Do you know how to determine which treaty benefits apply? I'm in Canada with a Delaware LLC, and I've heard we have a good treaty, but the actual text is like reading another language. Is there a simple way to know which parts matter for my situation?

The easiest way to determine applicable treaty benefits is to look at the technical explanation that accompanies most treaties. For the US-Canada treaty specifically, there are provisions in Article VII about business profits that would likely apply to your LLC. The key is identifying your specific type of income (services, royalties, etc.) and then finding the corresponding article in the treaty. For Canadian residents with US LLCs, you generally won't be taxed on business profits unless you have a "permanent establishment" in the US - which usually means a fixed place of business like an office.

Yes, there are filing requirements even without US-source income. If your LLC is treated as a "disregarded entity" and is 25% or more foreign-owned, you must file Form 5472 along with a pro-forma Form 1120 annually. This is required under relatively new regulations, and the penalties for non-filing are steep ($25,000+ per violation). This filing requirement applies even if you have zero US-source income and owe no US tax. It's primarily an information reporting requirement to track foreign ownership of US entities.

What about California? My mom passed with an estate around $1.5M (mostly her house value). Do they have a lower threshold I should worry about?

California is actually one of the states that doesn't have a separate estate tax, so you don't need to worry about that specific filing. They rely on picking up tax revenue in other ways, particularly through property tax reassessments when property transfers at death. If your mom's estate includes a home in California, you'll want to look into Proposition 19 rules about property tax reassessments rather than estate taxes. The rules changed recently regarding inherited properties, so that's where your focus should be rather than an estate tax return.

Not a stupid question at all! For estate tax purposes, the "gross estate" generally includes everything the person owned or had certain interests in at death - so yes, all those assets you mentioned would count toward the total value, even accounts with named beneficiaries. However, since the total value you mentioned is approximately $1.02 million, that's still well below the federal threshold of $13.61 million, so no federal estate tax return would be required. But as others have mentioned, check your state requirements if you're in a state with its own estate tax, as those thresholds can be much lower.

That's an interesting suggestion! I hadn't considered the contractor route. Do you have any issues with getting paid? Like do you have to deal with currency conversion fees or international wire transfers?

I use Wise (formerly TransferWise) for payments, and it's been great. The fees are much lower than bank wire transfers, and you get very close to the actual exchange rate. Most of my foreign clients are happy to use it since it saves them money too. You'll want to keep records of the exchange rates for tax purposes though. I track each payment in both the foreign currency and USD equivalent on the date of payment, which makes tax time much easier. Some clients pay me in USD directly, which simplifies things even further if your German company is willing to do that.

This is so true. I work for a UK company while living in California, and California doesn't fully recognize the same tax treaties as the federal government. Ended up having to pay more to California even though I was protected from double taxation at the federal level.

Thanks for pointing this out! I'm in Texas which doesn't have state income tax, so I guess that's one less thing to worry about at least!

Thanks! I didn't even think about being able to deduct things. I did drive the kids to soccer practice twice a week and bought art supplies a few times. Would I need receipts for all of that? I definitely didn't keep them...

For the driving, you don't need receipts - you can use the standard mileage rate (around 67 cents per mile for 2025). Just make your best estimate of how many miles you drove for work purposes. Keep a better log going forward! For supplies, receipts are ideal but not absolutely required. If you have bank or credit card statements showing purchases at relevant stores, that can help substantiate your claims. Make reasonable estimates of what you spent - just be prepared to explain your calculations if ever questioned. Going forward, keep all receipts and maybe use a separate payment method for work expenses to make tracking easier.

This is actually bad advice. The Voluntary Disclosure Program is for OFFSHORE accounts and much more serious tax evasion. What OP would want is just to file an accurate return, possibly with a "reasonable cause" statement explaining the mistake.

Thanks for the advice! How do I determine if the amounts on my K-1 will actually change my tax liability enough to make filing an amendment worthwhile?

The simplest way is to do a quick calculation with the largest numbers on your K-1. For example, if you see ordinary business income (Box 1) of $30, that would only increase your taxes by about $3-6 depending on your tax bracket. For small amounts like that, some people choose to wait and see if the IRS sends a notice. Look especially at Boxes 1-3 since those directly affect your income. If they total less than $50-100, the tax impact might be minimal. But remember, technically you're supposed to report all income regardless of amount. If you're more comfortable being 100% compliant, then file the amendment even for small amounts.

TurboTax can handle K-1 amendments but you'll need the paid version. The free version doesn't support K-1 forms at all. If you already filed with TurboTax, you can use their amendment feature - just log back in, click on "Amend return" and follow the steps to add your K-1 info.