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This is slightly off topic but dont forget that your sister is probably eligible for a Social Security lump sum death benefit of $255. Its not much but its something. She should contact Social Security right away as there are time limits. Also if they were married for at least 9 months she might be eligible for monthly survivor benefits depending on her age.
One more thing to consider - if your sister and her husband had any joint accounts, the basis (original cost) of investments might get a "step up" as of the date of death. This can be SUPER important if they owned stocks or property together. Basically, the deceased's portion gets revalued to what it was worth on the day they died, which can save a ton in capital gains taxes later. Might want to look into this if they had any investments.
Have you looked into the Streamlined Domestic Offshore Procedures? If this was non-willful (meaning you didn't know about the requirement), this program might help reduce the penalties significantly. I made a similar mistake with not reporting my foreign pension from when I worked in Singapore. The standard penalty would have been about $45k, but through the streamlined program I ended up paying just under $10k. The key is documenting that you genuinely didn't understand the requirement. The fact that you took action immediately after discovering the requirement will work in your favor. Make sure your attorney is specifically experienced with the Streamlined program.
Thanks for this suggestion! I just looked into the Streamlined Procedures and it seems like I might qualify. My attorney mentioned something similar but called it by a different name and was talking about a much smaller reduction. Do you know if I need a specialized attorney for this or if it's something I can handle myself? The legal fees are adding up fast.
You don't absolutely need an attorney to apply for the Streamlined program, but I'd recommend at least a consultation with someone who specializes in international tax issues. The program requires a detailed narrative explaining why your failure to report was non-willful, and that narrative is critical to acceptance. If your current attorney isn't giving you clear information about the Streamlined program (it's very well-established), you might want to get a second opinion. Many tax attorneys offer free initial consultations, so you could shop around. The penalties at stake are significant enough that good representation is worth it, but you shouldn't be paying for an attorney who isn't experienced with exactly this type of situation.
whatever u do, don't ignore this!!! i made that mistake when i got hit with a 18k penalty for not reporting my overseas rental income. thought it would go away if i just didn't respond. BIG MISTAKE. they started garnishing my wages and put a lien on my property which destroyed my credit score. took 3 yrs to finally resolve and ended up paying way more in the end. at minimum set up a payment plan asap even while ur contesting the penalty. u can always get refunded later if u win the abatement but it shows good faith effort.
Does anyone use tax software that DOESN'T use whole dollar rounding? I've tried three different programs and they all seem to do it automatically. TurboTax, H&R Block, and TaxAct all rounded my numbers. Is there any software that lets you choose to keep cents?
Most professional tax software actually keeps track of the cents behind the scenes but displays whole dollars on the forms. I'm a bookkeeper (not a CPA) and we use Drake Software which does this. The precise calculations happen with all the cents included, even though the forms print with rounded numbers.
Honestly the whole dollar method has saved me from so many mistakes. I used to track every cent and would get frustrated when things didn't add up perfectly. Now I just round as I go and it's so much faster. The IRS instruction booklet literally says it's fine on page 13. My refund has never been affected by more than a dollar either way.
Just to add another perspective - I've been a delivery subcontractor for 5 years now. You definitely want to track EVERYTHING. Beyond just gas, make sure you're deducting: 1. Any portion of insurance you pay 2. Parking and tolls (like mentioned above) 3. Car washes (if you pay for them) 4. Any required safety equipment or uniforms 5. Your cell phone percentage used for work 6. Meals during long shifts (50% deductible) My accountant catches stuff I would never think about. The actual expense method can actually work out better than mileage sometimes depending on your situation.
Isn't there a risk of getting audited if you claim too many expenses? I'm a new subcontractor and nervous about deducting too much.
There's always a small audit risk with any business deductions, but it's not about claiming "too many" expenses - it's about claiming legitimate business expenses and having proper documentation. Keep good records of everything - receipts, logs, payment statements. The IRS understands that businesses have expenses. As long as they're legitimate and you can back them up if questioned, you shouldn't be worried. It's your right to take all legal deductions you're entitled to! Just don't make things up or inflate numbers, and you'll be fine.
Quick question - does anyone use any specific apps to track their expenses as a subcontractor? I'm doing delivery work too and trying to stay organized for next year's taxes.
I've been using Stride for the past couple years. It's free and lets you track mileage with GPS plus all your other expenses. You can take photos of receipts right in the app. Really helpful at tax time because you can categorize everything properly for Schedule C.
Ava Garcia
I set up a Belize IBC for forex trading back in 2021 and wanted to share some practical advice. The regulatory benefits (higher leverage) worked great, but the tax situation was a NIGHTMARE. First, most "offshore experts" don't understand how GILTI works for trading entities. I ended up owing nearly the same US tax I would have without the structure, PLUS had $12K in annual compliance costs between the foreign registered agent, specialized tax preparation, and legal reviews. Also, be extremely careful about which foreign broker you use. Many won't accept entities from certain jurisdictions due to their own regulatory requirements. I had to switch brokers twice, which was incredibly disruptive to my trading strategy.
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Mei Lin
ā¢That's exactly what I'm worried about - spending all this money on the setup only to find out the tax benefits are minimal. Did you find any particular jurisdiction or structure that worked better than others? And any broker recommendations that actually accept these kinds of entities?
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Ava Garcia
ā¢I eventually switched from Belize to a Seychelles structure which had slightly better terms for satisfying economic substance requirements with algorithmic trading. The key is finding a jurisdiction that clearly classifies algorithmic trading as "active business income" rather than passive investment income. For brokers, I had good experiences with two firms based in St. Vincent and the Grenadines that specifically work with trading companies. They had reasonable documentation requirements and stable platforms. Just be careful - many foreign brokers have great leverage terms but terrible execution quality or withdrawal issues. Always test with small amounts first.
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StarSailor}
Don't forget about banking issues! This is what killed my foreign trading entity setup. Even after properly forming the company and finding a broker, I couldn't find a reliable bank that would: 1) Open an account for a foreign entity with US beneficial ownership 2) Allow smooth transfers to/from forex brokers 3) Not charge excessive fees I went through 3 different banks in 2 years. First one suddenly closed my account after 6 months with no explanation. Second had 5-day holds on all incoming wire transfers. Third worked OK but charged $75 per outgoing wire transfer which ate into profits.
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Miguel Silva
ā¢Did you try any of the digital banking solutions specifically for trading companies? I've heard there are some in Lithuania and Estonia that specialize in this.
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