That's a good point I hadn't considered. If my claim gets approved and I receive a large back payment, would we be better off filing separately in that year to avoid the higher bracket?

Filing separately usually doesn't help with this situation and often makes things worse. What you might want to look into is something called "income averaging" or the "lump-sum election method" specifically for certain types of back payments. Not all disability payments qualify for this treatment - it depends on what type of disability benefits you're receiving. Social Security disability payments have different rules than private disability insurance, for example. When you know what type of disability payment you'll be receiving, definitely consult with a tax professional who specializes in disability taxation to minimize the impact.

This is correct. I'm a tax preparer and see this confusion often. Spouses are never dependents, period. The only question is joint vs separate filing.

Does it matter what type of independent contractor you are? Like would it be different for a writer vs a plumber vs a consultant?

The profession doesn't significantly change the basic rules, but it might affect what's considered "ordinary and necessary" for your specific business. For example, a consultant who regularly meets clients at coffee shops might have more legitimate business coffee expenses than a plumber who works primarily at client homes. The key is whether the expense is directly related to your business operations, not just something you consume while working. This applies across different types of independent contractors, though the specific expenses that qualify as "ordinary and necessary" might vary by industry.

That's actually a really good rule of thumb! Makes it much simpler to understand than some of the complex explanations I've seen.

I tried that tool but it shows "no information available" for my amended return. It's been about 5 weeks now since I submitted the second amendment. I'm almost certain I paid those premiums with after-tax money when I was working, but I don't have any documentation from that far back to prove it. Is there any way to verify this? My former employer's HR department is basically impossible to reach.

The "no information available" message is frustratingly common with amended returns. The IRS systems for amendments are notoriously slow to update. As for verifying your premium payments, you have a few options. First, check your last paystub of each year when you were working - it should show year-to-date deductions. Look for "Post-tax deductions" or something similar that might list disability insurance. Alternatively, contact the insurance company directly rather than your former employer. They should have records showing whether the policy was employer-paid or employee-paid. Ask them for a "premium payment verification letter" - they're used to providing these for tax purposes.

The "call right when they open" trick hasn't worked for me in years. I've tried calling at 7:01am and still get the "due to high call volume" message. The IRS phone system is completely broken.

I actually haven't discussed this with my parents in detail yet. They let me run my business independently, but you make a good point about the tax implications. My business made about $22,000 last year, and I was planning to file my own return. What's this "Kiddie Tax" you mentioned? Does it mean I can't take the same deductions as adult business owners?

The Kiddie Tax applies to unearned income (like investment income) above certain thresholds for dependents under 19 (or 24 for full-time students). Business income is generally considered earned income, so your business profits would typically not be subject to Kiddie Tax rules. However, since you're a minor, there are still considerations about whether you file your own return or are claimed as a dependent on your parents' return. With $22,000 in business income, you would need to file your own return for that income, but your parents might still claim you as a dependent if they provide more than half of your support.

Which mileage app do you recommend? I tried one last year but kept forgetting to use it.

Thanks for mentioning this! Our LLC was formed in 2022, so sounds like we only need to worry about the beneficial owners part? And unfortunately we're nowhere near the exemption thresholds - small family business here.

That's correct. Since your LLC was formed before January 1, 2024, you only need to report the beneficial owners, not the company applicants. And regarding exemptions, yes, if you're a small family business you'll likely need to file. The exemptions mostly benefit larger companies or those already under heavy regulation (like publicly traded companies, banks, credit unions, etc.). Most small businesses will need to file BOI reports for each entity they own or control.

Great point! Do we know if FinCEN is actively cross-checking these reports yet? With millions of filings coming in, I wonder how closely they're reviewing them.