That's a really good point I hadn't even thought about! My friend is living in Germany now - would they have a similar tax treaty situation? How complicated is it to claim those foreign tax credits?

Yes, Germany and Canada do have a tax treaty that should prevent double taxation. Your friend will need to report the Canadian property sale on their German tax return, but they can claim a credit for taxes paid in Canada. For claiming the credits, they'll need documentation showing the exact amount of Canadian tax paid specifically attributable to the property sale. The process isn't super complicated, but it does require careful documentation. Make sure they keep copies of their Canadian non-resident return, the T2062 form, and proof of the tax withholding and any refund they receive. German tax authorities may want to see these documents.

This is so true! My family had the same issue with a property in Montreal. The 1994 capital gains election can make a huge difference in the adjusted cost base. Also worth noting that if they ever did any major renovations, those costs should be added to the ACB as well.

Yeah, finding documentation from 20+ years ago can be a real challenge though. If they made the election back in 1994, the CRA should have it on file, but you might need to specifically request that information. Some accountants keep spreadsheets showing the impact of various capital gains changes over the years for long-term held properties. Especially important for non-residents since they don't get the principal residence exemption for years they weren't Canadian residents.

Do you know if common property rules still apply if you're legally married but have a prenup? Our agreement specifically states our incomes remain separate, but I'm not sure if the IRS cares about that for Form 8958 purposes.

Yes, the IRS does actually recognize prenups for tax purposes in community property states, but the rules are very specific. Your prenup needs to explicitly outline how income and assets should be treated (not just a general "our incomes are separate" statement). You'll still need to fill out Form 8958, but you would allocate income according to your prenup rather than the standard 50/50 split. However, make sure your prenup complies with your state's requirements for it to be valid - some states have very specific rules about prenups overriding community property laws.

Generally, if you bought it before marriage, the original investment stays your separate property. However, any appreciation during marriage is typically considered community property in most community property states. So you'd need to establish the value at the time of marriage and then split the gains from that point forward.

What happens if the numbers don't match between my last pay stub and W-2? My retail job's W-2 shows about $200 less in income than my December pay stub indicated for the year.

If there's a discrepancy between your W-2 and pay stubs, first check if there's a logical explanation. Sometimes the last paycheck of December might be paid in January, which would explain why the W-2 total is lower than your December pay stub shows. If there's no clear explanation, contact your employer's payroll department directly. They can check their records and issue a corrected W-2 (called a W-2c) if needed. Small differences might occur due to non-taxable benefits or other adjustments, but anything significant should definitely be investigated before you file.

Did you have to pay a penalty too or just the interest? I'm worried because I just realized I forgot about a small job I had last year (only made like $600).

This is super helpful real-world experience. Quick question - did you use a local accountant or one of those online S Corp formation services? I'm trying to decide which route to go.

I started with a local accountant who specializes in healthcare professionals. It cost more initially, but he provided valuable industry-specific advice that generic online services wouldn't have known. For example, he helped structure my contracts to strengthen the case that I'm truly an independent contractor rather than an employee, which helps both with S Corp justification and avoiding potential misclassification issues. After the first year, I switched to a more affordable online accounting service for the routine stuff, but I still consult with the local specialist once a year for planning. This hybrid approach gives me the best of both worlds - specialized knowledge when needed and lower ongoing costs.

Does this health insurance thing apply to dental and vision too? And what about HSA contributions? I'm trying to figure out if all these complexities are worth the savings.

That sounds like it could trigger some red flags. Wouldn't the IRS consider that arrangement suspicious if the only client of your handyman business is your other business?

You're right that if the handyman LLC only did work for your primary business, it could definitely look suspicious. The arrangement works better if you're legitimately doing handyman work for other clients too. You'd need to charge market rates to all clients including your own business, keep separate books, maintain proper insurance, and fulfill all requirements of a legitimate business. It's definitely not a simple workaround and probably not worth it just for occasional home repairs.

Yes, if you're using the simplified method ($5 per sq ft), then you cannot deduct any actual expenses related to your home, including repairs. The simplified deduction is meant to replace ALL home-related expenses including mortgage interest, utilities, repairs, etc.