That's an interesting thought! Maybe there was just a communication breakdown. I was so focused on my 401k contributions that I might have misunderstood if she was asking about separate IRA contributions. Is it worth going back to TurboTax and clarifying this with a different expert?

Absolutely worth clarifying with a different TurboTax expert. Ask specifically about the deductibility of traditional IRA contributions when you already participate in a 401k plan. The rules get complicated based on your income level and filing status. For context, if you're single and covered by a workplace retirement plan, your ability to deduct traditional IRA contributions starts phasing out at an income of $77,000 and disappears completely at $87,000 (for 2024). The ranges are different if you're married or if only one spouse has a workplace plan. But regardless, 401k and IRA contributions are always reported separately - they're never the same thing.

What about a SIMPLE IRA? Those are employer-sponsored but have "IRA" in the name. Could that be what the TurboTax person was confusing?

What's an EOR service? Is that like a PEO? And do you have any recommendations for ones that work well with very small businesses? I'm only looking to hire one person to start.

An EOR (Employer of Record) is similar to a PEO but specifically designed for international hiring. They essentially become the legal employer in the foreign country while you maintain day-to-day management. For small businesses hiring just one or two people, services like Deel, Remote.com, or Ontop tend to be more cost-effective than traditional global PEOs which usually cater to larger companies. They handle everything from compliant contracts to local tax withholding and benefits requirements. The fees usually range from 5-8% of the employee's salary, which might seem high but is typically cheaper than setting up your own foreign entity. For just one employee in India, this approach could save you significant headaches with compliance.

The US-India tax treaty definitely applies here. Article 15 covers dependent personal services (employment), while Article 14 covers independent personal services (contractors). Generally, if your Indian worker never comes to the US to perform services, their income is only taxable in India. As for LLC vs S-Corp, it really depends on your overall business situation. An LLC with S-Corp election could give you some employment tax advantages if you're also taking a salary, but for purely hiring overseas workers, the structure is less important than properly documenting the relationship. What matters more is whether you classify them correctly as employees vs contractors, and whether you follow the reporting requirements for foreign persons.

Could you explain the annualized income method a bit more? I get most of my income in Q4 and always struggle with this.

The annualized income installment method basically divides your tax year into periods (Jan-Mar, Jan-May, Jan-Aug, and Jan-Dec). For each period, you calculate the tax on your income received so far, annualize it, and then figure what percentage of that annual amount you should have paid by that quarter's estimated tax deadline. It's helpful for people with seasonal or irregular income because it matches your required payments more closely to when you actually receive income. For example, if you earn 70% of your income in Q4, the standard method would still require you to make equal estimated payments throughout the year, which might be difficult. The annualized method would require smaller payments earlier in the year. It's calculated on Form 2210, Schedule AI. It's definitely more complex than the regular method, but for someone with heavily weighted Q4 income, it can prevent you from having to overpay early in the year just to meet safe harbor requirements.

Try TaxPlanner Pro - it lets you run multiple scenarios and updates your projected tax and withholding requirements throughout the year. Way better than waiting until December to figure out you're going to owe penalties.

Thanks for the recommendation! I'll give TaxPlanner Pro a look. I definitely need something that will alert me earlier if I'm going to face penalties. December was way too late to fix my situation last year, and I ended up with almost $2,100 in penalties. Not making that mistake again!

Thanks for the suggestion! I actually thought about that, but the problem is my mortgage payment included principal, interest, taxes and insurance all bundled together. So just seeing the total payment on my bank statement wouldn't tell me how much was specifically interest. I wish it was that easy!

This is what I do for clients all the time (tax preparer here). The Wage and Income transcript shows everything reported to the IRS under your SSN. Quicker than waiting for lenders, especially ones that changed hands or closed.

Thanks for the tip about retail options! Do you know if there's a significant difference in the features between the desktop and online versions? Is one better for more complicated tax situations like self-employment or investments?

The desktop version tends to be better for more complicated tax situations. If you're self-employed or have significant investments, I'd recommend the desktop version. It gives you more control and offers more advanced features for complex scenarios. The desktop version also allows you to file multiple returns (up to 5) without additional cost, which is great if you're doing taxes for family members. The online version charges separately for each return. Desktop also makes it easier to access previous years' returns without additional fees, whereas the online version sometimes charges you to access older returns.

I successfully used it last week, but only for the online version. When I clicked through the Chase Ultimate Rewards portal, it automatically applied a $15 discount plus the advertised percentage off. I tried to find a way to apply it to the downloadable version but couldn't figure it out. The Chase customer service rep confirmed it's online only.

Thanks for confirming! I'll go with the online version then. Seems like that's the only way to get the discount.