That's a really good point. I started contracting around April 2021 and didn't form the S Corp until September. So I definitely had some income before the corporation existed. And yes, I'm pretty sure I filed the 2553 - the bookkeeper handled that paperwork and I signed it. I got something back from the IRS confirming the S election but I'd have to dig through my files to find it.

That's good you filed Form 2553 and have confirmation. Your approach should be to file two different types of returns for 2021 then: For January-August 2021, report your contracting income on Schedule C as a sole proprietor. This will be part of your personal 1040. For September-December 2021, file an 1120-S for your S Corporation. You'll need to report any reasonable salary you should have taken (even if you didn't actually run payroll) and any distributions you took from the business.

I use TurboTax Business for my S Corp. Would that work for someone in OP's situation or is this too complex for DIY software?

Thanks for mentioning this! My ex and I are actually on decent terms. Would we both have to file jointly together or could I still do head of household? I've already submitted my return as head of household based on the advice here...would I need to do an amendment if joint was better?

If you file jointly, both of you have to file together on one return. You can't have one person filing jointly and the other filing head of household - it's an all or nothing choice. Since you've already filed as head of household, you could amend if filing jointly would benefit both of you. However, you'd need to run the numbers both ways to see which is better, and your ex would need to agree. Remember that filing jointly also means you're both responsible for the entire tax liability, so there's some risk involved if you don't completely trust each other.

FreeTaxUSA actually handles this pretty well! I used it last year after my divorce. They ask straightforward questions about your marital status as of Dec 31, whether you have dependents, etc. and guide you to the right filing status. Their help sections explain the requirements clearly too.

I would recommend you double check with a professional if your situation is complicated. My sister used FreeTaxUSA after her divorce and it seemed fine but she missed some deductions related to the kids that her accountant caught the following year.

Thanks for this perspective! I definitely won't go back to H&R Block after that experience. Do you have any tips on finding a good CPA who knows how to handle these interstate moves and stock issues? Is there anything specific I should look for or ask when I'm interviewing them?

Look for a CPA who specializes in individual taxes rather than business taxes. Ask specifically about their experience with interstate moves and stock compensation (RSUs, options, etc). A good question is "how would you handle allocation of income between California and Oregon for a mid-year move?" Also ask about their approach to organizing those old 401ks - a good tax professional thinks beyond just this year's return. Check Google reviews, but also ask for referrals from colleagues in similar situations. Since you work for a large company, there might be others who've dealt with the same stock and relocation issues who can recommend someone.

I'll second FreeTaxUSA. It handled my interstate move and stock sales for $15 (for the state return). Federal filing is completely free regardless of complexity. TurboTax would have charged me $120+ for the same forms.

Thanks for confirming! I felt like I was taking a risk trying a less-known software but it worked perfectly. The interface isn't as pretty as TurboTax but it asks all the right questions and handles the complex scenarios at a fraction of the cost.

Do you have any tips for tracking DeFi staking rewards if you were, hypothetically, completely disorganized and didn't track anything all year? Asking for a friend... 😬

If your "friend" hasn't been tracking anything, there are a few options! First, check if the DeFi protocols you're using have any dashboard that shows historical rewards - some newer ones do offer this. For most cases though, you'll need to use a blockchain explorer like Etherscan, Solscan, etc. Look up your wallet address and filter for the contract addresses of the staking protocols you used. You'll need to go through the transactions and identify the rewards. It's tedious but possible. Some tax tools can also retroactively analyze your on-chain activity and categorize staking rewards automatically. Worth the investment if you have significant DeFi activity, especially across multiple chains or protocols.

How much staking would trigger that self-employment consideration? I'm running 3 Ethereum validators and about 10k in Polkadot. Is that enough to be considered a "business"?

15 Is there any way to reduce that self-employment tax? That's a huge chunk of money on top of regular taxes!

5 You can reduce your self-employment tax by forming an S-Corporation instead of operating as a sole proprietor. With an S-Corp, you pay yourself a reasonable salary (which is still subject to self-employment tax) but can take the rest of your profits as distributions that aren't subject to SE tax. However, there are additional costs and complexities with an S-Corp, including payroll processing, separate tax returns, and other compliance requirements. Generally, it's not worth considering until you're consistently making at least $80-100K in profit. Given your income level, it might be worth consulting with a tax professional who specializes in small businesses to see if this strategy would benefit you.

8 BAD idea. The IRS has been cracking down hard on unreported income, especially from payment apps. As of 2022, platforms like CashApp, Venmo, PayPal etc. are required to report transactions to the IRS if they total over $600 in a year. Even if you don't get a form, they're sending the info to the IRS. Plus, if you have large deposits going into your bank account that don't match your reported income, that's a major audit flag. The penalties for intentional underreporting can include up to 75% of the unpaid tax plus interest, and potentially criminal charges for tax evasion. Not worth the risk with six-figure income!