But don't you get hit with franchise taxes in most states when you set up those LLCs? I heard California charges $800 minimum per LLC, so with multiple properties that adds up fast. Are the tax benefits really worth those extra costs?

You're right about the franchise taxes - they definitely cut into the benefits. In California it's $800 per LLC which is painful, but I'm in Tennessee where the annual fee is much lower ($300). For me, the math still works out when I consider both the tax advantages and the asset protection. I'm able to legitimately deduct more business expenses through the holding company structure, including a portion of travel related to property management, home office expenses, and administrative costs that were harder to claim as an individual investor.

This is a great question about QBI and holding companies. The Section 199A deduction can be tricky with holding companies because certain structures might limit your ability to claim it. If your holding company is classified as a specified service trade or business (SSTB) and your income is above the threshold (which at $310k, yours is), you'll face limitations. However, a properly structured holding company might allow you to separate SSTB income from non-SSTB income, potentially preserving some of the QBI deduction.

Yes, TurboTax does push you to Form 1116 once you exceed the threshold, but DON'T take the deduction just to avoid the form! I made that mistake last year with $820 in foreign taxes. Taking the deduction instead of the credit cost me around $600 in missed tax savings (I'm in the 32% bracket, so the deduction was way less valuable than the credit). Form 1116 seems intimidating but isn't that bad once you get into it. Most of your dividend-related foreign taxes just go into the "passive income" category, and TurboTax will guide you through it step by step.

Thanks for the advice! I was leaning toward just taking the deduction to avoid dealing with another form, but $600 in missed savings is definitely worth spending an extra 30 minutes on Form 1116. I'm in a similar tax bracket, so I'd probably be leaving similar money on the table. Is it true that I need to categorize dividends from different countries separately, or can I just lump all my foreign dividend taxes into one entry on Form 1116?

Is there a specific form or worksheet for tracking the carryforward amounts? I'm worried I might have some excess credits from previous years that I didn't claim. Does TurboTax automatically carry these forward if you used it in previous years?

Thanks for mentioning this! Do you know if setting up a payment plan affects your credit score? And is there a minimum amount I have to pay monthly or can I set it to whatever I can afford?

Setting up an IRS payment plan generally doesn't directly affect your credit score - the IRS doesn't report to credit bureaus like a normal lender would. However, if you fail to pay and the IRS files a tax lien, that WILL hurt your credit. So the payment plan actually helps protect your credit by preventing more serious collection actions. For monthly payment amounts, it depends on how much you owe. For debts under $10,000, you can pretty much set your own monthly payment as long as you can pay off the full amount within 3 years. For larger amounts, the IRS may want financial information to determine what you can afford. They're surprisingly reasonable about this - they'd rather get paid slowly than not at all.

This is actually brilliant advice. I had a similar situation (though not as old) and the Social Security earnings record was spot on. Combined with the IRS transcript it gave me everything I needed!

Thank you for this perspective. My husband's company is pretty small (only 15 employees) and I think they're just not sophisticated with their accounting. When I asked him about it, he said they just direct deposit this extra amount every month with a note saying "travel" and have never asked for any kind of documentation. Should he just start tracking his miles anyway even if they don't require it?

Yes, he should absolutely start tracking his miles regardless of what the company requires. Use an app or a mileage log that records the date, business purpose, starting point, destination, and total miles for each business trip. This documentation will be invaluable if you're ever audited. With a small company, it's worth having a conversation with whoever handles payroll. They might genuinely not know the proper way to handle this. Many small businesses try to help employees with these stipends without realizing they're creating tax problems. You could suggest they implement a simple accountable plan where employees submit mileage logs monthly. This would make the stipend non-taxable when handled correctly, which benefits both the employee and employer (they wouldn't have to pay payroll taxes on properly documented reimbursements).

That's not entirely correct. You can't deduct both the standard mileage rate AND car payments. You have to choose one method - either standard mileage OR actual expenses. And with actual expenses, you can only deduct the interest portion of the car payment, not the principal, plus depreciation. And once you choose actual expenses for a leased vehicle, you have to use that method for the life of the vehicle.

I didn't even realize there was a worksheet! I'll definitely look into that option. And yeah, the new form looks completely different from what I remember filing years ago - the elimination of allowances really threw me off. Thanks for the pointer about the worksheet!

Happy to help! The worksheet is actually on page 3 of the W4 form PDF from the IRS website. It's pretty user-friendly for simple situations like yours. Just be sure you're using the 2025 version of the form since they adjust the numbers slightly each year. Another tip: after you submit your W4, check your first couple of paystubs carefully to make sure the withholding looks reasonable. If it seems way off, you can always submit a new W4 to adjust. Most payroll systems let you update it anytime.

That's actually not how the new W4 works anymore. There's no place to put "0" since they eliminated allowances in 2020. The form is completely different now. You'd need to add an additional amount to be withheld on line 4(c) if you want extra withholding.