S-Corp election at that income level. Here's what I learned: the self-employment tax savings from S-Corp status only become meaningful when you can pay yourself a reasonable salary AND still have significant profits left over to take as distributions. At $50k revenue, after your business expenses, you're probably looking at maybe $30-40k in actual profit? That's barely enough to justify a reasonable salary, let alone leave room for tax-advantaged distributions. Plus, don't forget about the additional costs - payroll processing (around $100-200/month), quarterly payroll tax filings, and likely higher accounting fees. These can easily eat up $2,000-3,000 per year. My advice: stick with pass-through taxation for now, focus on growing your woodworking business, and revisit the S-Corp election when you're consistently hitting $75k+ in profit. The IRS allows you to make this election later, so there's no rush to decide now.

One thing no one's mentioned yet - make sure you understand if your distributions are actually "guaranteed payments" instead of true distributions. Some LLC operating agreements specify that certain payments to working members are guaranteed payments, which ARE subject to self-employment tax. Check your operating agreement carefully. If your payments are characterized as compensation for services rather than a share of profits, they might be considered guaranteed payments which are treated differently for tax purposes.

This thread has been incredibly helpful! I'm dealing with a similar situation where I'm both an employee and LLC member. One additional consideration I wanted to mention is the timing of when you'll owe taxes on your distributions. Even if the LLC doesn't actually distribute cash to you during the tax year, you may still owe taxes on your allocated share of the LLC's profits (called "phantom income"). This happens because LLCs are pass-through entities, so the profits are allocated to members for tax purposes regardless of whether cash is actually distributed. Make sure you understand whether your company plans to distribute enough cash to cover the tax liability, or if you'll need to pay taxes on profits that remain in the business. This can create a significant cash flow issue if you're not prepared for it. Also, keep detailed records of your basis in the LLC (your initial investment plus any retained earnings). This will be important for determining the tax treatment of future distributions and if you ever sell your ownership interest.

Quick question - I'm using QuickBooks Self-Employed and it doesn't seem to understand this SMLLC setup. It keeps wanting me to separate personal vs business accounts but everything is mixed because of the disregarded entity thing. Anyone else figure out how to make QB work with this situation?

I went through this exact same confusion when I started my SMLLC! Here's what I learned after consulting with a tax professional and getting it sorted out: For your 1099-NEC that you need to issue: Use your LLC's name, EIN, and business address. Even though you're a disregarded entity for tax purposes, your contractor worked with your LLC as a business entity, so the paperwork should reflect that relationship. For the two 1099s you received: Report both exactly as issued on your Schedule C. The IRS knows your LLC EIN is tied to your SSN, so they'll match both forms to your return automatically. This is totally normal for SMLLCs that started mid-year. One thing that really helped me understand this: Think of it as wearing two hats - you operate as a business entity (LLC) when dealing with others, but you file taxes as an individual (sole proprietor). The "disregarded entity" status just means the IRS ignores the business entity for tax filing purposes, not for business operations. Don't stress too much about being late on the 1099-NEC - definitely file it ASAP, but the penalties for late filing are usually much more reasonable than people expect, especially for first-time filers.