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TurboTax pulls this crap EVERY YEAR! They're trying to make it seem like everyone needs to file quarterly estimated taxes. My theory is they want to scare people into thinking taxes are more complicated than they are so you'll keep using their service. I switched to FreeTaxUSA this year and it asked clearly if I wanted to generate estimated payment vouchers instead of just doing it automatically. Saved like $80 too. TurboTax is getting worse every year, I swear.
Does FreeTaxUSA handle state taxes too? I've been wanting to switch from TurboTax but I have a somewhat complicated return with multiple state filings.
Yes, FreeTaxUSA handles multiple state returns! Federal filing is completely free for any tax situation (unlike TurboTax's bait and switch), and each state return is only like $15. I had to file in two states this year because I moved, and it was super straightforward. Their interface isn't as pretty as TurboTax, but it asks all the same questions and found the same deductions. Honestly felt like it explained things more clearly too.
Just my 2 cents, but even tho u don't technically need 2 file an amended return, u might want to check if TurboTax charged u extra for setting up those vouchers. I got hit with a $35 fee for "advanced tax planning features" when this happened to me, but had no idea until I looked at my receipt later. They bury these charges in the final bill sometimes.
Omg yes!! I just checked my TurboTax receipt and they charged me an extra $25 for "Tax Planning Plus" which I never asked for! How do you even get that refunded?
A tip from someone who's been in your situation: make sure you're also checking if you need to file Form 8938 (Statement of Specified Foreign Financial Assets) if the value of your foreign properties exceeds certain thresholds. I got hit with a nasty penalty for missing this even though I reported all my income correctly. The thresholds depend on whether you're filing single or married, and whether you live in the US or abroad. For someone on a work visa living in the US filing single, the threshold is $50,000 on the last day of the tax year or $75,000 at any time during the year.
Thanks for bringing this up! I hadn't even considered Form 8938. Do foreign properties always count as "specified foreign financial assets" or does it depend on how they're used?
Foreign real estate directly owned by you generally isn't considered a specified foreign financial asset for Form 8938 purposes. However, if your property is held through a foreign entity like a corporation or partnership, then the interest in that entity would need to be reported. That said, you absolutely need to report the income from the property (rental income, farming profits, or capital gains from selling) on your tax return regardless. And if you have foreign bank accounts where you're depositing the income from these properties, those accounts may need to be reported on both Form 8938 and the FBAR if they meet the thresholds.
Don't forget that timing matters for establishing tax residence too! Your tax obligations depend on whether you pass the Substantial Presence Test for the tax year. If you're in the US on a work visa and have been here for most of the year, you'd typically be considered a US tax resident and need to report worldwide income. But if you just arrived on your work visa this year, you might be a dual-status alien or a nonresident for part of the year, which could affect how your foreign property sale is taxed.
I used to work for a federal agency that issued cooperative agreements and JVAs. What's probably happening is that the agency is classifying your payment as a "cooperative agreement payment" rather than "contractor compensation" in their system. Federal accounting is weird like that. But here's the important part - this is THEIR classification for THEIR accounting purposes. For YOU, it's still income you received for services rendered, which means it's reportable on your Schedule C. Don't let their internal accounting categories affect how you report your income.
Thank you so much for this insider perspective! That makes a lot of sense. I've been keeping all my bank statements, invoices, and copies of the joint venture agreement, so I should have good documentation. I'll go ahead and report it all on my Schedule C as normal self-employment income. Do you think I should also include a note or explanation somewhere on my tax return about why there's no matching 1099-NEC for this income?
You're welcome! Glad I could provide some clarity from the federal side. I wouldn't add a separate explanation to your tax return - there's no good place for that kind of note anyway. However, when you complete Schedule C, there is a question that asks if you received all required Forms 1099. You can answer "No" to that question, which is sufficient. Just make sure you keep all your documentation organized in case of questions later.
Has anyone else noticed that when working with federal agencies, they often have totally different terminology and procedures than private sector clients? I did a project with USDA last year and they kept referring to my payments as "cost share reimbursements" even though I was clearly a contractor. Tax time was a nightmare!
OMG yes! I worked with the EPA on a water quality project and they called me a "cooperating technical advisor" instead of a contractor. But when I asked about taxes they just said "consult your tax professional" which wasn't helpful at all. Government speak is like a whole different language sometimes.
Don't forget to bring a detail of any PPP loan forgiveness or EIDL advances if you received them for your bakery. This tripped us up last year because it affects how certain expenses are treated on the 1065. Also, if any partners worked more than 500 hours in the business, make sure to note that for the CPA - it can affect self-employment tax calculations.
Thanks for mentioning this! We did get a small EIDL advance at the beginning of our operation. Should we bring the original loan documents or just the statement showing the forgiveness? My partner and I both work full-time in the bakery, easily over 500 hours each, so I'll definitely note that for self-employment tax purposes.
Bring both the original loan documents and the forgiveness confirmation if you have it. Your CPA will need to see the dates, amounts, and terms to properly account for everything. The forgiveness letter is especially important as it confirms the amount that won't be treated as taxable income. Since you both work full-time in the business, definitely make that clear to your CPA. You'll likely be subject to self-employment tax on your distributive shares of income. This is an area where partnerships can get complicated with the split between guaranteed payments and distributive shares, so having an experienced CPA is really valuable.
Anyone else notice that CPAs always seem to ask for something you didn't bring? No matter how prepared I think I am, my accountant always says "do you have the _____ form?" and I never do lol. For my partnership, the thing I always forget is the information about partner draws throughout the year. If you took any money out of the business for personal use, track all of that carefully!
Kiara Greene
One thing to keep in mind - when you apply for ITINs with your tax return, your refund will be held until the ITINs are processed. Last year this took almost 4 months for my brother's kids! If you need your refund quickly, you might want to consider applying for the ITINs separately before filing your tax return.
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Ivanna St. Pierre
ā¢Thanks for mentioning this! I hadn't considered the refund delay. Do you know if there's any way to apply for the ITINs now, before tax season starts, so everything's ready when I file?
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Kiara Greene
ā¢Yes, you can absolutely apply for ITINs before tax season! You'll need to submit the W-7 forms along with your federal tax return, but you can do this outside of tax season. You'll include a note explaining that you're applying for ITINs for the purpose of filing tax returns in the future. The advantage is that once the ITINs are assigned, you'll be able to file your 2025 tax return normally without delays in processing or receiving your refund. Given that ITIN processing is typically slower during peak tax season, applying now could save you significant waiting time.
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Evelyn Kelly
Whatever you do, DONT mail original documents to the IRS if you can avoid it!!! My cousin did this for her kid's ITIN application last year, and it took 8 months to get her daughter's birth certificate back. Use a certified acceptance agent who can verify the documents on the spot so you keep your originals.
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Paloma Clark
ā¢Is there a directory or something where you can find certified acceptance agents in your area? I'm in a small town and not sure if we even have any nearby.
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