Can you clarify how the tie-breaker rules work? I'm a Canadian citizen on TN status but have been in the US for 4 years. I was told I can't claim treaty benefits anymore because I'm clearly a US resident for tax purposes now.

Tie-breaker rules look at factors like where you have a permanent home, center of vital interests (closer personal/economic ties), habitual abode, and nationality. After 4 years in the US on a TN, it's difficult (but not impossible) to claim closer connection to Canada. You would need to demonstrate stronger ties to Canada than the US - permanent home there, family, bank accounts, voting, etc. The longer you stay in the US, the harder this becomes. Most tax professionals advise that after 3-4 years, you're likely a US tax resident unless you've deliberately maintained stronger Canadian connections. Filing Form 8833 to claim treaty benefits doesn't guarantee approval - it just asserts your position.

This is a really important point. My friend went down this road with a Cayman Islands setup for his trading business. Ended up with a full IRS audit, massive penalties, and had to pay all back taxes plus interest. The IRS agent specifically cited the lack of economic substance to the arrangement as the primary issue. Not worth the risk.

I haven't heard about this option. I'll definitely ask HR about it tomorrow. Do you know if there are specific requirements for a domestic partner to qualify under a Section 125 plan? Or does it vary by employer?

It does vary by employer, but generally they require proof of financial interdependence like joint bank accounts, shared lease/mortgage, or being named as beneficiaries on insurance policies. Some employers also require an affidavit that you've been in a committed relationship for a certain period (often 6-12 months). The key thing is that Section 125 plans allow employers more flexibility in defining eligible participants than standard health plans. Not all employers offer this option though, as it requires specific plan administration. Definitely worth asking about!

That's a pretty insensitive comment. There are many valid reasons people choose not to get married that have nothing to do with their commitment level. Financial considerations are just one factor in that decision.

THANK YOU ALL for explaining this! I feel so dumb now lol. I guess I need to call my tax guy again to see if he actually submitted the 1040 for me or if I need to do it myself. Makes so much more sense now that the W-2 is just info FROM my employer and the 1040 is what actually gets sent TO the government. Definitely gonna be more careful next year and maybe try one of these tools you guys mentioned instead of using my uncle's church friend...

Don't feel dumb at all! Tax forms are confusing and nobody teaches us this stuff. When you talk to your tax preparer, specifically ask if he e-filed your 1040 and ask for confirmation of the submission. Most tax software or professionals can provide an acknowledgment when the IRS accepts your return. If you can't reach him, calling the IRS directly is your best bet to see if a return has been filed under your Social Security number for this tax year.

Same! My "accountant" cousin supposedly filed for me but just pocketed my payment and never submitted anything. I only realized when the IRS sent me a notice for failing to file. What software do you use now?

We looked at the total tax liability too, and it's still higher when filing jointly. I think the issue is that combining our incomes is pushing us into higher phase-out ranges for the child tax credit. What deductions specifically should I be looking for that we might lose by filing separately?

You're right that the phase-outs for child tax credit could be causing this if your combined income is pushing you into that range. For deductions you might lose when filing separately, check specifically: 1) Student loan interest deduction is completely unavailable when filing separately. 2) Child and Dependent Care Credit is generally not available when filing separately (with some exceptions). 3) Earned Income Credit cannot be claimed when filing separately. 4) Education credits like the American Opportunity Credit and Lifetime Learning Credit are not available when filing separately. 5) The income threshold for IRA contribution deductions is much lower for separate filers. Double check if any of these apply to your situation as they might offset what you're seeing with the child tax credit phase-out.

Head of Household isn't available if they're married unless they've been living apart for the last 6 months of the year. Married people generally have to choose between married filing jointly or married filing separately.

I'm currently operating as a sole proprietor, but considering forming an LLC soon as the business grows. Would that change how I need to document these transactions?

As a sole proprietor, you're currently reporting everything on Schedule C. If you form an LLC but remain a single-member LLC with no special tax election, you'll still file the same way (Schedule C with your personal return). If you elect S-Corp status for your LLC (which many small business owners do to potentially save on self-employment taxes), then you'll need to file Form 1120-S and issue yourself a W-2 as an employee. In that case, the record-keeping becomes more complex because you need to separate owner compensation from business profits. The 20% commission structure remains a business income/expense issue, but you'll need more formal accounting.

This is so important! I use Quickbooks and make sure to enter the actual transaction date rather than the date I'm entering it. Also, do you use cash basis or accrual accounting for this kind of business?