That's interesting! So there might be a way I could still file as Head of Household? Do you know if there are any risks to using this approach with an expired ITIN? Would I need to attach additional forms?

The Head of Household status would only be available if you meet certain requirements - generally having a qualifying dependent (like a child) living with you and providing more than half their support. If you choose to treat your nonresident alien spouse as a resident alien, you'd both need to file using Married Filing Jointly, not Head of Household. This requires submitting a statement with your return and both spouses signing it. The risk is that your husband would then be taxed on his worldwide income, not just US income. If you don't make this election, then Married Filing Separately is usually the correct status, and you can use his expired ITIN without issue. You might want to include a brief statement explaining the ITIN situation with your return.

That's not completely accurate. ITINs issued before 2013 have been expiring on a rolling schedule regardless of use. ITINs with middle digits 70-87 expired in 2019 and middle digits 88-92 expired in 2020. Middle digits 93-99 expired in 2021.

Thanks for the correction! You're right about the rolling expiration schedule for older ITINs. I forgot about that policy. If the OP's husband got his ITIN recently (within the last 10 years), then it would only expire after 3 years of non-use on a tax return. If it's an older one, it might have expired based on those middle digit schedules regardless of use. The IRS sent notices about those expirations, but if he's abroad, he might have missed them.

Is that really still a concern? I thought the IRS has basically accepted the backdoor Roth as legitimate at this point. I've been doing immediate conversions (like within a day or two) for years and never had any issues. Do you have any actual examples of the IRS challenging someone on this?

While the IRS hasn't been actively enforcing the step transaction doctrine against backdoor Roth conversions, it remains a theoretical risk because they've never explicitly blessed the strategy in official guidance. You're right that many people do immediate conversions without issues - the risk is very low. However, for someone who wants to be absolutely cautious, waiting a statement cycle is a reasonable precaution. The Tax Cuts and Jobs Act congressional commentary actually acknowledged the backdoor Roth strategy, which many tax professionals view as implicit approval, but it's not the same as explicit IRS guidance. What I tell clients is to make their own risk assessment - if you're comfortable with the small risk, immediate conversion is fine.

For 2025, if you're covered by a retirement plan at work, the deduction phase-out range for Traditional IRA contributions is $77,000-$87,000 for single filers and $123,000-$143,000 for married filing jointly. At $120k single, you'd be completely phased out, but if you're married, you might be able to take a partial deduction. If you're not covered by a workplace retirement plan, different limits apply. Either way, if you can't deduct it, backdoor Roth makes sense since you'd be making non-deductible contributions anyway.

Thank you for this suggestion! I had no idea VITA existed. Do they have income limits? And will they still help even if I'm missing some of my documents?

Yes, VITA does have income limits - generally they serve people making under $60,000, but exact limits can vary by location. Since you mentioned making around $28k-$32k, you should definitely qualify. They absolutely will help if you're missing documents! That's a super common situation. The VITA volunteers can help you determine what's missing and can show you how to request wage transcripts from the IRS that will have all your W-2 information. They deal with this situation regularly and won't make you feel bad about it. Just be upfront about your situation when you make the appointment so they can schedule enough time to help you.

Not an audit exactly, but I did get CP59 notices (failure to file notices) for 2 years I missed. The IRS doesn't usually do full audits just for not filing - they send notices first. Your sister should respond ASAP though. The longer she waits, the worse it gets. If she can't pay what she owes, she should still file and then request a payment plan. The penalty for not filing is 10x higher than the penalty for not paying.

Is there an income limit on this? I've heard conflicting things about whether high earners can take this deduction.

Yes, there are income thresholds where the deduction begins to phase out. For 2023, the limits start at $182,100 for single filers and $364,200 for joint filers. Above these amounts, it gets more complicated and depends on your business type. If you're in a "specified service business" (like health, law, accounting, consulting), the deduction phases out completely between $182,100-$232,100 (single) or $364,200-$464,200 (joint). For non-service businesses, there's no complete phase-out, but limitations based on W-2 wages paid and business property.

What app do you use for tracking mileage? I've been trying to remember to write it down but I forget half the time.

I actually hadn't heard about this Qualified Joint Venture option before. Would this mean we'd need to change our LLC registration with the state too? Or is this just a tax election? Also, would we still get the liability protection of an LLC this way?

This is just a tax election, so you wouldn't need to change your state LLC registration. You'd still maintain the liability protection of the LLC. The Qualified Joint Venture election is made simply by filing your tax return as a QJV - you file a joint return, but each spouse files a separate Schedule C, Schedule SE, and any other required schedules. The main requirement is that both spouses must materially participate in the business, you must be the only owners, and you must file jointly.

In my experience, the W-2 route is more straightforward in TurboTax. The Qualified Joint Venture requires more manual manipulation in the software. TurboTax asks if you want to report a business, then you'd need to create two separate Schedule Cs manually and split everything correctly yourself. With W-2, the software handles everything through the normal employment sections.