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For what it's worth, I made this exact same mistake last year (forgot a 1099-MISC for about $2000). I just filled out Form 1040-X and Schedule C by hand, printed them, and mailed them in with a check for the additional tax I owed. Took about 30 minutes to complete the forms - just had to copy most info from my original return and then add the additional income. Yes, you'll need to pay the extra tax, but there's no penalty if you file the amendment before they catch the mistake. Don't stress too much! The IRS deals with this all the time.
Do you remember roughly how long it took for the IRS to process your amendment? I've heard horror stories about amendments taking 6+ months to process.
It took about 10 weeks for my amendment to be processed last year, which was faster than I expected. The IRS website said to allow up to 16 weeks, but mine was done sooner. Just make sure you don't make any mistakes on the form itself - double-check all your math and ensure you're using the correct tax year form. I also included a brief explanation statement that simply said "Reporting additional income from 1099-MISC that was received after original filing." Keep it simple and straightforward.
I've been a tax preparer for 6 years and I see this ALL THE TIME. The fact that tax software companies charge extra for amendments is one of my biggest frustrations with the industry. Just a warning - if you don't amend, the IRS WILL catch this eventually through their document matching program. The company that issued you the 1099-MISC already reported it to the IRS. When they notice the discrepancy, they'll send you a CP2000 notice with additional tax due PLUS interest and possibly penalties. Bottom line: filing an amendment yourself now will be cheaper than waiting for the IRS to find it.
Just to add a data point here - I'm also Canadian and do occasional work in the US. For amounts under $500, I've had about half of organizations ask for Form 8233 and half accept just the W-8BEN. There's a lot of confusion on the US side about the right documentation for small payments to foreigners. If this is a one-time thing and you don't plan to work with them again, it might be worth just completing the form. It's annoying but not actually that difficult once you understand what they're looking for. The key parts are: 1. Article XVI of the US-Canada treaty 2. Statement that you're a Canadian resident 3. Explanation that you're only temporarily in the US 4. Mention that your US source income for the year is below the treaty threshold
Thanks so much for this breakdown! You're right, it's just a one-time workshop so probably easier to just fill it out. Do you know if I need to include my SIN number on the form? I'm always hesitant to share that with organizations outside Canada.
Yes, unfortunately you do need to include your SIN as your "foreign tax identifying number" on the form. I understand the hesitation, but it's a requirement for treaty benefits. If it helps ease your mind, legitimate US organizations (especially non-profits) are required to maintain confidentiality of tax identification numbers under IRS regulations. They need your SIN to properly report the payment to the IRS, so there's no way around providing it if you want the treaty benefits.
Just FYI for Canadians filling out Form 8233 - make sure to check if your specific profession might have different treaty provisions! I'm a university professor and there's actually a specific article in the treaty just for teachers and researchers that gives different exemptions than the general Article XVI provision.
Artists also have some special provisions in the US-Canada treaty. If you're selling artwork rather than providing a service like teaching a workshop, different rules might apply. The distinction matters for tax purposes.
Something I don't see mentioned here - make sure you're coordinating with your girlfriend about this. Even though she's not filing taxes, if she's receiving certain benefits like Medicaid, SNAP, or other assistance programs, claiming her as your dependent could potentially affect her eligibility. Also, remember that since you're not married, you'd need to file as "Single" or "Head of Household" if you qualify. Head of Household could give you better tax rates, but you'd need to meet the requirements (like paying more than half the cost of keeping up a home where a qualifying person lives).
That's a really good point about benefits that I hadn't considered. She is on Medicaid while in nursing school, and also gets some assistance with childcare. Would claiming her as a dependent definitely affect those benefits? Is there any way to figure that out before filing? Also, how exactly do I determine if I qualify for Head of Household? I do pay more than half the household expenses, but I'm not sure if her oldest son would count as my "qualifying person" given all the complications.
Benefits eligibility varies by state, so there's no one-size-fits-all answer. Your girlfriend should contact her benefits caseworker to ask specifically how being claimed as a tax dependent might affect her Medicaid and childcare assistance. In some states, it could reduce or eliminate her eligibility, while in others it might have no impact at all. It's definitely something to check before filing. For Head of Household status, you need a "qualifying person" who lived with you more than half the year. If her oldest son can be your qualifying relative (as discussed earlier), he could potentially be your qualifying person for HOH purposes. Alternatively, if your girlfriend qualifies as your dependent, she might also qualify you for HOH. The IRS has a pretty detailed interactive tool on their website that can help you determine if you qualify - search for "IRS HOH assistant" and it should come up.
Don't forget about other tax benefits beyond just the dependency exemption! If you can claim the child as a dependent (even as a qualifying relative), look into: 1. Child Tax Credit - worth up to $2,000 per qualifying child under 17 2. Credit for Other Dependents - $500 for dependents who don't qualify for CTC 3. Child and Dependent Care Credit - if you pay for childcare while you work 4. Earned Income Tax Credit - depending on your income The rules for each of these are slightly different, so you might qualify for some but not others.
As someone who works with multiple tech companies on their taxes, I think the likelihood of a 2023 fix is about 50/50 at this point. The business community and many legislators from both parties want to restore immediate expensing, but finding the right legislative vehicle is challenging. The Joint Committee on Taxation scored the 5-year reversal at about $140 billion over 10 years, which makes it a significant budget item that needs offsets. Most likely scenario is it gets attached to a must-pass bill in Q4, possibly with some modifications. My advice? Don't make major R&D decisions based solely on potential tax changes. Focus on business value first, then optimize the tax treatment as much as possible under current law.
What about companies that are already cutting R&D specifically because of this tax change? I've seen several businesses in our industry reducing US-based research and moving more overseas because of this issue. Doesn't that defeat the purpose of encouraging innovation?
You're absolutely right that the tax change is having unintended consequences. I have clients who are shifting R&D to countries with more favorable tax treatment, like Canada and the UK, which offer refundable R&D tax credits on top of immediate expensing. This is exactly why there's bipartisan interest in fixing it. The original change was never about discouraging R&D - it was a revenue raiser to offset other tax cuts in the 2017 bill. Many legislators from both parties have expressed concern about the competitiveness impact. But tax policy often moves slowly, especially with divided government. Companies have to make decisions based on current law while advocating for changes. It's a challenging balance.
Does anyone know if state tax treatment of R&D expenses has also changed? Our company operates in California and Massachusetts, and I'm not sure if they follow the federal treatment or have their own rules for R&D amortization.
Great question - it varies by state. Many states use federal taxable income as their starting point, so they automatically adopt federal treatment unless they specifically decouple. California partially conforms to federal tax changes but has its own R&D credit that remains very favorable. Massachusetts has decoupled from this specific federal change, allowing immediate expensing of R&D for state tax purposes. Check with your specific states, but this is an area where you might get some relief at the state level even while the federal issue remains unresolved.
Adrian Connor
My sister is a CPA and does remote consultations. She primarily works with small business owners and individuals with investment income. Very reasonable rates and super knowledgeable. DM me if you want her contact info!
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Aisha Jackson
ā¢Be careful about hiring CPAs through random reddit recommendations. Always check their credentials and reviews online first! No offense to the person above, but there are a lot of scams out there.
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Ryder Everingham
Have you considered using a tax professional who isn't necessarily a CPA? Enrolled Agents (EAs) are also certified by the IRS to represent taxpayers, and they often specialize more in tax issues than CPAs who might focus more broadly on accounting. Sometimes they're more affordable too. I've been using an EA for years for my tax planning and she's been fantastic.
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