This is super helpful! One more question - if I decide to form an LLC for my freelance work in the future, would I need to stop using my SSN as my TIN and get an EIN instead? Or can I still use my SSN even with an LLC?

If you form an LLC, you have options. For a single-member LLC, you can continue using your SSN if you want the LLC to be treated as a "disregarded entity" for tax purposes (meaning the IRS treats it as an extension of yourself). However, most people with LLCs choose to get an EIN even if not strictly required. There are several advantages: it adds a layer of privacy (you're not sharing your SSN with clients), it's necessary if you want to hire employees, and it's required if you want your LLC taxed as a corporation. Getting an EIN is free and can be done online through the IRS website in minutes!

This isn't always true tho. I'm working in the US on a visa and don't qualify for an SSN, so I had to apply for an ITIN to pay my taxes. That's my TIN. So it depends on your situation.

Can you explain more about this pro-rata rule? I have about $120k in a rollover IRA from an old job and was thinking about doing backdoor Roth. Will that cause problems?

The pro-rata rule basically means the IRS looks at all your traditional IRA balances combined when you do a Roth conversion. If you have $120k in a rollover IRA and put in $7k non-deductible, then try to convert just that $7k to Roth, the IRS will say that only about 5.5% of your conversion ($7k out of $127k total) can be tax-free. You'd have to pay taxes on the other 94.5% of whatever you convert. Many people avoid this by rolling their existing traditional IRA funds into their current employer's 401k first (if the plan allows it). That way they'd have $0 in traditional IRAs before making the new non-deductible contribution, and the backdoor conversion would be 100% tax-free.

Thanks for the tips! I'm going to check if my 401(k) plan allows after-tax contributions with in-plan conversions. That mega backdoor Roth option sounds interesting. And yeah, it does feel like these rules are intentionally complicated sometimes!

Oh no, I might have missed the deadline for 2020 then! Does the IRS ever make exceptions for people who didn't know about the 3-year rule? And just to clarify, even if I can't get a refund for the older years, I should still file those returns anyway, right?

Unfortunately, the IRS is very strict about the 3-year refund statute and doesn't make exceptions even if you didn't know about the rule. It's set by law, not IRS policy, so they can't bend it. Yes, you should still file all unfiled returns even if you can't get the refund anymore. This closes your file with the IRS and prevents future issues. While you won't get money back for those older years, filing completes your tax record and can help with things like loan applications, government benefits, or any situation where tax return information is needed. Better to have everything clean and complete than leave those old years hanging.

Free File Fillable Forms only work for the current tax year (so right now, only 2024). For prior years, you need to download the specific forms for those tax years from the IRS website and mail them in. I did this last year for my 2021 and 2022 returns. You can still use free tax software though! Most of the major companies (TurboTax, H&R Block, TaxSlayer) offer access to prior year returns on their websites. The catch is that you can prepare them for free, but they usually charge to file them. Since you have to mail prior year returns anyway, you can just print them out and mail them yourself without paying.

That's an interesting approach I hadn't considered. Do you have any experience with how the lease arrangement would work? Like would I need to create some kind of formal lease agreement between myself and my LLC? And are there any specific rates I should charge to keep everything legitimate?

Yes, you'd need a formal written lease agreement between yourself and the LLC with reasonable market rates. The rate should be comparable to what you'd pay to lease a similar vehicle commercially. Keep documentation of how you determined that rate. You'd report the lease income on Schedule E of your personal return, and you'd still get to take depreciation deductions personally. The LLC would deduct the lease payments as a business expense. This can sometimes work better if your LLC doesn't have enough income to fully utilize the depreciation deductions in the early years.

I use it for my fishing charter business and it works pretty well. The app uses GPS to track your trips automatically, then you just swipe to categorize them as business or personal. It calculates your potential deduction based on the standard mileage rate. Just remember it doesn't handle the actual expense method if you decide to go that route instead of taking the standard mileage rate. But for basic mileage tracking it's been super reliable for me.

This is partially incorrect. There aren't general "home improvement credits" at the federal level - only specific energy efficiency credits like for solar panels, energy efficient windows, etc. Regular improvements like painting or carpet cleaning wouldn't qualify.