I did this for my job as a martial arts instructor. It took about 6 months but the IRS determined I was misclassified and I was able to file as self-employed, which saved me thousands in deductions.

This is actually a really important point! When I switched from W2 to 1099 for my coaching job, I was excited about the deductions but then got hit with that self-employment tax. Wasn't prepared for it.

I hadn't even thought about that aspect. My last pay stub shows I'm paying about 7.65% for Social Security and Medicare combined. So I'd basically be paying double that as a 1099? That definitely changes the math on whether pushing for reclassification makes sense. I'll need to calculate if the deductions would offset that extra cost.

That's a really interesting approach I hadn't considered! My daughter is definitely talking about grad school already (she's interested in research). How did you handle the estimated tax payments during those years? And did you run into any issues with the financial aid office regarding how you were allocating the scholarship funds?

We calculated her quarterly estimated tax payments based on the taxable scholarship amount. Since her only income was the taxable portion of the scholarship, it was pretty straightforward - we just divided her expected tax liability by four and made the quarterly payments. She never owed more than about $800 per year in total federal taxes because her taxable income was relatively low. We didn't have any issues with the financial aid office at all. They actually helped us understand how to properly document the allocation between tuition/fees and the room/board expenses. The key was communicating with them about our plan. They provided documentation showing which expenses were considered qualified education expenses versus living expenses, which made tax filing much easier. Most financial aid offices deal with this situation regularly and can provide the documentation you'll need for tax purposes.

That's a really important point. Do you know what the threshold is where the kiddie tax kicks in? Is it just the standard deduction amount or is there some other limit?

That's a good point I hadn't considered. I have no idea if he had insurance, but I'll definitely look into that. The police haven't given us much information about his business affairs due to the ongoing investigation. I'm guessing we'll learn more once the criminal case progresses and the estate gets settled. Would business insurance typically cover something like this?

Most legitimate HVAC contractors carry some form of business insurance that might cover situations where they can't complete contracted work. It varies widely by policy, but many include provisions for "business interruption" or "contract fulfillment" that could apply here. The estate administrator would be the one handling these claims once appointed by the court. I'd recommend documenting everything meticulously - your original contract, what was completed, what you paid to the second contractor, etc. This will be important not just for the tax credit but also for any future discussions with the estate. In my situation, the insurance company actually contacted us directly once a claim was filed, but that might take time given the circumstances.

100% this. I got audited specifically on my EEHIC claim last year. They wanted the AHRI certificate showing the exact efficiency ratings, proof the contractor was certified, and itemized invoices showing what portion was for equipment vs labor. The equipment manufacturer specs were super important - they rejected my first submission because it didn't clearly show the SEER2 rating.

That's a great suggestion! I hadn't even thought of checking my IRS account. Do you know how quickly that information typically shows up there? My missing W-2 would be for 2024 taxes, so I'm wondering if it would even be in the system yet if the employer hasn't sent it to me.

For current year (2024) tax information, there can be a significant delay before it appears in your IRS account. Employers are required to submit W-2 data to the Social Security Administration by January 31st, but it can take until July or even later before that information makes it to the IRS systems and becomes visible in your online account. Since you're trying to file now rather than waiting several more months, the Form 4852 route with your pay stubs is probably your best option. The online account is more helpful for prior years or if you're willing to wait longer. But it's always worth checking just in case your information is already there!

Yes, I had to do this last year! In TurboTax, you need to enter them as completely separate employers even if they're technically the same company. For the Form 4852 entry, add something to distinguish it in the employer name field - I added "(Form 4852)" after the employer name. This helped TurboTax treat them as separate income sources. Just make sure the EIN (Employer Identification Number) is exactly the same on both entries if they're from the same employer. The IRS computers match by EIN, so that needs to be accurate.

That's a great point about industry differences. Do you think this will lead to changes in how companies structure their operations? Like will we see tech companies suddenly investing in more physical assets in certain jurisdictions just to benefit from those exclusions?

I definitely expect to see behavioral changes in how companies structure their operations. We're already seeing some of our tech industry clients evaluating whether to increase substantive operations in certain jurisdictions. This doesn't necessarily mean building factories, but could involve relocating actual R&D teams or other high-value functions to jurisdictions that still offer competitive advantages while meeting substance requirements. Singapore and Ireland, for instance, are promoting their educated workforces and business-friendly environments rather than just low tax rates. The key is having genuine economic activity that justifies the profit allocation, not just paper arrangements.

You're right about the basic framework. The Income Inclusion Rule (IIR) has priority and allows the parent entity's jurisdiction to collect the top-up tax. The Undertaxed Profits Rule (UPR) is a backstop that kicks in if the parent jurisdiction doesn't have an IIR in place. What makes this complex is the implementation timeline. The EU countries are generally moving forward with coordinated implementation, while the US implementation remains uncertain given the political challenges of passing tax legislation. This creates potential for inconsistent application and even double taxation in some scenarios. For your 8-country structure, you'll need to map out which jurisdictions are implementing which rules and when. The OECD has a hierarchy for which country's rules take precedence, but transitional issues are likely during the rollout phase.