Does it handle tips well? My dog walking clients sometimes tip in cash and sometimes in the app, and I'm worried about mixing them up. Also, is there a way to mark certain expenses as "office supplies" vs "pet supplies" so I can track which deductions are for what?

It handles tips perfectly! You can create separate income categories for "service income" and "tips" and then further categorize as "cash tips" vs "app tips" if you want that level of detail. This makes it easy to reconcile against what shows on your 1099 vs. what you received in cash. For expenses, yes, you can create custom categories beyond the standard ones. I have categories for "cleaning supplies" and "office supplies" since they're different types of business expenses. For your situation, "pet supplies" would be a great custom category to track those specific deductions separately.

You should consider making quarterly estimated tax payments if you expect to owe $1,000 or more in taxes. For self-employment income, you need to pay both income tax and self-employment tax (15.3% for Social Security and Medicare). At $3,200 since October, you're looking at around $490 just in self-employment tax, plus whatever income tax applies based on your total annual income. If you have other income with tax withholding (like a regular job), that withholding might cover your tax obligation from pet sitting.

3 I did this last year. You can request it online through the IRS website or by calling. No setup fee, but you still pay interest and the failure-to-pay penalty during those 120 days. It was straightforward - I just needed to specify how much I owed and that I'd pay within 120 days. No financial statements needed.

Really helpful breakdown! My transfer would be to North Carolina. Any idea where that falls on the state tax spectrum? And is there a good online calculator you'd recommend that lets me input all these factors?

North Carolina is actually pretty straightforward with a flat 4.75% state income tax rate - so middle of the road compared to other states. Not as high as California or New York, but not tax-free like Texas or Florida. For calculators, I recommend using the ADP Salary Paycheck Calculator (just Google it) - it lets you input your salary, state, filing status, and deductions including 401k and health insurance to get a realistic take-home estimate. SmartAsset's paycheck calculator is another good one that shows the breakdown of all taxes. Both are free and pretty accurate based on my experience relocating employees to various states.

This is so important - I got hit with unexpected taxes from my home country after my transfer. Do you need to file Polish tax returns every year even after moving to the US? How does that work?

That's a really good point about the 7.5% threshold! Does that calculation happen before or after the HSA distributions are considered? I always get confused about the order of operations for these deductions.

The 7.5% AGI threshold applies to your total qualified medical expenses after you've already removed any expenses paid with tax-free distributions like HSAs. So the proper order is: 1) Add up all qualified medical expenses including Medicare premiums from SSA-1099, 2) Subtract any portion paid with HSA funds or otherwise reimbursed, 3) Calculate 7.5% of your AGI, 4) Subtract that 7.5% threshold amount from your adjusted medical expenses. What remains is your deductible medical expense amount for Schedule A.

In my experience, TurboTax correctly identifies the IRMAA surcharges as deductible medical expenses when you enter the SSA-1099 information. They show up separately in the medical expenses worksheet. FreeTaxUSA required me to manually add these as additional medical expenses - they weren't automatically pulled from the SSA-1099 form.

Does this mean the information my friend got last year might be outdated? He was told something about a "50% ECI test" by his previous advisor. Is that still a thing or has it changed with these new regulations you mentioned?

The good news is that the "50% ECI test" is still part of the regulations, but how it's applied and documented has evolved. Under current rules, the partnership can provide a certification that less than 50% of the gain would be effectively connected income, which may reduce withholding obligations. However, the certification process is more formalized now, with specific timing requirements (must be certified within 30 days before the transfer) and there are stricter penalties for improper certifications. The partnership needs to provide this in writing, and the documentation standards are higher than before. Also, publicly traded partnerships have different rules entirely under the current regulations. So while the basic concept remains, the implementation details have definitely changed.

Yes, unfortunately you do have to look through to the lower-tier partnerships in a tiered structure. This is one of the most complex aspects of Section 1446f compliance. The "look-through" rule requires examining each lower-tier partnership to determine if they have assets that would generate effectively connected income. Each tier needs to be analyzed separately, and the proportionate share of ECI assets needs to be calculated. This is why many sophisticated partnerships provide certifications to their partners - it's nearly impossible for a partner to make this determination without information from the partnership itself.