That makes a lot of sense now. I was definitely mixing up the federal and state parts. Looking at my W-2s now, I can see the state withholding amounts in box 17. One more question - do I need to enter anything for local tax withholding if my state doesn't have local income taxes?

If your state doesn't have local income taxes, then you would just enter zero for the local tax withholding amount. Some states have both state and local income taxes (like New York with NYC tax, or Ohio with municipal taxes), while others only have state-level income tax. Just be sure to enter the state withholding amount from box 17, and if there's nothing in box 19 for local taxes, enter zero there.

This cleared it up better than anything else I've read! So simple when explained that way. Software tax questions are so confusing sometimes.

But what about influencers who actually DO use luxury items as part of their business model? Like if your entire content is about luxury cars, wouldn't a Lambo be considered necessary?

That's a good question. For established influencers with substantial income from content specifically about luxury vehicles, there might be a legitimate case. However, the burden of proof would be extremely high. You'd need to show the direct connection between the specific vehicle and revenue generation, demonstrate that the entire vehicle (not just a portion) is used for business, and prove that the expense is reasonable relative to your business income. Most importantly, you'd need to show a history of profitability or a reasonable path to profitability. Starting from zero with a huge expense like a Lamborghini would be extremely difficult to justify to the IRS.

Yeah but how did they prove he wasn't really trying to start a business? Seems pretty subjective to me.

Is there any way to know if you're getting someone with real expertise vs a seasonal worker? I always see those pop-up tax places and wonder about the qualification level.

Ask about their credentials and experience directly. Anyone can call themselves a "tax preparer," but CPAs, Enrolled Agents, and tax attorneys have specific certifications and continuing education requirements. Look for those designations. At seasonal shops, ask how many years they've been preparing taxes and what training they've received. Experienced preparers, even without formal credentials, often have valuable practical knowledge. If they start working there just a few weeks before tax season, that's a red flag. Also, ask if they work on taxes year-round or just during tax season - year-round indicates more commitment to the profession.

Did you itemize deductions or take the standard? I feel like that's where most people might miss stuff when using software vs a pro.

Woah, that sounds complex and potentially expensive. So how do you determine if your foreign LLC is considered a corporation for US tax purposes? Is that something I actively choose or does the IRS decide for me?

By default, a foreign LLC with a single owner is treated as a disregarded entity (essentially a sole proprietorship) for US tax purposes, unless you elect otherwise. If there are multiple owners, it's typically treated as a partnership. You can file Form 8832 to elect corporate treatment if that's beneficial for your situation. The key thing to understand is that the US tax classification might be completely different from how your entity is classified in the foreign country. So your "LLC" abroad might be treated as something entirely different by the IRS. This is why getting proper advice early is crucial - the filing requirements and tax treatment vary dramatically based on the classification.

Yeah, this is a common problem. Many foreign banks don't want to deal with US citizen customers because of the FATCA reporting burdens. I had to shop around in Thailand to find a bank willing to work with my company. Usually larger international banks are more willing to deal with US citizens than smaller local ones.

Thanks for the info. I'll check with some of the bigger banks here. It's super frustrating that being a US citizen makes banking so difficult abroad even when I'm legitimately running a business in another country where I also have citizenship.

I know it seems silly to worry about 99 cents, but I just want to make sure I'm doing everything right. Better safe than sorry when it comes to taxes! Thanks for the straightforward advice though.

Trust me, I get it. I used to work myself up over tiny details on my taxes too. My accountant friend always says "report everything accurately but don't lose sleep over pennies." The IRS is looking for major discrepancies, not whether you properly categorized less than a dollar. Cash basis is right anyway for most regular people.

It's because different types of income have to be reported on specific forms. The 1099-B is specifically for proceeds from broker transactions (buying/selling investments). The 1099-MISC Line 3 "Other Income" is for things that don't fit elsewhere - like referral bonuses, interest on uninvested cash, or promotional rewards. The IRS requires brokers to categorize each type of payment correctly. It is confusing though - I agree the system could be streamlined!