Can you explain more about the S-Corp thing? I'm in a similar situation to OP and keep hearing about S-Corps but don't really understand the benefit.

Sure! With an S-Corp, you pay yourself a "reasonable salary" that's subject to self-employment tax (the 15.3% for Social Security and Medicare). Then you can take the rest of your profit as distributions, which aren't subject to self-employment tax. For example, if your business makes $105k, you might pay yourself a salary of $65k (which would be subject to self-employment tax) and take $40k as distributions (which would only be subject to income tax, not self-employment tax). This could save you about $6,120 in self-employment taxes (15.3% of $40k). The key is that your salary must be "reasonable" for your industry and role - you can't just pay yourself $20k and take $85k as distributions. There are also additional costs like increased accounting fees and payroll processing. Generally makes sense once you're earning over $80-100k consistently.

But doesn't the QBI deduction phase out at higher income levels? Im not sure OP would qualify with $105k income.

I think this depends on the state though? I'm in Texas and we don't have state income tax, so I only needed to file the federal 1040NR. Are there any states that honor the federal treaty exemptions?

You're absolutely right that it varies by state. Texas is lucky with no state income tax! States like California and New York generally don't fully honor federal treaty exemptions, so you often have to pay state tax even on treaty-exempt income. Some states like Pennsylvania and Virginia do honor many federal treaty provisions, but it's very state-specific. A good rule of thumb is that if your state has income tax, you should research whether they honor your specific treaty benefit or file a return anyway to be safe.

Most of the mainstream tax software isn't great with international situations. I had decent luck with Sprintax which is specifically designed for nonresident tax returns, but it's not free.

OLT.com actually has a decent nonresident version that handled my 1042-S and treaty benefits correctly. It's cheaper than Sprintax but still costs about $40-50 for federal filing.

Really? I thought Free File was only for super simple returns. Can it handle things like stock sales and early retirement distributions? I'm not confident in doing all those calculations myself.

Free File through partner companies (like TurboTax, H&R Block, etc.) can absolutely handle stock sales and retirement distributions if you qualify by income. The software is the same as their paid versions, just offered free through the IRS partnership. If you use Free File Fillable Forms (the direct IRS option), it's basically just electronic versions of paper forms with basic calculations. That option requires more tax knowledge since you need to know which forms to fill out, but it's still free and available to everyone regardless of income. For your situation, I'd recommend using one of the Free File partner software options to file your extension now. Then when you return, you can use the same service to complete your full return with all your investment documents. Much better than paying hundreds to a storefront preparer!

I second this. The IRS is much more accommodating than people expect when you're upfront about your situation. I've been on payment plans twice and it was simple to set up. The interest rates are usually better than credit cards too.

Does this apply to other gig work too? I do Instacart and sometimes drive to a busier area to get better batches. Can I deduct that drive if I have the app open and am willing to accept orders?

Yes, the same concept applies to other gig work like Instacart. If you have your app open and are available to accept orders during your drive to a busier area, those miles would generally be considered business miles and therefore deductible. The critical factor is that you must be actively working (app on, available) during that time. If you're just driving to an area with your app off, and then turning it on once you arrive, that would be considered non-deductible commuting. Record keeping is essential - note when your app is active and you're available to work.

I'm always worried about claiming too many deductions and getting audited. Are you sure all those things are legit deductions? Especially the phone bill part?

Did you have any issues with penalties even though you were owed refunds? And how long did the whole process take from when you first contacted the CPA to getting everything resolved?

No penalties at all since I was due refunds! That's the good news about being owed money - the IRS doesn't penalize you for filing late when they owe YOU. They only charge penalties and interest when YOU owe THEM. The process took about 3 weeks total. First meeting was dropping off all my documents (W-2s, 1099s, etc.). About 10 days later they had all the returns prepared for me to review and sign. Filed electronically for the two most recent years, paper filed the older ones. Got my electronic refunds about 3 weeks after filing, and the paper filed ones took about 4 months. The whole thing was way less painful than the years I spent worrying about it!

This is so true! Those places prey on fear with their scary commercials about IRS collections. A regular tax preparer or CPA is totally sufficient for unfiled returns when you have all your documents.

Thank you for this warning! I've been hearing those commercials and they definitely play up the fear factor. I'll look for a local CPA instead of one of those national chains. Appreciate the advice!