Looking at the 2023 tax year provisions, you should be aware that the Child Tax Credit is worth up to $2,000 per qualifying child under 17, with up to $1,600 being refundable (as the Additional Child Tax Credit). Even with zero income, you can receive this refundable portion. The filing deadline this year is April 15, 2024, so you still have time to file and claim these credits yourself. Your fiancé cannot claim the children unless you're legally married, as the IRS defines a step-parent relationship only through legal marriage. The biological parent with custody (you) has priority claim rights regardless of who provides financial support.

I've been following this thread and want to add something important that hasn't been fully addressed yet. Even though your fiancé can't directly claim your children as dependents, there's still a way for your household to maximize tax benefits while staying completely within IRS rules. Since you're the custodial parent, you should definitely file your own return and claim the kids - even with minimal income from gig work. Here's why this is actually beneficial: 1. You'll likely qualify for the full refundable Child Tax Credit ($1,600 per child under 17) 2. With gig work income, you might also qualify for the Earned Income Tax Credit 3. These are refundable credits, meaning you get money back even if you owe no taxes The key insight here is that it doesn't matter which person in your household files the return - the refund benefits your family either way. Your fiancé supporting you financially doesn't change who can legally claim the children, but it also doesn't reduce the tax benefits flowing to your household. One practical tip: make sure you file early in the season. If there's any confusion about who should claim the children, the IRS generally honors the first return filed with those dependents. This protects you from potential issues if the biological father changes his mind or files incorrectly.

Has anyone here actually been audited as a self-employed person? What was that experience like and how did you prepare?

Great thread! I'm in a similar situation - been freelancing for about 8 months now and definitely feeling overwhelmed by all the business structure options. Reading through everyone's experiences, it sounds like the consensus is that LLC formation is pretty straightforward, but the real decision point is whether to elect S-Corp status based on your income level. @Luca Russo - at $72k income, you're definitely in the sweet spot where S-Corp election could provide meaningful savings. From what I've read elsewhere, the general rule of thumb is that S-Corp makes sense when you're making $60k+ in profit, since the administrative costs and complexity start to pay for themselves at that level. One thing I'm curious about - has anyone dealt with quarterly estimated tax payments as an S-Corp? I'm already struggling to stay on top of those as a sole prop, and I'm wondering if the payroll requirements make that more or less complicated. Also really appreciate the tool recommendations in this thread. Always helpful to have resources that can run the numbers objectively rather than just getting generic advice.

Has anyone used tax software to file casualty losses? I'm trying to use TurboTax for mine but it's not very clear on how to enter all this information.

I went through this exact situation after tornado damage to my property last year. One thing that really helped me was creating a detailed inventory with photos for each damaged item or area. For your basement flooding, document everything that was damaged - flooring, drywall, electrical work, etc. - and get separate repair estimates for each category. Since you mentioned you have receipts for $15,700 in repairs, make sure you're separating these by casualty event if the IRS requires it (your two separate storms). Each storm event gets reduced by $100, so you might want to check if combining them or keeping them separate gives you a better deduction. Also, don't forget that you can deduct costs for things like temporary housing, storage, or cleanup that were necessary because of the disaster. I missed claiming some of these expenses initially and had to amend my return. Keep every receipt related to the disaster - even seemingly small expenses can add up! The key thing I learned is that "fair market value" doesn't have to be a formal appraisal for most residential property. Your repair costs, contractor estimates, and before/after photos are usually sufficient documentation for the IRS.

Are you and your fiancée filing taxes together? Because if so, I think there might be a different issue - you can't claim someone as a dependent if you're filing a joint return with them.

Just to add another perspective - I work as a tax preparer and see this confusion all the time! You're absolutely right that it's the net profit from Schedule C that counts toward the qualifying relative income test, not gross receipts. One thing to also keep in mind is that if you had any estimated tax payments or self-employment tax throughout the year, those don't reduce your "gross income" for dependency purposes - it's still the $2,700 net profit that counts. The self-employment tax is calculated separately and doesn't affect whether you meet the income test. Also, since you mentioned you're getting married next year, just be aware that once you're married, you'll need to decide whether to file jointly (which would be more beneficial in most cases) or separately if one of you wants to continue being claimed as a dependent by someone else. But that's a problem for next year's taxes!

has anyone looked into the tax treaty between Paraguay & the US? that could be super important for determining how ur income gets taxed. also check if Paraguay has a territorial tax system (only taxes income earned within the country) or worldwide. also whats ur citizenship? that matters a ton for how this all shakes out. if ur a US citizen u cant escape US tax filing no matter what u do lol

One thing I haven't seen mentioned yet is the potential impact of the UK's IR35 rules on your situation. Since you're working remotely for a UK recruitment company, they might still consider you a "disguised employee" rather than a genuine contractor, which could affect how your income is classified and taxed. The UK has been cracking down on contractors using offshore structures to avoid employment taxes, especially in the recruitment/staffing industry. Even if you set up a US LLC, HMRC might still view your relationship with the UK company as employment rather than B2B services. This could create complications because: 1) The UK company might be required to operate PAYE (Pay As You Earn) and deduct taxes 2) You might still be liable for UK National Insurance contributions 3) The income classification could affect how it's treated under any tax treaties Before you commit to the LLC structure, I'd strongly recommend getting clarity from the UK company about how they plan to classify and pay you. Some companies won't work with contractors through foreign entities specifically because of IR35 concerns. You might want to consult with a UK tax advisor who specializes in IR35 alongside your international tax planning, as this could significantly impact the effectiveness of any offshore structure you choose.