I've heard about DSTs but don't really understand how they're different from REITs? Are there minimum investment requirements? My financial advisor never mentioned these as an option.

DSTs are fundamentally different from REITs in both structure and tax treatment. Unlike REITs which are securities, DSTs are considered direct ownership in real estate for tax purposes, which qualifies them for 1031 exchanges. This means you can defer capital gains taxes by rolling proceeds from property sales into DSTs. Minimums typically start around $100,000, which is higher than REITs, but that's because they're designed for accredited investors. The tax benefits are substantial - you'll receive K-1s showing your portion of depreciation, which often shelters a significant portion of the cash distributions from immediate taxation. Many financial advisors aren't familiar with them because they require specialized knowledge and typically don't fit into standard model portfolios. You'll want to work with someone who specializes in tax-advantaged real estate strategies for high-income professionals.

I've invested in two Opportunity Zone funds. They do work as advertised tax-wise but be extremely careful about the underlying investments. Many OZ areas are economically distressed for good reason, and some developers are creating poor investments that only make sense because of the tax benefits. The best approach is to find OZ investments that would make sense even without the tax advantages. I found a multi-family development in an emerging area just outside a major city that had strong fundamentals regardless of the OZ benefits. The tax deferral and eventual exclusion is just a bonus.

That's really helpful insight. I was looking at a fund that invests in multiple OZ projects to spread the risk, but you're right that I should be evaluating the underlying economics first. What documentation do you need for tax purposes? My accountant mentioned something about attaching an election statement to my return and filing Form 8997 annually, but I want to make sure I don't miss anything that could jeopardize the tax benefits.

Thanks for this specific breakdown! Yes to all of those questions - they assigned clients, partners reviewed everything before it went out, I had set office hours (9-6 generally), and they provided everything including legal research software and admin support. Sounds like Form 8919 is definitely the right approach here.

You're welcome! With all those factors, you're clearly describing an employee relationship, not an independent contractor situation. Form 8919 is absolutely the right approach. Just one more tip - in Section 3 of the form where it asks for the reason code, use code G since you received both a 1099 and W-2 from the same firm in the same year. This is a textbook example of when to use that code. And keep copies of any firm policies, emails about work requirements, etc. that demonstrate the control they had over your work, just in case questions come up later.

Yes, TurboTax does support Form 8919! I used it last year for this exact situation. When you enter your 1099-MISC, it will ask a series of questions about your working relationship with the payer. Answer those honestly, and if it determines you were misclassified, it will guide you to Form 8919 instead of Schedule C/SE. One tip though - make sure you're using at least TurboTax Deluxe. The free version doesn't support this form.

That's really interesting! I do have a small side business doing web design that brought in about $12,000 last year. Would I qualify for this SEP IRA option? And can I open one if I also have access to my employer's 401k from my main job?

Yes, you absolutely can set up a SEP IRA for your self-employment income, even while having access to an employer 401k! The two are independent of each other. The calculation gets a bit tricky though - it's not simply 25% of your gross $12,000. For self-employment income, you first need to deduct the self-employment tax deduction, then calculate 25% of that reduced amount. With $12,000 in net business income, you could probably contribute around $2,200-2,500 to a SEP IRA. That would directly reduce your taxable income for 2023 if you establish and fund the account before filing your taxes. Many brokerages like Vanguard, Fidelity, or Schwab offer SEP IRAs that you can open online pretty quickly.

The work-related educational expenses deduction was suspended until 2025, so that's unfortunately not an option for 2023 taxes. The moving expense deduction is indeed only for active duty military now too. But good call on the self-employed health insurance premiums! If OP has self-employment income as mentioned above, they might be able to deduct health insurance premiums paid.

Thank you for this insight. I hadn't considered doing just a consultation. Would that one hour really be enough to catch potential issues across multiple tax years including the business transition?

A one-hour consultation won't be comprehensive enough to catch everything across multiple years, but it would be enough time to identify major red flags in your approach and give you guidance on the areas where software typically fails for business returns. If you're going the DIY route, I'd actually recommend two consultations - one before you start to get a strategic approach, and one review after you've prepared the returns but before filing. The key is finding someone experienced with both the sole proprietor to LLC transition and back tax situations.

The Fresh Start program isn't actually a specific program you apply for - it's a collection of different IRS initiatives that make it easier to resolve tax debt. The main components are expanded installment agreements, offers in compromise with more flexible terms, and tax lien procedures. For OP's situation with unfiled returns, the most relevant part would be penalty abatement options after filing the back returns. First-time penalty abatement is available to many taxpayers who haven't had previous issues.

4 Is the withholding requirement based on where the LLC is registered or where the members live? If our LLC is registered in Delaware but we have a NY member, do we need to withhold NY taxes?

22 It's based on where income is sourced/where business is conducted, not where the LLC is registered. If your LLC is earning income attributable to NY (which can include having NY members performing services there), then yes, you may need to withhold NY taxes for non-NY members receiving that NY-sourced income. Delaware registration doesn't exempt you from other states' withholding requirements. Many LLCs register in Delaware for its favorable business laws but still have to deal with tax obligations in states where they actually operate or have members conducting business.

9 This is a great point. Do you know if it matters what type of investments? Like if it's mostly interest income vs capital gains from stock trading?