Thanks for bringing up the state tax issue! I completely forgot about that aspect. I'm in New York - do you know if they have special requirements for reporting excess contribution earnings?

New York generally follows the federal treatment for retirement account distributions, so you'd report the income the same way you do on your federal return. The earnings would flow through to your NY state return based on your federal AGI. However, New York has some specific modifications for certain types of retirement income, so it's always good to double-check. The NY tax department website has a decent FAQ section on retirement account distributions, or you could call their taxpayer assistance line which is usually less busy than the IRS line.

100% agree with this. I had a similar situation and got a CP2000 notice two years later questioning my Roth withdrawal. Having all the documentation showing it was an excess contribution correction saved me from paying taxes on my original contribution amount, which would have been thousands in unnecessary taxes.

Thanks for mentioning PFIC and FBAR! I hadn't even considered the PFIC angle. My foreign corporation is actually involved in manufacturing, so I think it's an active business rather than passive, but I'll double-check the passive income percentages to be sure. And good reminder about the FBAR requirements - those definitely apply to me as I had over $10,000 in foreign accounts. Is the FBAR filing threshold the same regardless of residency status?

For PFICs, you're right that manufacturing is typically considered an active business, but be careful if your company also earns interest, dividends, or has rental properties as those could push you over the passive income thresholds. Regarding FBAR, the filing requirement applies to "U.S. persons" which includes resident aliens. During your non-resident period, you technically wouldn't have an FBAR requirement, but once you become a resident alien, the requirement kicks in. If you had over $10,000 in foreign accounts at any time while you were a resident alien, you need to file the FBAR for that period.

Do any exceptions apply specifically to the dual status year though? I'm trying to figure out if there's a minimum time you need to be a resident for 5471 to apply. Like if you're only a resident for 2 months of the year, seems excessive to require full reporting.

Thank you for the validation! I was really starting to doubt myself. Given what you experienced, did you have any trouble transferring all your tax info mid-year to a new accountant? I'm nervous about starting over with someone new since my business situation is a bit complicated with some interstate income.

Transferring to a new accountant was actually much easier than I expected. I simply requested all my documentation back (they're legally required to provide it), and my new accountant sent over a professional authorization form that let them get copies of previous returns directly from the IRS just to be sure everything was in order. For your interstate income situation, just make sure you find someone who specializes in multi-state taxation. I found it helpful to interview 3 different accountants before deciding. The best ones asked detailed questions about my business during the initial consultation and explained their communication policies without me even having to ask. Trust your gut - if someone is responsive and thorough during the sales process, they'll likely be that way after you hire them too.

Not all businesses have the same deadlines right? My LLC files with my personal return so I always thought it was October 15th with an extension. Are you saying some business types have different extension deadlines?

What about property tax records? I've been keeping those forever because I'm not sure when it's safe to get rid of them.

For property tax records, you should keep them at least until you sell the property, plus 3-7 years after that. They're important for calculating your basis in the property when you sell, which affects your capital gains tax. If you've made improvements to the property that increase its value (renovations, additions, etc.), definitely keep those receipts as they adjust your basis and can reduce your capital gains when you sell.

I use Microsoft Lens on my phone and it works great! Creates clear PDFs that I store in an encrypted folder. Just make sure to back them up somewhere secure like an encrypted external drive or password-protected cloud storage. Regular phone backups aren't secure enough for tax docs.

So if my employer has fewer than 50 employees but still provides insurance, what form should I expect? I work at a small business with about 20 people total.

If your employer has fewer than 50 full-time employees, they're not required to provide a 1095-C form. In that case, your insurance company might send you a 1095-B instead, though many insurers have stopped automatically sending these unless requested. The good news is you don't actually need either form to file your taxes. You can simply indicate you had coverage when your tax software asks. These forms are primarily for your records and to verify coverage if there's ever a question about it.

Yes, you can skip it! On that screen there should be a button that says something like "I don't have this form" or "This doesn't apply to me" - it's usually at the bottom of the page. Click that and it'll let you move past that section without entering any 1095-A information.

Thanks! Found it hiding at the very bottom of the page. Wish they made these skip options more obvious for forms that many of us don't need.