That's a good point about the fees potentially offsetting the rewards. My main card actually gives 2.5% back on everything for the first $10k spent each quarter, so I should still come out ahead. Did you have any issues with the IRS or your credit card company questioning the large payment? That's my main concern.

I didn't have any issues with the IRS questioning the payment. They really don't care how you pay as long as they get their money. My credit card company did temporarily flag the transaction due to the size, but that was resolved with a quick text confirmation. If you're using a card that gives 2.5% back, you'll definitely come out ahead. Just give your credit card company a heads up before making the payment to avoid any fraud holds. Large IRS payments are actually pretty common, especially during tax season, so the credit card companies are generally familiar with them.

The $600 reporting threshold only applies to goods and services payments, not personal transactions like reimbursements. As long as you're not marking these as "goods and services" in Zelle (which I don't think is even an option), you should be fine. It's just like splitting a dinner bill.

Those are helpful points, especially about the entity classification and VAT implications. I hadn't even considered the currency translation issues. Would you recommend any particular resources for understanding the basics of the US-Mexico tax treaty? I'd like to get enough background knowledge to at least ask intelligent questions when I do consult with a specialist.

The best starting point would be the actual US-Mexico tax treaty text, which you can find on the IRS website. While technical, it outlines the fundamental principles. For a more accessible overview, the IBFD has good summaries of treaty provisions that explain concepts like permanent establishment thresholds and withholding tax rates. The Tax Executive Institute also publishes good articles on US-Mexico cross-border taxation. For the currency translation issues, look at the basic rules in IRC Section 988 and Reg. 1.988, which cover foreign currency transactions. Understanding these basics will definitely help you ask the right questions when you consult with specialists who handle these matters regularly.

Would a check-the-box election help in this situation to treat the Mexican entity as disregarded? I thought that might provide some flexibility.

That's a really good point about the different forms. My LLC is set up as a disregarded entity, so I'll need the Form 4868. I didn't realize the W-7 has to be attached to a tax return - does that mean I need to complete a full tax return even though I'm filing for an extension?

Yes, that's one of the trickier parts of this process. You'll need to complete your tax return (Form 1040-NR in your case as a foreign person with a disregarded entity LLC), attach the W-7 application, and then submit them together. The extension (Form 4868) gives you more time to file the return, but you'll still need to prepare the return to get your ITIN. It seems contradictory, but what many people do is prepare the full return, attach it to the W-7, and submit both while also filing the extension to avoid penalties. When your ITIN is assigned, the IRS will process the already-submitted return.

The EFTPS system requires an EIN though, which they might not have either as a foreign person. I think mailing a check or money order with Form 4868 is the safest option in this situation.

Do you need a separate bank account too? Or can you just use your personal account as long as you keep good records?

You don't absolutely need a separate bank account from a legal standpoint if you're a sole proprietor, but I highly recommend it. Having a dedicated business account makes it so much easier to track income and expenses cleanly, and it looks more professional when clients pay you. If you ever get audited, having separate accounts makes it much easier to prove which transactions were business-related. It's also helpful for calculating your actual profit each month. Most banks offer free or low-cost business checking accounts for small businesses, so there's really no downside to setting one up.

I've used it for 2 years for my web development side gig. Honestly it's been worth every penny. It automatically categorizes expenses, tracks mileage if you need that, and separates business from personal transactions. The best part is at tax time - it generates all the reports you need and transfers everything to TurboTax if you use that.

I hadn't considered that approach! Her tuition for spring was around $15,000 plus I covered about $8,000 in housing and other expenses through May. Her job pays about $60,000 annually, so she'll make roughly $35,000 for the 7 months she works this year. Would the tuition I paid count toward the support calculation?

Yes, the tuition you paid absolutely counts as support! The IRS considers support to include tuition, fees, books, supplies, and room and board. So the $15,000 tuition plus the $8,000 in housing and other expenses means you provided $23,000 in support. For your daughter's income, it's not just what she earns but what she actually spends on support items. If she makes $35,000 but saves some of it or spends on non-support items like retirement contributions or entertainment, that doesn't all count as self-support. You'd need to calculate what she actually spends on housing, food, medical expenses, etc. after graduation.

This is such a good point! My son graduated last year and his tax liability for his first half-year of work was only about $3,000, so he couldn't use the full LLC amount. Would have been better if I could have claimed it since I was in a higher tax bracket.