Thanks for the suggestion! Have you ever run into any issues with FreeTaxUSA when filing with an ITIN instead of an SSN? I heard some tax software has problems processing ITINs correctly.

I've never had any issues using an ITIN with FreeTaxUSA. Their system is set up to handle ITINs just like SSNs during the filing process. One tip though - double-check that your name appears exactly as it does on your ITIN documentation. Even minor differences can cause processing delays with the IRS. Also, make sure you select the correct filing status for nonresidents, as the options are more limited than for residents.

That's not entirely accurate. The IRS requires nonresidents engaged in a US trade or business to file a 1040-NR regardless of the amount. There's no minimum threshold for business income like there is for passive income.

That only works if you actually have investment losses to harvest though. In a year where the market is up, you might not have many losses to claim. Plus you need a taxable brokerage account, not just retirement accounts.

That's actually really practical, thanks! I get paid twice a month, so I'd need to withhold about $73 extra per paycheck to cover the taxes on my HYSA interest. That seems totally doable.

That's really helpful advice! Would you recommend I get something in writing from a tax professional stating that my father doesn't need to file anymore? Or is my own documentation sufficient?

Your own documentation is usually sufficient. Just create a simple dated memo stating "As of [date], [parent's name] no longer files tax returns as their only income is Social Security benefits, which falls below the IRS filing threshold." Include any reference to IRS publications that support this (Publication 915 covers Social Security taxation). A tax professional's statement isn't necessary but can provide extra reassurance if you're concerned. Some tax preparers will provide a simple letter confirming non-filing status at little or no cost if you've used their services before. Just having something in your parent's financial records explaining the change helps if questions arise during future care transitions or estate matters.

Not filing taxes won't negatively impact a Medicaid application. In fact, it's completely normal for Medicaid applicants who only receive Social Security to not file tax returns. Medicaid eligibility is based on current income and assets, not on tax filing status. They'll still want to see proof of all income sources (including the SSA benefit statement), but they won't expect or require tax returns if there's no filing requirement.

Thanks for mentioning this! Do you know if the Foreign Tax Credit is worth claiming for such a small amount ($65)? Is there a minimum threshold where it makes sense to bother with Form 1116?

For just $65 of interest income, the Foreign Tax Credit might not be worth the additional paperwork. Form 1116 is pretty complex and time-consuming to complete correctly. As a general rule, I usually don't bother with Form 1116 unless the foreign tax paid is at least $300-400, given the time and complexity involved. However, there's no minimum threshold requirement - you can claim it for any amount. If your brother plans to have more significant foreign income in the future, it might be worth establishing the pattern now. It's really a judgment call based on how much Australian tax was actually paid on that interest and how much you value your time versus the small credit amount.

Is that $10,000 per account or total across all foreign accounts? My parents have a few small accounts in Mexico but I'm not sure if they add up to that much.

So what happens if the company refuses to give me a corrected form? My former client insists they're right even though I know they're using the wrong form.

If they refuse to correct the form, document your attempts to get it fixed (keep emails or notes from phone calls). Report the income correctly on your tax return using Schedule C regardless of their error. You can also file Form 8919 "Uncollected Social Security and Medicare Tax on Wages" if you believe you were misclassified as an independent contractor when you should have been an employee. The IRS may contact the company directly once they see the discrepancy in reporting methods.

I used TurboTax last year with a similar issue. Just enter the 1099-MISC exactly as it appears, but when it asks what type of income it is, select "business/self-employment" rather than "rental income." The software will place it correctly on Schedule C. It might give you a warning about the mismatch, but you can add a note explaining the company issued it incorrectly.