Thanks for sharing your experience! Do you think it matters that my contract with the Malaysian company says "employment agreement" in the title, even though the substance of the relationship is more like self-employment? Did you have a similar issue with your German contract?

The title of the contract isn't as important as the actual terms within it. My German agreement also said "employment contract" but the IRS looks at the substance of the arrangement more than the labels. Make sure you highlight aspects of your arrangement that support self-employment: you paying your own expenses, setting your own schedule when possible, using your own equipment, and the lack of typical employee benefits. In my case, I included a memo with my tax return briefly explaining why I was filing as self-employed despite the contract title, focusing on these substantive factors. The key is being consistent and having documentation to back up your position if questioned.

I used TurboTax last year for a similar situation working in Thailand. It does handle Schedule C for self-employment and Form 1116 for Foreign Tax Credit, but honestly the questionnaire was confusing for international situations. I ended up having to manually override some things and do quite a bit of research on my own. If your situation is straightforward self-employment, it might work fine, but if there are complexities, you might want a professional who specializes in expat taxes.

Thanks for the insight! I might try TurboTax first since my situation isn't super complex, but keep a tax professional as backup if I get stuck. Did you find any specific resources that helped you figure out the overrides you needed to make?

That's a really good point about deductions. Do I need to file a Schedule C for the contractor income? And is it worth looking into setting up an LLC or something like that for tax purposes?

Yes, you'll need to file Schedule C to report your business income and expenses as a self-employed person. This is where you'll list all those deductions I mentioned. Regarding an LLC, it probably isn't necessary just yet at your income level. An LLC by itself doesn't change how you're taxed - you'd still file Schedule C. It mainly provides liability protection, which may not be crucial depending on what type of contract work you're doing. If your business grows substantially or has liability risks, then consider it. But for now, focus on tracking expenses and making your quarterly estimated tax payments.

An S-Corp can save on SE taxes, but only makes sense once you're making at least $60-80k from your independent work. At $27k, the extra costs of running an S-Corp (separate payroll, more complex tax filing, annual fees) would likely outweigh any tax savings. Plus you'd need to pay yourself a "reasonable salary" which would still be subject to FICA taxes. The tax savings only apply to distributions above that reasonable salary amount. For smaller amounts of contract income, stick with Schedule C filing.

This is really helpful! So there's a regular Child Tax Credit AND an Additional Child Tax Credit? My disability is SSDI if that matters. Would I still file a tax return even though my SSDI isn't taxable based on my total income amount?

Yes, there are two parts to the credit. The regular Child Tax Credit is non-refundable (only helps if you owe taxes), while the Additional Child Tax Credit is refundable (you can get it even without owing taxes). You should absolutely file a tax return even if your SSDI isn't taxable! That's the only way to claim the refundable credits you're eligible for. Many people on disability don't file because they don't have taxable income, and they miss out on these refundable credits. For 2022, you could get up to $1,500 per qualifying child through the ACTC.

For 2023, the rules are similar to 2022. The expanded 2021 version (which was fully refundable) has expired. You'll still be able to claim up to $1,500 per qualifying child as a refundable credit through the ACTC, even with only disability income. The total Child Tax Credit remains $2,000 per qualifying child for 2023, with up to $1,500 being refundable through the ACTC.

Thanks for the price info! Did you find the local CPA was more knowledgeable about this specific issue than H&R Block would have been? I'm torn between convenience and expertise.

Definitely yes - the local CPA had handled several backdoor Roth situations before and immediately knew why my 8606 was rejected. He mentioned that national chains like H&R Block often use preparers who don't specialize in more complex retirement account transactions. The main issue with backdoor Roth conversions involving same-day recharacterizations is that there are specific reporting requirements for the timing and basis calculations. My CPA showed me exactly what went wrong on my original form and how to fix it. Well worth the slightly lower price for someone who dealt with this specific issue regularly.

This is great advice! I'd recommend keeping these records for at least 7 years, particularly for retirement account transactions. I'd even go further and suggest scanning all the documents and storing them digitally as well as in paper form.

What's the ballpark cost for having a CPA handle an 1120S for a small business? My biggest concern with hiring someone is cost since we're pretty straightforward (just retail sales, no crazy deductions or situations).

For my business, which is similar in size to yours (about $280K in revenue), I pay around $1,200 for the 1120S preparation and filing. That includes quarterly check-ins and some basic tax planning. I know that might seem expensive compared to software that costs $150-200, but the CPA found enough legitimate deductions to more than cover her fee. The peace of mind is the biggest benefit though. No stress about making mistakes or missing deadlines. Plus, if there's ever an audit or question from the IRS, she handles all communication. For me, the cost is just another business expense that actually provides real value.

Great point! I use Drake Software for my small business and it handles all the business forms including 1120S. It's less known among casual users but very popular with tax professionals. The interface isn't as pretty as TurboTax but it gets the job done at a reasonable price.

Thanks for the Drake recommendation! I'll check that out for next year. I ended up using TaxAct Business which worked fine but was a bit more expensive than I expected. The e-file went through without issues though, and I got my acknowledgment from the IRS within a day.