Would keeping a log of hours worked (which would be basically zero) help document this? I have a similar situation but with a small rental property in my S-Corp that basically runs itself through a property management company. I literally spend maybe 2-3 hours per YEAR on it.

Yes, a log of hours would be extremely helpful documentation. For your situation with just 2-3 hours annually, that's exactly the type of minimal involvement that supports a no/low salary position. I'd recommend documenting not just the hours but specifically what you do during those hours. Show that you're only making high-level oversight decisions while the property management company handles all the actual work. Include copies of your property management agreement in your corporate records to further substantiate your minimal involvement.

The accumulated earnings tax doesn't apply to S-Corps, only C-Corps. S-Corps are pass-through entities where income is taxed to shareholders regardless of whether it's distributed. The penalty you're probably thinking of is for personal holding companies, which is different.

That's a great point I hadn't considered. We're in Oregon. Does anyone know if Oregon generally follows federal guidelines on settlement taxation or if they have their own rules?

Oregon generally follows federal treatment for physical injury settlements, so if your portion qualifies as tax-exempt under federal rules, it should also be exempt from Oregon state income tax. However, the key is still getting clarity on whether your guardian portion maintains the same character as the physical injury settlement. If the federal determination is that it's taxable as guardian fees, Oregon would likely treat it the same way.

This is definitely the best advice. I'm a paralegal at a firm that handles injury cases, and we always make sure to include specific language about tax treatment of guardian portions. If your attorney didn't do this, they really should have.

But isn't it still smart to plan ahead? I mean, even if the full 44.6% doesn't pass, there could be some increase, right? Better safe than sorry...

Planning ahead is always good, but I wouldn't make any drastic moves based on proposals that haven't even made it to committee yet. If you're really concerned, the best approach is probably to run multiple scenarios - what happens if rates stay the same, what happens if they go up moderately, and what happens in the worst case. Then identify strategies that work reasonably well across all scenarios. The biggest mistake would be making irreversible financial decisions based on tax proposals that might never materialize.

I've been using H&R Block Premium, and they have a "tax calculator" feature that lets you adjust income types and tax rates to see different scenarios. It's not super sophisticated but it gave me a rough idea of how different capital gains rates would affect my bottom line.

Thanks for the suggestion! I'll take a look at H&R Block. I really need something that can help me visualize the impact since I'm planning to sell a rental property next year that I've owned for about 15 years. The potential tax difference between current rates and the proposed rates would be substantial for me.

Do you need specific forms from your school to claim the Lifetime Learning Credit? My university gave me a 1098-T but it doesn't show all the details I think I need.

Yes, you should receive Form 1098-T from your US university which shows your qualified education expenses. Sometimes it doesn't include everything that's actually eligible though! For example, my form didn't include my required course materials, but those are qualified expenses I could add. If you're missing information on your 1098-T, contact your university's bursar or financial office - they can usually provide an itemized statement of your expenses. Keep receipts for things like textbooks and required supplies too, since those count but might not appear on your 1098-T.

I used TaxAct last year and it asked clear questions about my education history that helped determine I was only eligible for Lifetime Learning Credit. It specifically asked if I had completed 4 years of post-secondary education before, not just if I had claimed AOTC before.

Thanks for the recommendation! I'll check out TaxAct. The software I was using just kept asking if I'd claimed AOTC for 4 years already, not whether I'd completed 4 years of college, which was confusing since I never claimed it before (wasn't in US during undergrad).

So you're saying I shouldn't worry yet? When should I start to panic if I don't see movement? It's already been 3 weeks since I filed and the tracker still just says it's being processed with that PATH Act message.

You definitely shouldn't worry yet! The PATH Act hold means nothing will happen until after February 15th at the earliest. Even then, it can take another 5-7 business days for your return to finish processing and the refund to be approved. I'd say don't start getting concerned until around March 15th. If you haven't seen any movement by then, you might want to contact the IRS to see if there's an additional issue. But right now you're still well within the normal timeframe, especially considering this year's processing volumes. The "being processed" message with the PATH Act reference is exactly what you should be seeing at this point.

Unfortunately, amended returns with EIC are subject to even longer delays. They not only get caught by the PATH Act hold, but amended returns typically take 16-20 weeks to process regardless. And that's during normal times - with current IRS backlogs, some people are waiting 6+ months for amended return processing.