One important thing nobody has mentioned yet is that your parents need to be aware of FIRPTA - the Foreign Investment in Real Property Tax Act. This only applies if they're not US persons (citizens or permanent residents) and are selling US property, not foreign property. But the reverse situation is important too! Many countries have their own version of FIRPTA that applies to foreign nationals (including Americans) selling property in their country. The foreign country might withhold a percentage of the sale proceeds regardless of actual gain. Your parents should check if the country where they're selling has a withholding requirement, as this could affect their cash flow even if they can later claim it back.

Something nobody's mentioned - if the total value of all foreign financial assets is over $10,000 at any point during the year, your parents likely need to file an FBAR (FinCEN Form 114). Selling a property worth $215-260k would definitely trigger this. There's also Form 8938 (Statement of Specified Foreign Financial Assets) which has different thresholds depending on whether they live in the US or abroad and whether they file jointly or separately. The penalties for not filing these forms can be severe, even if no tax is owed! This is separate from the actual tax on the capital gain.

Has anyone here ever actually filed an SS-8? I'm curious because TurboTax prompted me to file one last year for some side gig work, but after reading about how long they take to process (6+ months!), I decided against it and just paid the self-employment tax instead.

I went through this exact situation last year with my wife's postdoc fellowship at a research university. TurboTax kept prompting us for the SS-8 form, but after doing some research and consulting with our university's international scholar services office, we learned it was completely unnecessary. The key issue is that fellowship stipends have a special tax classification that's different from both employee wages and independent contractor income. When you enter fellowship income under the 1099 miscellaneous section, TurboTax's algorithm incorrectly assumes there might be a worker classification issue that needs to be resolved with an SS-8. Here's what we did: we removed the fellowship income from the 1099 section entirely and reported it as "Other Income" on line 8z of Form 1040 with the description "Fellowship Stipend." This immediately stopped the SS-8 prompts. The fellowship income was still taxable for federal income tax purposes, but it wasn't subject to self-employment tax, which saved us quite a bit of money. One important note for your husband's H1B situation: make sure to keep detailed records showing the clear distinction between the fellowship period (January-August) and the W-2 employment period (September-December). The IRS likes to see clean documentation that explains the change in status and income type.

This is why I switched to a small local CPA. I was paying H&R Block around $400-500 for my 1099 returns, and my local accountant now charges $275 for the same service with better advice. Those big chains prey on people who don't know better and add on unnecessary services.

$1,300 is definitely excessive for your situation! I've been doing 1099 work for several years and have never paid anywhere near that amount. Even with unemployment income added to the mix, you should be looking at maybe $200-400 per year maximum at most tax prep services. The fact that they didn't discuss pricing upfront is a huge red flag. Legitimate tax preparers should always provide a clear fee schedule before starting any work. Since you haven't signed anything, you absolutely can walk away and take your documents elsewhere. For future reference, if you decide to file yourself, TurboTax Self-Employed handles 1099 income really well and costs around $120 per year. It walks you through all the deductions you can claim as an independent contractor. For unemployment income, that's actually pretty straightforward to report - it's just additional income that gets added to your return. Don't let them pressure you into paying those outrageous fees. Get quotes from at least 2-3 other preparers or seriously consider doing it yourself with good tax software.

Based on your detailed situation, you definitely have a strong case for the Bona Fide Residence Test. Your permanent resident visa status since 2016, long-term property lease, and continuous residence since 2012 are all excellent supporting factors. One thing I'd add to the great advice already given - when you make the switch, be prepared to explain the timing if asked. The IRS might wonder why you're changing methods now after 5 years of using Physical Presence. A simple explanation like "I now realize my situation better qualifies for Bona Fide Residence and want to use the most appropriate test" is perfectly fine. Regarding your concern about not paying local income tax - this actually works in your favor in some ways. It shows you're properly following local tax laws (many countries don't tax foreign-source income for residents), and it doesn't create any conflicting tax obligations that might complicate your US filing. I'd recommend keeping a simple log of your US visits going forward - not because there's a strict day limit with Bona Fide, but because it helps demonstrate that your foreign residence remains your primary home. The flexibility to spend more time with family in the US is exactly why Bona Fide Residence can be superior to Physical Presence for people in your situation.

Your situation looks really solid for the Bona Fide Residence Test! As someone who made a similar switch a few years ago, I'd say go for it. Your permanent resident visa and property lease are huge advantages. One quick tip - when you file Form 2555 using Bona Fide for the first time, make sure to attach a brief explanation of your living situation. I included a one-page summary with mine explaining my visa status, housing arrangement, and community ties. It probably wasn't necessary, but it gave me peace of mind and I never heard anything back from the IRS. The freedom to spend more time in the US is worth it. I went from being stressed about every trip home to being able to attend family events without constantly counting days. Just keep your foreign residence as your clear primary home and you should be fine. Also, don't overthink the local tax situation - many expats are in similar positions where they don't owe local taxes on foreign income. The IRS understands this is common with different countries' tax systems.

Just to add another option - have you considered checking if your situation qualifies for relief under the US-UK tax treaty? Depending on your specific activities, you might be able to claim treaty benefits that could eliminate some filing requirements or reduce taxes. The concepts of "permanent establishment" in the treaty could be relevant here.

This is a really complex situation that I've been dealing with myself. One thing I'd strongly recommend is making sure you understand the timing requirements for some of these filings. Form 8858 for disregarded entities has to be filed by the due date of the owner's return (including extensions), and if you miss it, there are automatic penalties that can be pretty steep - $10,000 per form per year. Also, don't forget about state-level implications. Even if your LLC is disregarded for federal purposes, some states might still require separate filings or have different rules for foreign-owned entities. You'll want to check the specific requirements in whatever state your LLC is formed in. The withholding requirements mentioned by others are crucial too - if you have effectively connected income and don't properly withhold on your foreign partners' shares, you could be looking at penalties on top of the taxes owed. It might be worth getting professional help given all the moving pieces here.