That's a really good point I hadn't considered. If they messed up my COGS on the 1125-A, it definitely would have changed my Schedule C profit and then my self-employment tax on Schedule SE. Should I submit copies of all three forms with my amendment or just the 1125-A?

You should submit the entire amended tax return package, including the corrected 1125-A, Schedule C, Schedule SE, and main 1040 form. This gives the IRS a complete picture of how the corrections flow through your entire return. When preparing your 1040-X, you'll need to show the original figures that were processed, the corrected figures, and the difference between them. Make sure your explanation in Part III clearly traces how the 1125-A errors affected each subsequent form. For example: "The IRS incorrectly transcribed line 2 of Form 1125-A as $8,400 instead of the correct amount of $11,250. This error reduced my Cost of Goods Sold by $2,850, which incorrectly increased my Schedule C profit and subsequently my self-employment tax on Schedule SE." This level of detail helps the IRS follow your calculations and process your amendment more efficiently.

I used TaxAct to prepare an amended return last year when the IRS messed up my itemized deductions. It worked fine but you have to be very careful. The software doesn't automatically know that you're correcting IRS errors versus changing your own entries. Make sure you use the explanation section to clearly state that you're fixing IRS transcription errors, not changing your original filing.

Thank you for sharing! Did you and your spouse both use the same CPA so they could coordinate both of your returns? And did you have any issues with previous years where you might have filed inconsistently?

Yes, we definitely used the same CPA for both returns to ensure consistency. That was key to making sure our community property allocations matched up perfectly. Regarding previous years, we had indeed filed inconsistently for two years (similar to your situation). Our CPA advised that we could either amend those previous returns or simply start filing correctly going forward. Since the difference in our case wasn't enormous and we hadn't been audited, we chose to just file correctly going forward rather than opening up old returns. The CPA mentioned that the statute of limitations for most returns is 3 years, so after that time passes, your risk decreases significantly.

How much were the penalties? Was it worth the savings you got on the student loans during that time or did it completely wipe that out?

Do film tax credits count as income in the year you receive them? I'm getting a small incentive payment from my state film commission next month for a project I completed last year, and I'm not sure if that's 2024 income or if I should have somehow accounted for it in 2023.

The timing of film tax credit recognition generally depends on when you have the legal right to receive the payment. If your production was completed last year but the credit wasn't approved until this year, it's typically 2024 income. However, it also depends on your accounting method. If you're using the cash method (most small productions do), you'd report it as income when you actually receive the payment. If you're using the accrual method, you'd record it when you earned the right to receive it. Since it sounds like the state is just now processing your payment for last year's work, this would likely be 2024 income. But definitely confirm this with your accountant since tax credit treatment varies by state and situation.

That's wild, I never would have thought about credit as compensation! How do you even calculate the value of a film credit for tax purposes? Is there some kind of standard rate card for that?

That's really helpful. So for my invoices, should I format it as "My Full Name dba Business Name" and then just use my SSN on the W9 form? Or should I include both the SSN and FEIN on different parts of the form?

You should format it exactly as "Your Full Legal Name dba Business Name" on your invoices, and then on your W9, check the "Individual/sole proprietor" box, use your personal name on the "Name" line, your business name on the "Business name/disregarded entity" line, and your SSN in part I. You can include your EIN in Part II if you want, but it's cleaner to just use your SSN for everything unless you specifically need the EIN for something like business banking. This way, everything matches what the IRS has on file for you personally, which prevents these verification hiccups.

From my experience (worked in tax prep for 7 years), these kinds of mismatches don't typically trigger audits on their own. They're considered administrative issues rather than compliance problems. The IRS is looking for income reporting discrepancies, not ID formatting issues.

Thank you for bringing up these important points! I have about $35K combined in my Canadian accounts, so I'll definitely need to file the FBAR. You're right about the TFSA - that's exactly why I'm planning to close it before October. Regarding RRSPs, I do have about $80K in an RRSP. I wasn't aware of Form 8891 - does that need to be filed annually or just once?

The good news is that Form 8891 was actually eliminated in 2014! The IRS now automatically recognizes the tax deferral for RRSPs under the US-Canada tax treaty without requiring a specific form. You'll still need to report the existence of the RRSP on your FBAR and potentially on Form 8938 (Statement of Foreign Financial Assets) if you meet the filing threshold, but the income can continue to grow tax-deferred. One other consideration for your plan: make sure you've researched any state-specific requirements. California, for example, doesn't always follow federal treatment of foreign income and may have different rules regarding your Canadian accounts and investments compared to federal regulations.

This is incorrect information. Canada doesn't have an "exit tax" in the same way as the US. What Canada has is a deemed disposition rule where certain properties are treated as if they were sold at fair market value when you cease Canadian residency. However, this typically doesn't apply to cash, personal-use property, most registered plans like RRSPs, and certain real property located in Canada.

Thanks for bringing this up. I've been concerned about this potential issue. My total assets are around CAD $1.3 million, so I should be under that threshold. Most of my assets are either in my RRSP, cash, or the condo which I'm planning to sell before becoming a non-resident. Would there be any other assets I should be concerned about for the deemed disposition rules?