This is a complex situation that's worth getting right given the property value involved. One thing I'd add to the excellent advice already given - make sure you're properly documenting everything for the suspended passive losses. The IRS requires you to track these losses year by year, and with depreciation creating substantial annual losses on a $1.6M property, you'll likely be accumulating significant suspended losses. Also consider the long-term strategy here. While you can't use these losses against your dividend income now, they'll become fully deductible when you eventually sell the property. Given that you inherited it with a stepped-up basis, you might want to think about whether this property fits your overall investment strategy or if there are better alternatives. One last thought - if you're planning any major improvements to the property, make sure you understand the difference between repairs (immediately deductible) and improvements (must be depreciated over time). With depreciation already exceeding your rental income, maximizing immediate deductions through proper repair classifications could be beneficial.

I've been dealing with a similar inherited rental property situation for the past two years, so I completely understand your confusion about the passive loss rules. What everyone has explained about the passive activity limitations is spot-on - you won't be able to use those rental losses against your dividends and capital gains with your income level. One thing I wish someone had told me earlier: consider doing a cost segregation study on that $1.6M property. With such a high basis, you might be able to accelerate some of the depreciation by separating out components like flooring, fixtures, and landscaping that depreciate over 5-7 years instead of the standard 27.5 years for residential rental property. This could create even larger losses in the early years that get suspended, which means bigger deductions when you eventually sell. Also, since this is inherited property, make sure you're not missing any potential deductions for estate-related expenses or property preparation costs that might be immediately deductible rather than added to basis. The combination of high depreciation and proper expense classification can really maximize those suspended losses for future use.

Has anyone here used QuickBooks for managing their S Corp? I'm trying to figure out if the Self-Employed version is enough or if I need to upgrade to the more expensive versions.

Great question about S Corp setup! I went through this same decision process last year. One thing I'd add to the excellent advice already given is to really think about your projected income level. The S Corp election becomes more beneficial as your profits increase, but there's definitely a threshold below which the additional complexity isn't worth it. Also, don't forget about state considerations - some states don't recognize S Corp elections or have additional fees/taxes that can impact your savings. Make sure to factor in your specific state's requirements when running the numbers. The reasonable compensation requirement is real and the IRS does audit this, so be conservative in your approach. I've found it helpful to research salary data for similar consulting roles in my area to justify my compensation level. Better to err on the side of paying slightly more in salary than to face an audit later.

Random question - how many family members do you all typically help with taxes? I'm currently doing returns for my parents, 2 siblings, and my in-laws, and it's gotten overwhelming. Considering asking for POA just to save time like the original poster suggested.

Great question about helping family/friends with POAs! I've been doing this for about 6 years now and it's completely legitimate as long as you maintain proper separation from your firm work. A few additional tips from my experience: 1. Keep detailed records of which POAs you've filed and for whom - I use a simple spreadsheet with names, dates filed, and status. This helps when the IRS inevitably loses paperwork. 2. Consider setting an annual limit on how many people you'll help. I cap mine at 10 family members because beyond that it becomes like running a second practice. 3. For the phone number question - yes, you can include multiple numbers. I put my cell as primary and home as secondary right in the contact section. Never had an issue with this. 4. Pro tip: Submit your 2848s early in the year (January/February) when IRS processing is faster. During busy season, POAs can take 8-12 weeks to process versus 3-4 weeks in quieter months. One thing I learned the hard way - always keep copies of the signed 2848s. The IRS has "lost" mine before and without the original signature, you're stuck waiting for them to mail a new one to your family member to re-sign. The transcript access alone makes this worth doing - you'd be surprised how many times I've caught missing 1099s or other issues that would have caused problems later.

Just FYI - I've been on F1 for 7 years now and file as a resident. The tuition and education credits alone saved me over $1500 last year. Definitely worth looking into if either of you has been here more than 5 years.

I went through this exact situation two years ago! My spouse and I were both on F1 visas, and we were able to file jointly after my spouse hit the 5-year mark. Here's what I learned: The key is that once an F1 student has been in the US for more than 5 calendar years, their days start counting toward the substantial presence test. If they meet that test, they become a resident alien for tax purposes. The resident spouse can then make an election under IRC Section 6013(g) to treat the non-resident spouse as a resident, allowing you to file jointly. You'll need to file Form 1040 (not 1040NR) and include a statement with your return making this election. The statement should specify that you're electing to treat the non-resident spouse as a resident for the entire tax year. A few important points: - This doesn't affect your visa status at all - it's purely for tax purposes - You'll need to report worldwide income, so factor that into your calculations - Your past FICA exemptions remain valid for those years when you qualified - The savings can be substantial due to access to education credits, standard deduction, and potentially lower tax brackets I'd strongly recommend running the numbers both ways (joint vs. separate non-resident returns) before deciding, as the worldwide income reporting requirement could impact the benefits depending on your situation.

Something nobody's mentioned yet - you might want to look into the IRS Fresh Start program. It's designed specifically for people with tax debt who need manageable payment options. With your income level and no assets, you'll likely qualify for an installment agreement. If you're really struggling financially right now, you might even qualify for an Offer in Compromise, where the IRS accepts less than the full amount owed. That's harder to get, but worth exploring.

You're absolutely right to tackle this head-on now. Five years of unfiled 1099 income is serious, but the IRS does appreciate voluntary compliance and you have options. First priority: Get a CPA who specializes in tax resolution or back taxes. Don't try to handle this alone - the penalties and interest calculations are complex, and you'll want someone who knows how to maximize deductions and negotiate with the IRS. Quick reality check on what you're facing: You're looking at roughly $135k x 5 years = $675k in unreported income. As a 1099 contractor, you'll owe both income tax AND self-employment tax (15.3%). Even with deductions, you're probably looking at $150k-200k+ in taxes, plus penalties and interest that could add another 50-75% to that amount. The good news is payment plans are very doable. The IRS would rather collect over time than not at all. Start gathering every piece of financial documentation you can find - bank statements, any 1099s you received, receipts for business expenses, etc. The more legitimate deductions your CPA can find, the less you'll owe. Don't wait any longer. The penalties and interest are accruing monthly, and voluntary compliance will always get you better treatment than if the IRS finds you first.