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.

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.

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.

I never even thought about that. Is it possible I missed out on refunds from my self-employment years too? I definitely had some business expenses that I'm guessing would have been deductible.

Yes, it's entirely possible you could have qualified for refunds during your self-employment years too. As a self-employed plumber, you likely had significant business expenses that would have been deductible - tools, supplies, vehicle expenses, mileage, possibly even a portion of your phone bill or home expenses if you used them for business purposes. The unfortunate reality is that if those potential refunds were from more than 3 years ago, they're likely forfeited. However, this is even more reason to get current with your tax filing - you might be leaving money on the table for more recent years, and you'll want to properly claim your legitimate business deductions going forward.

This is such an important point! I couldn't qualify for an apartment I wanted because I couldn't provide tax returns. Also had issues with my car loan application. Being off the tax grid causes so many unexpected problems.

If I choose actual expenses the first year, can I switch to standard mileage the next year if that works out better? Or am I locked into one method?

If you use the standard mileage rate the first year you use the car for business, you can switch between methods in subsequent years. However, if you use actual expenses the first year, you're locked into that method for the life of that vehicle for business purposes. That's why many tax professionals recommend using standard mileage the first year even if actual expenses might be slightly better - it preserves your flexibility to switch methods later if your situation changes. Once you choose actual expenses initially, you can't go back to standard mileage for that same vehicle.

Thanks for pointing this out! Do you know if driving to pick up prescriptions counts as medical mileage?