Thanks for the suggestion! I've actually been thinking about getting out of real estate altogether, so a 1031 exchange probably isn't right for me at this point. But I appreciate the idea - if I was looking to stay in the landlord business, that would definitely be something to consider to avoid the recapture hit.

Yes, an installment sale can help spread out the tax hit. When you sell with owner financing and receive payments over multiple years, you can spread the depreciation recapture tax over the payment period rather than paying it all in year one. However, there's a catch - if the mortgage on your property exceeds your basis, you might face something called "mortgage over basis" that can trigger immediate gain recognition.

Thanks for bringing up the SEP IRA option. I've heard of those but wasn't sure about the differences. Is there any advantage to the Solo 401k over the SEP IRA if I'm only able to make employer contributions anyway? And do both allow me to wait until tax filing time to actually fund the account?

The main advantage of a Solo 401(k) in your case would be slightly higher contribution limits due to how the 25% is calculated (it's effectively about 20% of gross Schedule C income for a SEP IRA vs. truly 25% of net profit after self-employment tax adjustments for a Solo 401(k)). Both plans allow you to make contributions up until your tax filing deadline, including extensions. So if you file an extension, you could have until October 15, 2026 to make 2025 contributions.

The backdoor Roth is definitely worth considering, but wouldn't that be subject to income limits? If OP has a full-time job plus $55k-$110k in consulting income, they might be over the income threshold anyway.

1 I've heard about the S-Corp option but wasn't sure if it was worth the extra paperwork and compliance requirements. What income level do you think makes the S-Corp election worthwhile? And did you need to hire a specialized accountant to handle it?

22 Most tax professionals suggest considering S-Corp election when your business profit exceeds about $40,000-$50,000 annually. That's typically where the self-employment tax savings outweigh the additional costs of compliance. I did hire a specialized accountant because the S-Corp has more filing requirements including an annual 1120S corporate return. The costs run me about $1,200 annually for tax preparation, but I save around $4,000 in self-employment taxes, so it's definitely worth it. You'll also need to run regular payroll and maintain more formal business documentation, but the tax savings can be significant once your business is consistently profitable.

11 I used TurboTax Self-Employed last year for my single-member LLC with both 1099s and W-2 (I pay myself). It worked well and walked me through reporting the 1099 income on Schedule C, entering business expenses (including my salary to myself), and then separately entering my W-2. Just make sure you enter your salary as a wage expense on Schedule C - this is critical to avoid double taxation.

Thank you for this info! I'm still confused though about allocation. How do I "choose" where my Pell Grant goes? On paper it went directly to the school first, then they sent me the excess. Can I still allocate it differently on my taxes than how the money actually flowed?

Yes, you absolutely can allocate differently on your taxes! The IRS gives you the choice of how to allocate your grants for tax purposes, regardless of how the money physically flowed. For example, if you had $5,000 in tuition and $7,000 in Pell Grants, you could choose to allocate $5,000 of your grant to tuition (tax-free) and $2,000 to living expenses (taxable). OR you could allocate all $7,000 to living expenses (making it all taxable), but then claim the AOTC on the full $5,000 tuition amount. The second method often results in a better overall outcome despite creating more taxable income.

Head of Household is a gamechanger for sure! Just be careful with that "paying more than half the cost of keeping up a home" requirement. Do student loans count toward that calculation since technically it's borrowed money? Or just grants?

Do tie-breaker rules automatically apply or do you have to specifically claim them somehow? And would using them affect their green card status?

You have to specifically claim treaty benefits by filing Form 8833 (Treaty-Based Return Position Disclosure) with your tax return. It's not automatic - you need to identify which specific treaty provision you're claiming and explain why it applies to your situation. Using tie-breaker rules can potentially affect immigration status long-term. The IRS and USCIS don't directly share this information, but claiming to be a non-resident for tax purposes while holding a green card can raise questions about your intent to permanently reside in the US during future immigration proceedings. It's a bit of a balancing act that should be discussed with both a tax professional and an immigration attorney.

That's correct. Form 8840 is specifically for non-resident aliens who meet the substantial presence test but wish to claim a closer connection to a foreign country. Green card holders cannot use Form 8840 because they're already considered U.S. tax residents regardless of their physical presence. The only way for green card holders to be treated as non-residents for tax purposes is through an applicable tax treaty using Form 8833, or if they've formally abandoned their permanent resident status.