That sounds interesting but I've never heard of a spousal IRA. How does that work exactly? Does it come with the same tax benefits as a regular IRA?

A spousal IRA works just like a regular IRA - same contribution limits, same tax benefits. The difference is that normally you need earned income to contribute to an IRA, but the spousal IRA is an exception that allows a working spouse to contribute to an IRA for a non-working spouse. For 2024, you could contribute up to $7,000 to a spousal IRA for your wife ($8,000 if she's 50 or older). This gives you an additional tax deduction if you choose a Traditional IRA, or tax-free growth if you choose a Roth IRA. You'll need to file jointly to use this benefit, and your earned income must be at least equal to the total contributions you make to both your IRA and her spousal IRA.

This is a really good point. Do you use any specific tax software that made it easy to compare the two options?

That's super helpful, thanks! My accountant mentioned something about "reasonable compensation" requirements for S Corps but wasn't clear on how that interacts with the K-1 income flowing in. Does the K-1 income from the LLC affect how much I need to pay myself as reasonable salary from the S Corp?

The K-1 income does indirectly affect reasonable compensation considerations. The IRS expects S Corp owner-employees to take a "reasonable salary" before taking distributions, which means your salary should be comparable to what would be paid for similar services in your industry. When your S Corp receives additional income (like K-1 income from an LLC), it increases the total profit available in the S Corp. If your responsibilities or time commitment increase due to this additional business activity, it might justify a higher reasonable salary. The key test is always what's reasonable for the actual services you're providing to the S Corp. Remember that paying yourself too little in salary and taking large distributions instead can be a red flag for the IRS, as it can look like an attempt to avoid payroll taxes.

I did this last year. The paperwork is a pain, honestly. You need to formally admit the S Corp as a member of the LLC, which means amending the LLC operating agreement. Then there's the whole issue of how to value the membership interest if the S Corp is purchasing it rather than being granted it. We had to get a business valuation done which cost about $3,500.

What if I plan to keep my house in my home state and rent it out while I'm gone? Does that mean I'll always be considered a resident there for tax purposes?

Keeping a house doesn't automatically make you a resident, but it does create a connection to the state that tax authorities might use to argue you've maintained your residency. If you rent out your house, you'll need to report that rental income to your state, but that doesn't necessarily make you a full resident. To strengthen your case for non-residency, make sure you have documentation showing you've established a genuine home in Dubai, like a long-term lease or utility bills in your name. Also keep records of your physical presence (entry/exit stamps, flight records) to demonstrate you're genuinely living abroad. Some states have specific requirements about maximum days you can spend there annually without triggering residency.

You can generally keep your retirement accounts as they are when moving abroad. For contributions, it gets tricky - you need US taxable income to contribute to an IRA, so if all your income is excluded via the Foreign Earned Income Exclusion, you might not be eligible to contribute. For 401k contributions, it depends on your employer - if you're working for a US company abroad, you may still be able to contribute, but if you're working for a foreign employer, you typically can't.

I'm in Dubai now and found that keeping my retirement accounts in the US was the easiest approach. Just make sure your financial institution doesn't have issues with foreign addresses - some do!

What kind of attorney should I look for specifically? Is there a certain specialty that deals with trustee misconduct? And roughly what should I expect this to cost? I'm worried about spending a ton on legal fees when the trust assets have already been diminished.

You want an attorney who specializes in trust and estate litigation specifically - not just any estate planning attorney. Many estate planners focus primarily on creating trusts and wills but have limited experience with litigation when things go wrong. Look for terms like "trust litigation," "fiduciary litigation," or "trust disputes" on their website or firm description. Ideally, find someone who has experience specifically with trustee removal cases and financial misconduct. Regarding costs, most trust litigation attorneys work on an hourly basis, typically $300-$500 per hour depending on your location and the attorney's experience. Many states allow for attorney fees to be paid from the trust itself when the litigation benefits the trust (like removing a dishonest trustee), but this usually happens after the case concludes. You might need to pay upfront and seek reimbursement later.

This is an important point. My family went through something similar, and we found that once we filed a police report, the trustee suddenly became much more cooperative with returning funds. The district attorney in our county had a financial crimes unit that took it quite seriously.

Is it even worth claiming home office then? I've heard it reduces your mortgage interest deduction and complicates selling your house later because of capital gains implications. Some of my friends say to avoid it completely.

I didn't make any special elections, so I guess it's the default (sole proprietorship)? Is that bad? Should I have chosen S-Corp instead?

For your first year with more expenses than income, the default sole proprietorship treatment is actually perfect! This allows your business losses to directly offset your W-2 income on your personal return. If you had elected S-Corp status, the rules for how losses flow through would be more complicated and potentially less beneficial in this startup phase. As your business becomes profitable, S-Corp status might make sense to save on self-employment taxes, but for now, you're in the ideal structure to maximize the tax benefit of your startup losses. You made the right choice by sticking with the default!