This sounds interesting but a bit complex. Do you need a specialized attorney to set this up? And does it actually reduce your current tax liability significantly or is it more of a long-term strategy?

You definitely need a team including a tax attorney who specializes in charitable planning and an accountant familiar with these structures. The tax benefits are both immediate and long-term. The immediate benefit is a current year tax deduction based on the present value of the future gift to charity, which can be substantial depending on how you structure it. For example, when I placed $500k of appreciated assets into my CRUT, I received a deduction of about $175k in the year I established it, which directly reduced my current tax liability.

I second the S-Corp recommendation! My accountant also had me set a reasonable salary at about 40% of my business income with the rest as distributions. Huge savings on SE tax. Talk to a good CPA about whether that might work for your specific business type.

I run a specialized software development firm focusing on financial services. Currently structured as an LLC taxed as a sole proprietorship. I've heard about the S-Corp strategy but wasn't sure if the administrative overhead was worth it. Sounds like the savings could be substantial though if you're saving $30k just on self-employment taxes. Do you find the added complexity with payroll and additional filings to be a major headache? And did you have to justify your salary-to-distribution ratio to the IRS at all?

Creating an IRS account is a nightmare though. I tried to do this last year and they wanted me to verify my identity by entering information from a mortgage, car loan, or credit card - none of which I had at the time! Ended up having to mail in a form and wait 10 days for a verification code.

That's a good point about the verification process. It can be difficult for some people to create an account. If you can't access your transcript online, calling the IRS transcript request line at 800-908-9946 is another option. They can mail your transcript to your address on record. The most important thing is confirming whether an extension or return has actually been filed under your SSN before worrying about potential identity theft or duplicate payments. This information can help determine your next steps.

I tried to pay about $2,700 which was what TurboTax estimated I would owe based on the information I entered so far. I understand extensions only give more time to file, not pay - that's why I attempted to submit the payment with my extension request. I'm just worried about where that money went since the extension was rejected!

This is such an important point that people miss! I've seen so many friends get hit with penalties because they thought filing an extension meant they didn't have to pay until October. The interest and penalties on unpaid tax can add up fast - I think it's something like 0.5% per month plus interest.

Does Form 8275 work even when the e-file system is giving the specific rejection code about the Premium Tax Credit? I thought those automated rejections couldn't be overridden with explanation forms.

Yes, it can work depending on the specific rejection code. The Form 8275 creates a "soft override" for certain validation checks. It won't work for all rejection codes, but for Premium Tax Credit mismatches where there's a discrepancy between what the IRS thinks and your actual situation, it can be effective. The key is properly documenting your explanation with supporting details. In my case, we included my employer's EIN, coverage dates, and policy numbers to prove I had continuous employer coverage and never received PTC. If your tax software doesn't allow attaching Form 8275 to e-file, then mailing is still your best option.

100% this! My brother's return got "lost" last year and he had to deal with failure-to-file notices. Since he didn't have proof of mailing, it was a huge hassle. Certified mail is absolutely worth the extra $5.

Thanks for this info! Just to clarify, my total from all the trial work was about $540 for the year. Does that mean I definitely have to pay the self-employment tax? And is Schedule C-EZ still available? I thought I read somewhere that the IRS discontinued it a few years ago.

Since your total is over $400, you would need to pay self-employment tax on that $540. It's 15.3% which comes out to about $82.62 in additional tax. You're right about Schedule C-EZ - I apologize for the confusion. The IRS did discontinue it after 2019. You'll need to use the regular Schedule C, but with such a straightforward situation and minimal income, it shouldn't be too complicated. Just list each payment as income and any legitimate expenses you had related to earning that income.

Technically you're supposed to report all income regardless of the amount or whether you received a tax form. But realistically speaking, the IRS isn't likely to audit someone over $300. They typically focus on much larger discrepancies. That said, if you're ever audited for other reasons, they could discover this unreported income. Your call, but personally I report everything just to avoid potential headaches later.

My parents went the trust route and it was incredibly smooth when my dad passed. The shares transferred to my mom without liquidation or going through probate. The main advantage seemed to be that the trust provided clear instructions about everything, not just the investments. They did have to retitle all their accounts into the name of the trust though, which took some paperwork.

Thanks for sharing. Did your parents need to file separate tax returns for the trust while they were both alive? That's one thing I'm confused about - whether having a trust creates additional tax filing requirements or complications during my lifetime.