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I wanted to add something about that $4,500 fee your friend's fiancรฉ mentioned. I'm a former tax preparer (not giving official advice), but that fee is WAY too high for what's likely needed in this case. A typical OiC application might cost $1,500-2,500 from a reputable tax professional, including preparing the unfiled returns. I'm concerned that: 1. The fiancรฉ might be getting kickbacks from whoever he's referring her to 2. The professional is overcharging by promising "guaranteed" results 3. They might file a boilerplate OiC that has little chance of acceptance Remember that ANYONE can request an installment agreement or apply for an OiC - these aren't secret programs. The value in professional help is proper preparation and documentation, not access to "secret" programs. Also, I'd be concerned about the fiancรฉ who promised to file her taxes and didn't. That's a major breach of trust, especially since it's causing penalties and interest to accumulate.
Thank you for this perspective! I've been really concerned about the high fee and the relationship dynamics. The fiancรฉ has been handling her finances for a while and I'm definitely worried he's not acting in her best interest. Do you think she should separate the tax issue completely from him at this point?
Based on what you've shared, I would absolutely recommend she handle this separately from her fiancรฉ. His track record isn't good - he failed to file her taxes for two years despite promising to do so, and now he's steering her toward an expensive service with unrealistic promises. This is a situation where she needs to take control of her own financial situation. She should consider getting a free consultation with a licensed EA (Enrolled Agent) or CPA who specializes in tax resolution to understand her real options. Many offer free initial consultations. She should go alone, without the fiancรฉ, to ensure she gets unbiased advice.
Just want to add one thing about bankruptcy and taxes - timing is SUPER important here. For income taxes to be dischargeable in bankruptcy: 1. The taxes must be income taxes 2. The due date for filing the tax return was at least 3 years ago 3. The tax return was filed at least 2 years before filing for bankruptcy 4. The tax assessment was made at least 240 days before filing bankruptcy 5. There was no fraud or willful evasion Since her taxes for 2022 and 2023 haven't even been filed yet, they almost certainly won't be dischargeable in bankruptcy. This means she'll still owe them after bankruptcy unless she uses OiC or another resolution method.
Just a side note - if you're not a U.S. citizen and don't qualify for an SSN, you might have an ITIN (Individual Taxpayer Identification Number) as your TIN instead. That's what I have as a resident alien, and it works similar to an SSN for tax purposes but can't be used for things like Social Security benefits.
How difficult was it to get your ITIN? I'm helping my cousin who just moved to the US and needs to file taxes next year.
The ITIN application process wasn't super difficult, but it did take some time. You need to complete Form W-7 and provide original documents or certified copies from the issuing agency (like a passport). You can submit it with your tax return or in advance. The processing time was about 7 weeks for me, but I've heard it can take longer during busy periods. One tip for your cousin: if possible, use an IRS-authorized Certifying Acceptance Agent instead of mailing original documents. That way they don't have to part with their passport for weeks while the IRS processes the application.
When I first got my tax documents sorted out, I was confused by all these different ID numbers too. Basically: - Regular employees: SSN = TIN - Non-US citizens without SSN: ITIN = TIN - Businesses: EIN = TIN - Adoption taxpayer: ATIN = TIN The TIN is just the generic term the IRS uses to refer to whichever number applies to your situation.
What about for a trust? My parents set one up and I'm trying to figure out the tax situation.
My tax guy told me there's a $400 threshold for self-employment income but royalties are different - they're considered passive income and have to be reported regardless of amount. Been reporting my timber royalties for years even though they're less than $300/year.
Wait, is the $400 threshold for ALL income or just self-employment? I made about $350 last year doing some freelance work and didn't report it. Should I be worried???
The $400 threshold applies specifically to self-employment income, which is when you need to file Schedule SE and pay self-employment tax. But that's completely different from the requirement to report all income on your tax return. All income is technically required to be reported regardless of amount. The $400 threshold only determines whether you need to pay self-employment tax, not whether you need to report the income. For your freelance work, you should still report it on Schedule C even if it's under $400, but you wouldn't need to file Schedule SE or pay self-employment tax.
I just went through an audit because I didn't report $200 in royalties from a book I published years ago. Thought it was too small to matter but the IRS computer matched the 1099 to my return and flagged it. Cost me way more in penalties and time than if I'd just reported it. Don't risk it!
One thing nobody's mentioned - make sure you take pictures of the destroyed couch before you get rid of it! My accountant always tells me to document the condition of things I'm replacing for business reasons. Also keep the receipt for the new couch and maybe write a note on it about the business purpose. The IRS loves documentation if they ever question anything.
Do you think it would be better to just take the whole cost as a business expense? Like can't I just say it's 100% for the dog sitting since that's what ruined it? The living room is where all the dogs hang out during the day.
I wouldn't recommend claiming 100% business use if you actually use it for personal purposes too. The IRS specifically looks for people trying to deduct personal expenses as business ones. If you're honestly using it almost entirely for the business, you might be able to justify a higher percentage like 90%, but you should be truthful about any personal use. Better to take a slightly smaller legitimate deduction than risk problems with an audit by overreaching.
Has anyone considered buying the couch through their business directly? I have a separate business account for my lawn care service and I buy equipment that way - seems cleaner for tax purposes.
Andre Rousseau
One important thing nobody mentioned yet - if you DO make the election to treat your non-resident spouse as a resident for the full year, remember that FBAR filing requirements will apply to her too! That means if she had over $10,000 in foreign accounts at any point during the year, you'll need to report all those accounts. This caught me and my wife by surprise last year. We made the election but didn't realize we needed to report her overseas accounts, and got a nasty letter from FinCEN about it.
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Zara Malik
โขOh wow, I hadn't even thought about the FBAR requirements! Do you know if there's a specific form for that or is it part of the regular tax filing?
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Andre Rousseau
โขThe FBAR (Foreign Bank Account Report) is actually filed separately from your tax return. It's officially called FinCEN Form 114 and must be filed electronically through the BSA E-Filing System. It's not part of your regular tax filing with the IRS. The deadline is technically April 15, but there's an automatic extension to October 15 if you miss the April deadline. The penalties for not filing can be pretty severe - starting at $10,000 for non-willful violations - so definitely make sure you file if your wife's foreign accounts exceeded $10,000 at any point during the year.
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Zoe Papadakis
Another option nobody mentioned - you could file as "Married Filing Separately" this year and then switch to "Married Filing Jointly" next year when she's been here longer. Sometimes that actually works out better financially depending on your specific situation and her foreign income.
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Jamal Carter
โขBut don't you lose a bunch of tax benefits if you file separately? Like I think you can't claim education credits and some other stuff.
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