Does anyone know if Texas accepts this MTC form? Their website is so confusing and I've gotten different answers from different people at their tax department.

Texas does accept the MTC form, but with some caveats. They're technically a member of the Multistate Tax Commission, but they sometimes require additional documentation if you're not registered in Texas and you're doing dropshipping where the final customer is in Texas. I've found it's always safest to call the state's department of revenue directly for your specific situation. The rules for dropshipping in particular vary tremendously between states and can change without much notice.

But don't you still need to provide resale certificates to your suppliers regardless of whether you have nexus in a state? My understanding is these are separate issues - nexus determines if you collect tax from customers, while certificates prevent you from paying tax to suppliers.

You're absolutely right - I should have been clearer. Nexus and resale certificates are related but separate issues. You need to provide resale certificates to your suppliers to avoid paying sales tax on purchases intended for resale, regardless of your nexus status. What I meant was that tracking your sales by state helps you determine where you need to register for sales tax permits, which you often need before you can get a valid resale certificate for that state. Some states will issue resale certificates even without nexus, while others require you to have nexus and be registered first.

Thanks for mentioning this. We actually don't have kids yet, so I'm not sure if we'd qualify for the EITC. And honestly, I don't think either of us updated our W-4s after getting married - I didn't even know that was a thing we needed to do. Would fixing that help us for this year's taxes or just for next year?

You can still qualify for EITC without children, though the amount is smaller. It depends on your income level - for 2023 taxes, married couples filing jointly with no qualifying children can get EITC if their income is below about $24,210. Regarding the W-4 adjustments, unfortunately that would only help you for future tax years, not for the return you've already filed. But you should definitely both submit new W-4 forms to your employers right away to prevent this problem next year. When both spouses work, you often need to withhold at a higher rate than single filers to account for your combined income pushing you into higher tax brackets. The IRS has a Tax Withholding Estimator tool on their website that can help you fill out your W-4 correctly.

This is generally bad advice for most people. MFS rarely results in tax savings and actually disqualifies you from several tax benefits like education credits, child care credits, and earned income credit. It's usually only beneficial in very specific situations like when one spouse has income-based student loan payments or massive medical expenses.

Thanks for this info! I did file Form 1120-S for 2021 and issued myself W-2s, so sounds like I've been operating consistent with S-corp status. I was just confused about whether I could put January 1 as the effective date when my LLC wasn't technically formed until March. I'll definitely check Box D1 and explain the situation in Part III as you suggested. Do you think I should attach anything else to the form when I send it in? Like copies of my 2021 tax filings to prove I've been operating as an S-corp?

Yes, you should absolutely attach copies of your 2021 Form 1120-S and any W-2s you issued yourself as supporting documentation. This demonstrates to the IRS that you've been operating consistently as an S-corporation. Also consider attaching a brief cover letter referencing the IRS notice you received and explaining your intention to address this with the late-filed election. I'd also recommend sending it certified mail so you have proof of submission. The IRS can be slow to process these, so having documentation of when you submitted everything can be important if they follow up again before processing your election.

Good point! I made this mistake last year and they rejected my filing, adding another 2 months to the process. You can download the current version directly from irs.gov rather than using any forms that might be outdated on tax preparation websites.

That's a great point that I hadn't considered. I'll definitely review the trust document. The trust does own some investment properties besides just basic investment accounts. Could that be why they were filing 1041s? Would the nature of the assets change how it should be reported?

Investment properties within a revocable trust still maintain the grantor trust status, so that alone wouldn't necessitate 1041 filings. The income and expenses from those properties should flow through to your uncle's personal return. Sometimes corporate trustees follow standardized procedures regardless of whether they're necessary for tax purposes. They might file 1041s for all trusts they manage, even when not required. This creates additional paperwork but doesn't necessarily change the tax outcome if done correctly with proper grantor trust reporting.

Does getting an EIN mean you have to file a 1041 though? I thought having a tax ID for the trust means you're required to file trust tax returns. That's what my bank told me when I set up accounts for my dad's trust.

Thanks for the solid advice! For the quarterly taxes, is it just a flat 30% of income or does it vary based on what expenses I've had that quarter? Also, do most banks offer business accounts to sole proprietors or do I need an LLC first?

The quarterly tax amounts should ideally be based on your actual profit for that quarter (income minus expenses), but many contractors use a simplified approach of setting aside a percentage of gross income to make it more manageable. The 30% is just a rule of thumb - your actual percentage might be higher or lower depending on your state tax situation and deductions. Most banks absolutely offer business accounts to sole proprietors - you don't need an LLC first. You'll typically need your Social Security number and possibly a DBA ("doing business as") registration if you're operating under a business name that's not your personal name. I'd recommend shopping around as some banks offer free business checking while others charge monthly fees.

Can confirm this 100%. I broke my wrist in a bike accident last year and couldn't code for 8 weeks. No income coming in but rent and bills still due. The disability insurance I had grumbled at paying for? Saved me from emptying my emergency fund.