Does the brother actually need to issue a 1099-INT in this case? Or just report it as miscellaneous income?

For small loans between family members, a formal 1099-INT isn't typically required. Your brother would simply report the interest received as "interest income" on his Schedule B if he itemizes his interest income, or directly on line 2b of Form 1040 if it's a smaller amount. The IRS doesn't generally expect family members to go through the formal 1099-INT process for personal loans, but the income still needs to be reported. The most important thing is having documentation of your loan agreement in case either of you gets audited down the road.

Did you use any specific template for that loan document? I need to create something similar with my mom but don't want to pay a lawyer for something simple.

I just used a free template I found online after searching "simple family loan agreement template." The key elements were making sure it had the loan amount, interest rate (even if small), payment schedule, and both our signatures. I didn't use anything fancy or pay for legal services. Most important parts were being specific about repayment terms and having both signatures. We also each kept a copy. It doesn't need to be complicated - the IRS just wants to see there's a genuine expectation of repayment, which distinguishes a loan from a gift.

Do you have to worry about CFC (Controlled Foreign Corporation) rules with the Canadian corporation approach? I heard those can be complicated for US citizens.

Yes, CFC rules definitely come into play, particularly the GILTI (Global Intangible Low-Taxed Income) provisions from the 2017 tax reform. These rules can cause immediate US taxation on certain types of income earned through your Canadian corporation. However, with proper planning, you can often manage these effectively. For consulting businesses, you may qualify for the high-tax exception if Canadian corporate taxes exceed 18.9% (90% of the US corporate rate). Also, you can make a "962 election" on your US return to apply foreign tax credits against GILTI tax. It's complex but can be navigated with good advice.

Is there a specific form you need to file to claim that exemption from self-employment tax? I've been paying both US and Canadian retirement contributions and now I'm wondering if I've been doing it wrong.

I heard some expats are going heavy into crypto to avoid reporting but that seems super risky. Isn't the IRS cracking down on that now?

Using crypto to avoid reporting is an absolutely terrible idea. The IRS has massively increased enforcement in this area. Crypto exchanges are now required to report transactions, blockchain analytics are getting more sophisticated, and the penalties for willful non-compliance can include criminal charges. Remember that crypto transactions (including trading one crypto for another) are taxable events. The IRS considers crypto to be property, not currency, so each transaction can trigger capital gains tax. Some people mistakenly think crypto is "invisible" but that's becoming less true every year as reporting requirements expand.

Whoa I had no idea about this! Is this true even for index funds that just follow something like the S&P 500 but are based in another country? This is the kind of stuff that makes me wonder if the hassle is worth it...

How do you actually prove inventory is "obsolete" though? Do you need documentation or can you just decide something isn't going to sell anymore?

You need to have a consistent method for determining when inventory becomes obsolete or has declined in value. This could be based on how long an item has been in stock (like items over 12 months old), items that haven't sold after multiple price reductions, or products that have been replaced by newer models. The key is documenting your process and applying it consistently. You can't just randomly decide something is obsolete when you want a tax deduction. Most businesses create a written inventory policy that explains their method for identifying and writing down obsolete inventory. If you're audited, the IRS will want to see that you followed this policy.

This! I learned this lesson the hard way my first year in business. Had a "profitable" year on paper but all the cash went to inventory growth. Still had to pay taxes on the profit even though my bank account was empty.

That's really helpful about the deadline! I had no idea there was a cutoff for getting refunds. Does the IRS charge penalties for filing late if you're owed a refund?

Good news - the IRS generally doesn't charge penalties if they owe YOU money. Penalties and interest typically only apply when you owe them. So if you're confident you'll be getting refunds, you should be fine penalty-wise. That said, filing sooner rather than later is always better. Besides the refund deadline I mentioned, having unfiled returns can sometimes cause issues with other government programs or financial applications like mortgages. Some people also find that their refund was larger than expected, which is a nice surprise!

I used FreeTaxUSA for a late 2020 return last year and it worked great. Super straightforward and much cheaper than TurboTax or H&R Block for prior years. Federal was free like you said, and I paid $15 for state. They walk you through everything step by step.