Did the conversion process mess up your ability to take the QBI deduction that year? I heard entity changes can disrupt that 20% pass-through benefit.

The conversion actually didn't disrupt my QBI deduction that year. Since I went from one pass-through entity (Nevada LLC) to another pass-through entity (Wyoming LLC), the basic eligibility wasn't affected. However, I did have to carefully document the transition date and maintain separate accounting for the pre and post-conversion periods. The tricky part was that the conversion created a "short year" for tax purposes, which required some additional form filing and proration of certain expenses. I recommend getting a tax pro involved if you're considering a similar move.

Yeah, the Corporate Transparency Act is hitting every state. Started in January 2024. Every LLC, corp, etc has to report ownership to FinCEN. Doesn't matter which state anymore - Wyoming, Delaware, wherever - the privacy benefit is mostly gone now.

Thanks for confirming. That's disappointing since privacy was one of my main reasons for choosing Wyoming. Guess I'll focus more on the tax benefits now since that privacy advantage is diminished.

Oh wow I had no idea about quarterly taxes. How do you know if you need to pay them? And what happens if you haven't been paying them all year?

Generally, you need to pay quarterly taxes if you expect to owe $1,000 or more when you file your return. It's basically a pay-as-you-go system for income that doesn't have taxes automatically withheld like your W2 jobs do. If you haven't been paying them, you might face an underpayment penalty when you file. The good news is that if this is your first year with 1099 income, you might qualify for a waiver of the penalty. Moving forward, you'll want to make estimated payments every quarter (April 15, June 15, September 15, and January 15) based on what you expect to earn.

You can offset some of this though! You can deduct business expenses against your 1099 income, which lowers your taxable income. Things like software subscriptions, equipment, home office, internet, phone, professional development, etc. can all potentially be deductible if you use them for your freelance work.

Thanks for this info! My fiancée and I weren't planning to get married until after graduation, but maybe we should reconsider the timeline if it would help with financial aid. Would getting married now affect her financial aid situation too? She's currently classified as a dependent student on her parents' taxes.

Getting married would make both of you independent students for FAFSA purposes, regardless of whether your parents still claim either of you as dependents on their taxes (those are separate systems). This could be beneficial for both of you if your incomes are lower than your parents', as financial aid would be calculated based only on your finances, not your parents'. However, it could potentially reduce aid if one of you has significant income or assets that would now be counted toward both of your FAFSAs. Marriage also makes you eligible to file taxes jointly, which could have its own implications.

This is smart advice. I did the community college route too for similar reasons. Saved a ton of money and still got my teaching degree. Many community colleges also have special institutional scholarships that don't require FAFSA completion.

Does this apply if I'm under 26 but financially independent? I thought the ACA lets parents keep kids on insurance until 26 regardless of dependent status for taxes?

You're right that the ACA allows children to remain on their parents' health insurance until age 26, regardless of tax dependent status. That's a separate regulation from the tax rules. However, some employers offer additional pre-tax benefits for health insurance premiums for dependents, and those specific benefits might require tax dependent status under their cafeteria plan rules. It varies by employer, so your mom should check with her HR department to see if there would be any change in her pre-tax benefits if she doesn't claim you as a tax dependent.

This is important! I learned the hard way too. What's the best way to figure out the right withholding amount? Should OP use the IRS calculator or is there an easier way?

Thanks for mentioning Opportunity Zones. I've heard of them but don't really understand how they work. Do I have to invest the exact amount of my gains, or can I do partial? And is there a time limit after selling my stocks to invest in an OZ?

You need to invest your capital gains (not necessarily the entire proceeds from your sale) into a Qualified Opportunity Fund within 180 days of realizing the gain. You can definitely do partial investments - any portion of your gains that you invest will get the tax deferral. The main benefits are: 1) You defer paying taxes on your original stock gains until 2026, 2) If you hold the OZ investment for 5+ years, you get a 10% reduction on those original deferred taxes, and 3) If you hold the OZ investment for 10+ years, any new gains from the OZ investment itself are completely tax-free. It's complex but can be very advantageous if real estate investing aligns with your goals.

Yes! I trade in my Roth and it's awesome for tax-free growth. But there are limits - you can only contribute $7,000/year for 2025 if you're under 50, and there are income phaseouts that start around $146,000 for single filers. Also, you can't touch the earnings without penalties until 59½ in most cases.

I actually do have a Roth IRA but haven't been very active with it. I'm contributing the max already, but never thought about doing my more active trading in there instead of my regular brokerage account. Might be a good strategy for next year to avoid this tax situation altogether.