But don't you get hit with franchise taxes in most states when you set up those LLCs? I heard California charges $800 minimum per LLC, so with multiple properties that adds up fast. Are the tax benefits really worth those extra costs?

You're right about the franchise taxes - they definitely cut into the benefits. In California it's $800 per LLC which is painful, but I'm in Tennessee where the annual fee is much lower ($300). For me, the math still works out when I consider both the tax advantages and the asset protection. I'm able to legitimately deduct more business expenses through the holding company structure, including a portion of travel related to property management, home office expenses, and administrative costs that were harder to claim as an individual investor.

This is a great question about QBI and holding companies. The Section 199A deduction can be tricky with holding companies because certain structures might limit your ability to claim it. If your holding company is classified as a specified service trade or business (SSTB) and your income is above the threshold (which at $310k, yours is), you'll face limitations. However, a properly structured holding company might allow you to separate SSTB income from non-SSTB income, potentially preserving some of the QBI deduction.

Do they handle Schedule C for small businesses? I have a side hustle selling crafts online and I'm trying to file properly without spending a fortune.

Yes, they do handle Schedule C for small businesses and side hustles. I actually started using them when I had a small consulting gig on the side. It covers all the common business deductions and expenses. The interface for business income isn't quite as polished as TurboTax's, but again, completely free is hard to beat. If you have inventory for your crafts business though, just be aware you'll need to understand the basics of how to track that yourself - this is true of most DIY tax software.

That's interesting - I've always been hesitant about the cost of a CPA, but I never thought about the year-round advice aspect. How did you find your CPA? And did you interview multiple people before choosing?

Does the scanner you mentioned work well with receipts? I have a regular printer/scanner but it doesn't handle small receipts well and they always come out crooked or unreadable.

The Brother scanner handles receipts extremely well! It has a dedicated receipt mode that adjusts the settings specifically for those narrow thermal paper receipts. Even faded receipts scan clearly, and it automatically straightens them. It also does batch scanning, so I can load a stack of different sized documents (receipts mixed with regular papers) and it processes them all correctly. The auto-feed feature is what makes it worth it for me - I just load everything in and walk away while it scans a stack of documents.

I do this and it works fairly well, but two important tips: 1) Make sure the entire receipt is visible and readable in the photo, and 2) Create separate albums for different categories (medical, business, donations, etc). Also, most smartphones timestamp photos which helps prove when the expense occurred. The IRS accepts digital copies of receipts as long as they're legible and show all the important information (date, vendor, amount, what was purchased). Just make sure you back up your photos somewhere in case your phone dies or gets lost!

Thanks for the tips! I'll definitely create separate albums by category - that makes a lot of sense. I was worried about the IRS not accepting digital photos, so it's good to know they're valid as long as everything is readable. I'll start backing them up to my cloud storage just to be safe.

That's a good suggestion. There's a senior manager who seems approachable - maybe I could ask her if she'd be willing to do quick pre-reviews for me on the more complex returns. Did you find your mentor within your firm or through a professional organization?

I found my mentor within my firm initially, but I also connected with another experienced expatriate tax professional through our local CPA society's international tax committee. Professional organizations like that are goldmines for finding people who are willing to help. My in-firm mentor would spend 15 minutes with me before I submitted anything complex, which cut my review notes down dramatically. The external mentor was great for bigger-picture career advice. Don't underestimate how willing people are to help someone who shows genuine interest in improving!

The IRS actually has some decent webinars specifically about international taxation. There's also a certification program through the American Academy of Attorney-CPAs focused on international tax that goes into much greater depth than regular CPE.

That's a really good point I hadn't considered. Do you think the mortgage company would report that information directly to the IRS though? Or would they only discover it if they specifically investigated him for some reason?

Mortgage companies don't routinely report down payment sources directly to the IRS - that's not their job. However, they do file what's called a Mortgage Interest Statement (Form 1098) that shows the IRS your friend bought a property. If the IRS ever decides to audit your friend, they'd look at his income versus his expenses and assets. A $50K down payment that doesn't align with reported income would raise immediate questions. The IRS could then subpoena the mortgage application documents, which would reveal the source of funds. It's not about the mortgage company reporting him - it's about the paper trail created during the mortgage process that could be discovered during an audit. The bigger issue is your friend deliberately hiding taxable income, which has no statute of limitations for fraud.

What was the small exchange you used? Was it US-based? I'm wondering if offshore exchanges report to the IRS too or if they're safer.