Do you happen to know where in the tax forms you claim the treaty benefits? I've been looking through the 1040 instructions and I'm totally lost.

You'll need to attach Form 8833 (Treaty-Based Return Position Disclosure) to your tax return if you're claiming treaty benefits. On the form, you'll need to cite the specific treaty article that applies to your situation. For retirement accounts specifically, you'll report the income normally on your return, but then identify the applicable treaty article that modifies how it's taxed. The exact location depends on what type of retirement account it was - for example, 401(k) distributions typically go on line 5 of Form 1040, but you'd need to include Form 8833 explaining why the treaty reduces your tax liability.

From what I understand, the 10% early withdrawal penalty is part of US domestic tax law and applies to US residents/citizens. If you're being treated as a nonresident (getting 1042-S), you're generally subject to flat withholding under Chapter 3 rules, not the additional penalty. But don't take my word for it - check with a tax pro.

Thanks for the insight! I did some more research and it looks like you're right - as a nonresident, I'm generally subject to the flat 30% withholding (or lower treaty rate) but not the additional 10% early withdrawal penalty. This is a huge relief since that would have been another $5,400 on my distribution.

Does this apply to all transportation benefits? My employer offers a transit subsidy that doesn't come out of my paycheck but they give us pre-loaded cards. Is that handled differently?

Employer-provided transit subsidies that don't come from your paycheck are still tax-free benefits up to the monthly limit (around $300/month in 2025), but they're handled differently. Since you're not contributing from your paycheck, they wouldn't reduce your Box 1 wages. Instead, your employer simply doesn't include those benefits as taxable income. The key difference is that FSA contributions come from your pre-tax salary, while direct employer subsidies are additional benefits provided on top of your salary. Neither belongs in Box 10 though - that's only for dependent care benefits!

The impact depends on your tax bracket, but essentially you'd be paying taxes on money that should be tax-free. If you're in the 22% bracket, that $300 transportation benefit incorrectly reported would cost you about $66 in taxes you shouldn't have to pay. Plus possibly state taxes too.

Thanks for breaking that down! $66 isn't the end of the world but it's still annoying to pay taxes I shouldn't owe. I guess I'll try getting the correction first and only file as-is if I'm running up against the deadline.

Do you do your own taxes with all that complexity or hire someone? I'm starting to get more income streams and wondering at what point I should stop using TurboTax.

I started out doing my own taxes using higher-end software like TurboTax Business, but switched to a CPA about four years ago when I added the rental properties. I think the tipping point is when you have multiple types of income that interact with each other in complex ways. For most people, that transition happens when you have both self-employment and rental income, or when you're operating in multiple states. The software can handle it technically, but a good accountant catches nuances and planning opportunities the software might miss. My accountant fee is around $800 annually, but she's saved me at least triple that amount through better tax strategies.

That's so true! I found my dad's return from 1985 and it was literally 2 pages. Now mine is at least 12 pages with just basic stuff. I think part of it is that tax software includes a bunch of worksheets and explanations that weren't part of paper returns back then.

That's a really good point I hadn't considered. I do have all the deposit records in my bank account, and I kept track of all my invoices in a spreadsheet. Would having these records be sufficient if there's ever a question from the IRS about the amount I report?

Your bank records and invoice spreadsheet are excellent documentation. Keep those records for at least 3 years after filing (the standard IRS lookback period). If there's ever a discrepancy between what you report and what the company reports, these records will be crucial evidence showing exactly what you received. I'd also recommend sending one final email to the company stating the total amount you were paid and that you'll be reporting this amount on your tax return. This creates another documentation trail showing you made a good faith effort to confirm the correct amount.

Yes, you can file Form 3949-A (Information Referral) to report suspected tax law violations, including failure to provide required tax documents. But honestly, it's usually faster to just file your return correctly and move on. The IRS is so backlogged that following up on these reports takes forever.

I tried Free File last year and still ended up getting charged when I had to enter my self-employment income. Do any of the Free File partners actually support Schedule C without upgrading?

Yes, some Free File partners do support Schedule C without upgrading, but you need to be careful about which one you select. TaxSlayer and OnLine Taxes (OLT) both handle self-employment income through the Free File program if you meet the income requirements. The trick is to always access these services through the official IRS Free File portal (www.irs.gov/freefile) rather than going directly to the company's website. If you go directly to their sites, you'll often get routed to their commercial products which have more limitations and upsells.

Credit Karma Tax (now Cash App Taxes) is completely free for federal and state including self-employment. Been using it for 3 years with no issues.