One thing to be aware of - people with ITINs are still subject to the same tax withholding requirements as anyone else. The only difference is the ID number itself. They pay into Social Security and Medicare through FICA taxes, even though they may not be eligible for those benefits later. As an employer, you'll complete their W-2 using the ITIN instead of an SSN. The rest of your tax responsibilities remain exactly the same - withholding, reporting, etc. Just make sure you have them complete a W-4 like any other employee.

I've been dealing with ITIN employees for about two years now in my construction business, and I wanted to share a few practical tips that might help other employers: First, always keep detailed records of the work authorization documents you verify during the I-9 process. This is separate from the tax ID issue but equally important. Some of my ITIN employees had employment authorization documents that were temporary, so I had to track renewal dates. Second, double-check that your business insurance and workers' compensation policies don't have any special requirements for employees with ITINs. Most don't, but it's worth confirming with your insurance agent. Finally, if you use a payroll service, make sure they're experienced with ITINs before you hire the employee. I had one service that kept "correcting" the ITIN back to look like an SSN, which created problems with our filings. Now I always test the system with a sample ITIN before processing actual payroll. The good news is that once you get the systems set up properly, it's really no different from processing any other employee's taxes. The IRS treats the income reporting exactly the same way.

Has anyone used TurboTax for reporting seller financing? I'm wondering if it handles Form 6252 correctly or if I should just go to a CPA this year.

Great thread! I'm also going through seller financing for the first time. One thing I learned from my accountant that might help - make sure you're keeping detailed records of ALL the closing costs and expenses related to the sale, not just the payments you receive. Things like title insurance, attorney fees, recording fees, etc. can all be added to your basis, which reduces your taxable gain. Also, if you're paying any ongoing expenses like property management fees or collection costs, those might be deductible against the interest income you're reporting. Another heads up - if your buyer ever defaults and you have to foreclose, that creates a whole different set of tax implications. The IRS treats it as a separate sale transaction, so you'd need to report any additional gain or loss at that point. Hopefully it doesn't come to that, but it's worth understanding upfront. Has anyone dealt with state tax requirements for seller financing? I'm in California and trying to figure out if there are additional state forms beyond the federal ones.

Just want to share some timeline expectations if you're submitting Form 4506-T for verification of non-filing. I submitted mine in early February: - Mailed the form: February 3 - IRS received it (according to tracking): February 7 - Got my verification letter: March 1 So it took about 3 weeks after they received it. I've heard it can take 5-10 business days if you fax it instead of mailing, but I didn't want to risk a fax not going through properly.

PRO TIP: Make copies of EVERYTHING before you send it in!!! I learned this the hard way when the IRS claimed they never received my 4506-T form, even though I had mailed it. Second time around, I made copies, sent it certified mail with return receipt, AND kept the tracking number. When they tried to tell me they didn't have it again, I had proof of delivery and was able to get it resolved. Also, double-check that you've signed the form. It sounds obvious, but that's the #1 reason these get rejected.

Quick question - does anyone know if TurboTax can handle Form 1045 for 1256 contract loss carrybacks? I've got a similar situation but on a smaller scale, and wondering if I need to hire a specialist.

Based on your situation, I'd definitely recommend going with Form 1045 for the federal refund. You're dealing with a substantial amount ($45k loss against $87k prior gains), and the faster processing time of Form 1045 will get your money back much quicker than amending your 2022 return. Since you've already amended your 2023 return to include the proper election on Form 6781, you're in good shape to proceed. Just make sure when you file the 1045 that you clearly show you're carrying back Section 1256 contract losses specifically against your 2022 Section 1256 gains, and remember the 60/40 treatment (60% long-term, 40% short-term). For state returns, you'll unfortunately need to file amended returns since states don't have Form 1045 equivalents. But getting the federal refund processed quickly through Form 1045 will at least give you some cash flow while you wait for the state amendments to process. One heads up - make sure you file the Form 1045 before December 31, 2024, since that's your deadline for 2023 losses. After that date, you'd have to go the amended return route anyway.

I think everyone's overcomplicating this. The simple answer is that the tax code is inconsistent and has weird rules. Sometimes you just have to memorize the formula and not worry too much about "why" it works that way. For self-employment tax: 1. Multiply SE income by 0.9235 2. Calculate SS tax (12.4%) and Medicare tax (2.9%) on that amount 3. Take 50% of total SE tax as an AGI deduction Just follow the steps and don't overthink it. That's what I do on exams!

I've been following this discussion and it's been really helpful! As someone who just started freelancing and is dealing with SE taxes for the first time, I was making the same mistake as Dylan - thinking the two adjustments were double-counting. The parallel universe example from Yara really clicked for me. I've been trying to wrap my head around why self-employment seems so complicated compared to regular employment, but now I see it's actually trying to create equivalent treatment between the two situations. One thing that helped me solidify this understanding was looking at actual Form 1040 and Schedule SE side by side. You can see how the SE tax calculation (with the 0.9235 factor) happens on Schedule SE, while the AGI deduction (half of SE tax) goes on Form 1040. They're literally affecting different parts of your tax return! For anyone still struggling with this concept, I'd recommend working through the forms manually at least once. It makes the distinction between SE tax calculation and income tax treatment much clearer when you see where each number actually goes.