That's a really good point! We initially chose partnership taxation because our accountant said it was simpler for our first year, but I've been wondering if S-Corp might be better long-term. Are there big differences in the reporting requirements between the two? And if we wanted to switch to S-Corp status, is that complicated?

The reporting requirements are somewhat different. Partnerships file Form 1065 with K-1s for partners, while S-Corps file Form 1120-S with K-1s for shareholders. The bigger difference is how you're taxed - with an S-Corp, you can pay yourself a reasonable salary (subject to employment taxes) and take remaining profits as distributions (not subject to self-employment tax). This can save on taxes. Switching isn't too complicated. You file Form 8832 to elect to be taxed as a corporation, then Form 2553 to elect S-Corp status. The timing is important though - generally you need to file within 2 months and 15 days from the beginning of your tax year for it to be effective for the current year. Otherwise, it takes effect the following year.

Did you have to amend your operating agreement to specify those allocations more clearly? Our agreement just says "50/50" for everything but I've heard the IRS wants more specific details about how different types of income and special allocations are handled.

We didn't have to formally amend our operating agreement, but our accountant recommended creating an addendum that specifically addressed tax allocations. We documented how we handle different income types, guaranteed payments, and special allocations for tax purposes. The IRS does want to see that your allocations have "substantial economic effect" - basically that they reflect actual economic reality and aren't just done to avoid taxes. For a simple 50/50 partnership, you're probably fine as long as you consistently apply that split to all financial aspects of the business.

What happens when you hit year 5? Do you automatically become a resident for tax purposes or is there something you can do to maintain nonresident status?

When you hit year 5, you generally can no longer claim exemption from the substantial presence test as a student. This means you'll likely be considered a resident alien for tax purposes if you meet the regular substantial presence test (which most international students easily do). There are some exceptions though. If you have no intention of residing permanently in the US and have closer connections to a foreign country, you might qualify for the "closer connection exception." Some tax treaties also have provisions that can override the 5-year limit for students from specific countries. These exceptions require additional forms and documentation beyond the 8843.

OMG this tripped me up too! I had a 2-week winter program in Dec 2022 and didn't realize that counted as a whole calendar year for this form. Almost answered wrong.

Yep it's super confusing! The IRS doesn't care about semesters or academic years - they only look at whether you were present in the US for ANY part of a calendar year under student/teacher/trainee status. So even a short winter break program or summer session counts as a full "calendar year" for this question. That's why it's so important to track ALL your entries and exits precisely.

How far back should we keep receipts? I've been creating content for about 2 years but only started making decent money in the last 6 months. Should I still have all my old receipts from when I started?

Keep receipts for at least 3 years from when you file your return, but honestly I keep mine for 7 years to be extra safe. The IRS can generally audit returns up to 3 years back, but that can extend to 6 years in some cases. Even receipts from when you weren't making much money are valuable! If you're showing business losses in early years (spending more on equipment than you earned), those are still legitimate business expenses as long as you were genuinely trying to make a profit. Those early investments were part of building your business, so definitely keep documentation of everything.

I switched to TurboSelf-Employed this year and it was 100% worth it for content creator income. It walks you through all the possible deductions and has specific questions for digital creators. It found deductions I never would have thought of, like partial internet costs and even the percentage of my phone bill used for content creation. It's more expensive than regular TurboTax but I saved way more in deductions than I spent on the software. Just make sure you're keeping good records throughout the year to maximize the deductions!

What documentation did you show for the business vs personal use percentage? Did you still track every trip or just estimate based on the typical usage pattern?

I used a combination of methods. I didn't log every single trip, but I did keep good records of my regular business travel patterns. I maintained a work calendar with client appointments and locations, and I'd note my starting/ending odometer readings for those days. For recurring trips (like going to the same client site every Tuesday), I documented the mileage once and then used my calendar to show how many times I made that trip. My tax guy said this is acceptable as long as it's consistent and reasonable. The key was being able to show both the business purpose and the frequency/pattern of travel. I also kept all maintenance records showing odometer readings which helped establish total miles driven.

I went through an audit two years ago where they questioned my vehicle expenses. I had used the actual expense method but my documentation was pretty spotty. The auditor disallowed about 30% of my deduction because I couldn't adequately prove my business use percentage. They wanted to see contemporaneous records (created at the time of the trips), not just estimates after the fact. My advice: start keeping better records NOW, even if you haven't been doing it before. Apps make it much easier these days.

I use QB for my pottery business. It can track COGS but you have to set it up correctly first! Make sure you classify your items properly as inventory items rather than non-inventory, and enable the inventory tracking feature. Then when you purchase materials, you'd post to inventory asset accounts, not expense accounts. When you sell, QB will automatically calculate COGS.