7 Would recommend checking if you qualify for the Streamlined Foreign Offshore Procedures if you haven't been filing while abroad. It lets you catch up on filing requirements without penalties if you can certify your failure to file was non-willful. I used it after living in Japan for 3 years and realizing I should have been filing.

Great thread with lots of helpful info! I'm in a similar situation - been living in the UK for 6 months with no income. One thing I wanted to add that might help others: even if you don't need to file a tax return due to the income threshold, you should still consider filing Form 8938 (FATCA) if your foreign financial assets exceed certain thresholds. For someone living abroad and filing single, you need to file Form 8938 if your foreign financial assets exceed $200,000 on the last day of the year OR more than $300,000 at any point during the year. This is separate from FBAR and has different thresholds. Most people with zero income probably won't hit these thresholds, but it's worth knowing about if you have any investments or larger savings accounts abroad. The penalties for not filing Form 8938 when required can be significant too. Also, if you're planning to stay abroad long-term, it might be worth establishing your tax residency status early even with zero income, as it can affect future filing requirements when you do start earning.

Oh my goodness, please be careful with this decision! I switched to MFS last year without proper research and it was a DISASTER! 😫 I lost my Roth IRA contribution eligibility, couldn't claim education credits for my daughter's college, and ended up paying almost $4,000 more in taxes than if we'd filed jointly. The worst part was that the reason we did it (to qualify for an income-based program) didn't even work out because they looked at household income anyway. Make absolutely sure you understand ALL the implications before making this choice.

I switched from joint to separate filing two years ago and learned some hard lessons. Here are the key things that caught me off guard: **Immediate Tax Impact:** - Lost about $2,800 in combined refunds compared to joint filing - Standard deduction dropped from $25,900 to $12,950 each - Lost eligibility for several credits we'd been claiming **Ongoing Complications:** - Had to split itemized deductions carefully (mortgage interest, property taxes, etc.) - One spouse itemizing meant we BOTH had to itemize even when standard would've been better - State taxes became more complex since our state doesn't allow separate filing **Unexpected Restrictions:** - IRA contribution limits became much stricter - Some retirement plan contributions were no longer deductible - Capital loss deduction was capped at $1,500 instead of $3,000 The process itself was more work too - essentially preparing two returns and coordinating between them. We did it for student loan payment reasons and it worked out financially overall, but barely. I'd strongly recommend using tax software to model both scenarios with your actual numbers before deciding. The "what if" calculators can show you exactly what you'll gain or lose.

I'm surprised nobody's mentioned that you can negotiate with your tax professional! When mine tried to charge me $450 for a reasonable compensation report, I asked for a breakdown of what goes into it. Turns out it was mostly pulling data from a subscription database they already pay for and formatting it into a report template. I asked if they could do a more basic version and they agreed to do it for $200 instead. It doesn't have all the fancy graphs and extensive narrative, but it includes the essential salary data for my industry and region with a brief explanation of how my compensation was determined. Another option: if you're using a tax software like TaxSlayer, TurboTax, or H&R Block for your business, some of their higher-tier packages include access to business reports and documentation tools that can help you create your own basic reasonable compensation documentation.

I've been through this exact situation with my S-Corp and ended up doing a hybrid approach that worked well. Instead of paying the full $500 my accountant wanted, I did some research myself first using the Department of Labor's wage data and industry salary surveys, then had my tax professional review my analysis and formalize it into a brief report for $150. The key is making sure you have documentation that shows you researched comparable positions in your industry, location, and company size. I looked at job postings for similar roles, used the Bureau of Labor Statistics Occupational Employment and Wage Statistics, and even checked sites like PayScale and Glassdoor for my specific role. My accountant said this approach was perfectly adequate for IRS purposes - what matters is that you can demonstrate you made a good-faith effort to determine reasonable compensation based on objective market data. The fancy reports are nice to have but not always necessary unless you're in a high-audit-risk situation or taking a very aggressive salary/distribution split. Given that you're paying yourself 50% of profits as salary, you're probably in a reasonable range, but having some documentation is definitely smart for peace of mind.

This is a common confusion. LLCs are state-level entities, but how they're taxed is a federal matter. The IRS doesn't actually recognize LLCs directly - they look at how you operate. Since you have 2 people sharing profits, the IRS considers it a partnership regardless of state paperwork. Filing Schedule C is ONLY for sole proprietors. Your partner's CPA is correct - you need Form 1065. By the way, you should definitely amend that LLC registration too.

Just wanted to add some clarity on the TurboTax question - when you're preparing a partnership return (Form 1065), you'll actually need TurboTax Business, not the individual version. In TurboTax Business, you select "Partnership" as your business type, then indicate it's an LLC taxed as a partnership. The software will walk you through entering both partners' information and generating the required K-1 forms for each partner. One important note: make sure you have an EIN (Employer Identification Number) for the partnership before you start filing. Even if your LLC originally had an EIN as a single-member entity, you may need a new one now that it's being treated as a partnership for tax purposes. The IRS website has a clear guide on when you need a new EIN versus keeping your existing one.

One important thing nobody mentioned yet - if you're filing electronically, you need to make sure you're using the right form! The IRS has been phasing out 1099-MISC for nonemployee compensation and now requires 1099-NEC for contractor payments. 1099-MISC is still used for other types of payments like rent, prizes, etc. Made this mistake last year and had to refile everything 😭

Just want to add another perspective on electronic filing options! I've been helping small businesses with their 1099 filings for years, and here's what I've found works best: For someone with 8 contractors like you mentioned, I'd definitely recommend going with a reputable tax software or third-party service rather than trying to navigate the IRS FIRE system directly. The learning curve and time investment just isn't worth it for that volume. A few additional tips that might help: - Make sure you have all your contractors' correct legal names and TINs BEFORE you start filing. Mismatched information is the #1 cause of rejections. - Keep digital copies of all the 1099s you send to contractors - you'll need them for your own tax return. - If you use accounting software like QuickBooks, make sure it's the version that includes 1099 e-filing. The basic versions sometimes don't have this feature. Also, don't stress too much about the electronic vs paper distinction - the IRS actually processes electronic returns much faster and with fewer errors. You made the right choice switching away from paper filing! The electronic confirmation you get when filing is also really helpful for your records.