Thanks for bringing this up! I'm definitely worried they won't send the 1099 now. Should I just email them and explicitly ask if they'll be sending a 1099-NEC since I'm classified as a vendor in their system? I have all my payment records but would obviously prefer to have the official form.

Yes, I'd recommend sending them a polite email asking for confirmation that they'll be issuing you a 1099-NEC for the 2024 tax year. Something like: "I understand I'm classified as a vendor in your system, and I just wanted to confirm you'll be issuing a 1099-NEC for tax purposes since the payments exceeded $600 this year." If they come back and say they don't issue 1099s to vendors, you can politely inform them that IRS rules require a 1099-NEC for independent contractors/vendors who were paid $600 or more for services. Sometimes the accounting department just needs a friendly reminder about the requirements.

Do you need a different form to track expenses for a vendor vs a contractor? I always get confused about this stuff.

This is a really good point about state taxes. I'm originally from California and they kept trying to claim me as a resident for tax purposes for years after I moved to France. I had to provide extensive documentation proving I had no intention of returning to California. Also, the FATCA thing is real - my French bank made me fill out a W-9 form once they realized I was a US citizen, and they definitely report my account information to the US authorities.

California is particularly aggressive about maintaining tax residency. They look for any connection (driver's license, voter registration, family ties, etc.) to claim you're still a resident. Other problematic states include New York, Virginia, and New Mexico. The FATCA reporting is a double-edged sword for expats. On one hand, it means the IRS likely already knows about your foreign accounts, which increases the importance of proper filing. On the other hand, it's caused some foreign banks to refuse US clients altogether due to the reporting burden. It's unfortunately part of the reality of being a US citizen abroad.

The UK-US tax treaty does help with investment income but it's complicated. Generally, you can claim foreign tax credits in the US for taxes paid to the UK on the same income. For US-source investment income like your US investments, you'll typically pay US tax on those first, then declare them on your UK return and get credit for the US tax paid. For dividends specifically, the treaty usually reduces withholding rates. Interest and capital gains have their own rules too. I recommend keeping very clear records of all taxes paid in both countries so you can properly claim credits.

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.

That's not correct. You can't claim Head of Household if you're married (unless you're legally separated or meet very specific requirements). If he's married and living with his wife, Married Filing Jointly is the correct status, not Head of Household.

Oh shoot, you're right - I was mixing up the requirements. For some reason I was thinking Head of Household was for anyone supporting dependents, but you're correct that married couples living together can't use it. Thanks for the correction! Married Filing Jointly would indeed be the right status in this case.

Actually, your spouse doesn't need earned income for you to contribute to a spousal IRA as long as you file jointly and have sufficient earned income yourself. It's one of the few exceptions to the "earned income" requirement for IRA contributions.

That's a really good point I hadn't considered. Do you know how we can find out what kind of audit they'd likely do for something like this? And did you find that having representation made the field audit less stressful? My cousin is already pretty anxious about the whole situation.

It's hard to predict exactly, but generally, the larger the deduction and more complex the situation, the more likely it is to be a field audit. For a significant theft loss, I'd plan for at least an office audit if not a field audit. Having representation absolutely made the process less stressful. My tax attorney handled most of the direct interaction with the auditor, prepared me for questions I needed to answer, and made sure I didn't volunteer unnecessary information that could expand the scope of the audit. Worth every penny for the reduced stress alone. Before hiring anyone, ask specifically about their experience with the type of audit they think you might face. Some preparers are great with correspondence audits but have never handled a field audit.

I second this! My enrolled agent charges about half what CPAs in my area charge, and she used to work for the IRS so she knows exactly how they think. She's saved me so much money and stress over the years. Definitely worth considering as an option.

What's the difference between a CPA and an EA? Are EAs actually qualified to handle complex situations? No offense but I always thought they were like a step down from "real" tax professionals.