Can you give an example of the special treatment you're talking about? I have income from Canada and want to make sure I'm not missing anything.

For Canadian income specifically, you should check the US-Canada tax treaty to see if your type of income qualifies for reduced withholding or special classification. For example, certain royalties from Canada are subject to a maximum 10% withholding rate rather than standard rates. Also important for Canadian transactions - if you have income from Canadian retirement accounts, there are specific reporting requirements and potential treaty benefits. Some Canadian investment income might not need to be on Schedule NEC at all if it meets certain treaty qualifications. Review Article XI and XII of the treaty for investment income and royalties.

TurboTax Premium with the foreign tax package can handle additional non-ECI transactions. It automatically creates the attachment when you exceed the limit. I've used it for the past two years with no issues.

Can you explain what a Section 125 Cafeteria Plan is? Never heard of this before. Is this something I should specifically ask my HR about?

A Section 125 Cafeteria Plan (named after the section of the tax code) allows employees to pay for certain benefits with pre-tax dollars. It's essentially a menu of benefit options where you can choose between taxable benefits (like cash) and non-taxable benefits (like health insurance, FSAs, etc.). Yes, definitely ask your HR if they have this plan option. If they do, and you opt for the cash option within this plan, it might be structured in a way that reduces your tax burden. But be aware that most small to medium companies don't have this set up because it's administratively complex. Still worth asking though!

This matches my experience too. My employer gives $320/month for declining their insurance, and it's definitely taxed. Shows up as "Benefit Opt-Out Pay" on my paystub.

How did you handle the QI bankruptcy situation? Were you able to recover your funds or did you end up having to pay the capital gains?

I was extremely lucky that the bankruptcy happened on day 15 of my 45-day identification period. I immediately hired a new QI who was able to make a claim against the first QI's bond. I did recover about 85% of my funds eventually, but it delayed my purchase of the replacement property and caused a ton of stress. I ended up having to bring additional cash to closing to make up the difference. The bigger problem was that I nearly missed the 180-day deadline for completing the exchange because of all the legal complications. If that had happened, I would have owed tax on the full gain. Now I only use large, established QI companies that have significant insurance and bonding, even if they charge slightly higher fees.

I did this last year with a triplex (lived in one unit, rented two). My CPA had me use square footage as the most defensible method in case of audit. We calculated the percentage of the total square footage that my unit represented, then allocated purchase price, improvements, and selling costs accordingly. For common areas, we split those proportionally too. Keep VERY detailed records of when you converted part to personal use, any improvements made to either side, and maintenance costs. Take photos of everything. The more documentation you have, the better position you'll be in if the IRS questions your allocation.

This is actually not entirely accurate. While some taxes can be discharged in bankruptcy, there are strict requirements. Self-employment taxes specifically have additional complications because they include both income tax and what would normally be FICA taxes (Social Security and Medicare). The FICA portion is much harder to discharge. Also, filing fraudulent returns or willful evasion will prevent discharge regardless of timing. Given that OP deliberately chose not to pay the taxes to fund their business instead, a bankruptcy judge might view that as willful evasion.

1 You make a good point about intent. We definitely went into this planning to be partners from day one - we split costs 50/50, made decisions together, and had a handshake agreement about profit sharing. So it sounds like we really should file as a partnership for 2023. If we do file Form 1065 for 2023 now, how complicated is the process for a business that technically existed but had no income, only startup expenses?

7 Since your intent was clearly to operate as partners from the beginning with your 50/50 cost splitting and shared decision-making, filing Form 1065 for 2023 is definitely the correct approach. Filing a Form 1065 for a startup year with only expenses isn't particularly complicated. You'll report zero income and list all the qualified business expenses on the appropriate lines. The form will show a loss, which will flow through to each partner's K-1 based on your ownership percentages. Make sure to include a statement that clearly identifies these as startup costs under IRC Section 195. The main challenge is just categorizing all your expenses correctly.

11 I used TurboTax Business for a late 2022 partnership return last year. You need to buy the software for the specific tax year you're filing for (so 2023 TurboTax Business for a 2023 return). They keep previous years' versions available for download on their website specifically for late filings.