I formed my LLC in New Mexico while living in Thailand. The privacy is good (similar to Wyoming), and annual fees are low ($0 annual report fee). The problem came with banking - many banks weren't familiar with New Mexico LLCs and their privacy features, which made opening accounts harder. I eventually switched to Wyoming because it had better name recognition with financial institutions. If banking isn't a concern though, New Mexico is solid.

That's an interesting point I hadn't considered! We did actually change insurance again in March 2023 when I got a new job with better coverage, but it's still an HDHP that's HSA-eligible. Would that still count as maintaining eligibility for the testing period, or does it have to be the exact same plan?

As long as your new coverage in 2023 still qualifies as an HDHP and you remained HSA-eligible, you should be fine for the testing period. It doesn't have to be the same exact plan - you just need to maintain HSA eligibility through December 31, 2023. If your new job's plan is HSA-eligible, you should be meeting the testing period requirements. Maybe double-check that the new plan truly meets all the HDHP requirements (minimum deductible, maximum out-of-pocket, etc.) to ensure it qualifies.

Does this actually work? I thought once the money was in your HSA, you couldn't move it to someone else's account, even your spouse's. Wouldn't that count as a distribution and then a new contribution?

You're absolutely right to question this - you actually CAN'T directly transfer money between spouses' HSAs. What the HSA provider likely helped with was a "recharacterization" of excess contributions, which is different from a transfer. Here's how it works: If you over-contributed to your HSA, you can remove the excess contribution plus any earnings before the tax filing deadline and treat it as if it was never contributed. Then your spouse could make a new contribution to their HSA (assuming they haven't maxed out their limit). So it's not actually moving money between accounts - it's removing an excess contribution from one account and making a fresh contribution to the other. The net effect looks like a transfer, but technically it's two separate transactions that keep everything IRS-compliant.

Did you use a tax pro to help with the audit or did you handle it yourself? I'm nervous about claiming these credits because I don't want to trigger extra IRS attention.

I handled it myself since I had all the documentation ready. The key was having the manufacturer's certification statement showing the heat pump met the efficiency requirements and the itemized receipt from my contractor. If you're worried, I'd recommend creating a folder (physical or digital) specifically for your energy credit documentation. Include the product details with efficiency ratings, contractor certification, receipt, and maybe even photos of the installed unit with its model number visible. With everything properly documented, it was actually a straightforward process to respond to the audit request.

Are you sure about splitting across years being better? I thought there was a lifetime limit to these credits, not just annual.

The Inflation Reduction Act actually removed the lifetime limits that existed under the old energy credit system! Under the current rules, the $2,000 annual limit for heat pumps resets each year, so you could theoretically claim it multiple times if you install qualifying equipment in different years. However, you're right to think about timing strategically. If you're doing multiple improvements, you want to make sure you can use all the credits. Since these are non-refundable credits, you need enough tax liability each year to absorb them. Vincent's approach of spreading installations across years makes sense if your annual tax liability is limited. For most people though, if you have sufficient tax liability, there's no advantage to waiting - you might as well get the improvements done and claim the credits as soon as possible.

That's actually not correct for everyone. W-2 box 1 only shows wages from employment, not all sources of income. If someone has self-employment income, rental income, investment dividends, etc., those aren't on the W-2. Line 9 on the 1040 includes ALL income sources combined, which is what true "gross income" means.

That's super helpful! So would you recommend we officially form the LLC before purchasing any equipment or the course? Or does it matter as long as we can show these were legitimate startup expenses? Also, what's the best way to document the transition from "startup phase" to "operating business"?

You don't necessarily need to form an LLC first - the IRS recognizes businesses regardless of formal structure. What matters is being able to show these were legitimate business startup expenses with a clear profit motive. Keep all receipts and document why each expense was necessary for your business plan. For documenting the transition from startup to operating business, the clearest indicator is when you begin offering your product/service to the public. For a blog, this would typically be when you launch your website and begin publishing content. Keep evidence of your launch date - screenshots of your first posts, analytics showing when traffic began, social media announcements, etc. A formal business plan with timeline goals can also help establish this transition point and demonstrate your serious profit intent to the IRS.

This is good info. I used to work for a tax prep company and we'd always tell clients that mixed-purpose travel is a red flag for audits. The IRS is very skeptical of people trying to write off vacations as business trips.

@Kyle Wallace is absolutely right about the audit risk. I ve'seen the IRS challenge travel deductions aggressively, especially for new businesses "that" look like extended vacations. The key is having bulletproof documentation from day one - detailed business activity logs, content creation schedules, revenue generation attempts, and clear separation between business and personal activities. Even if you meet all the technical requirements, be prepared that this type of mixed-use travel often triggers closer scrutiny. Make sure your records can withstand an audit because the IRS will assume it s'primarily personal until you prove otherwise.