Oh wow, I didn't realize there was an additional tax on top of regular income tax. Does TurboTax factor all this in automatically? And is that 15.3% on the $42,000 she made after expenses or on the full $73,000?

TurboTax will absolutely calculate this automatically for you, so don't worry about figuring it out manually. The self-employment tax applies to her net earnings after expenses (so the $42,000 figure you mentioned), not the gross income. The one good piece of news is that you can deduct half of the self-employment tax on your 1040, which helps offset some of that additional tax burden. Also, don't forget to look into whether you qualify for the Qualified Business Income deduction (Section 199A), which could give you a deduction of up to 20% of qualified business income. TurboTax should walk you through this as well.

How do you organize all of that? I have a shoebox full of receipts and I'm already dreading next year's taxes.

That's a great suggestion! Do you find that the time zone differences are manageable? And did you find them through a referral or some other way?

The time zone difference is honestly not a big deal. We schedule video calls that work for both of us - usually early morning my time, late afternoon Seattle time. Most of our communication happens through email anyway, and she's really responsive. I found her through an American expats in Thailand Facebook group. That's usually my first recommendation - join Facebook groups or forums for expats in your specific country and ask for CPA recommendations. You'll get feedback from people in very similar situations to yours.

This is good advice. I used an EA who specializes in expat taxes last year after a regular tax preparer completely messed up my return. The EA fixed everything and the difference in knowledge was night and day. Cost me about $550 for a pretty complex situation with income from three countries.

Thanks for this advice! I just started downloading all my bank statements. I'm realizing I had way more little side jobs than I remembered. Should I be separating the income by different clients/sources or just lumping all 1099 work together when I get organized?

For organization purposes, it's good to separate income by different clients, especially if you received actual 1099 forms from them. This makes verification easier if the IRS has questions. When you actually file though, all your self-employment income will be reported on Schedule C (Profit or Loss from Business). You'll list the total income there, but keeping records of which client paid what is important for your own documentation. If you earned more than $600 from any single client, they should have issued you a 1099, and the IRS will be expecting to see that income reported on your return. The more organized you are by client source now, the easier it will be to match everything up when filing.

Be really careful with tax relief companies. Most of them charge thousands upfront and just do what you could do yourself by calling the IRS directly. They advertise "pennies on the dollar" settlements (called Offers in Compromise) but most people don't qualify for those. For unfiled returns, you're much better off working with a local EA or CPA who charges a reasonable hourly rate rather than a tax relief company charging huge fees.

Thanks for this suggestion! I hadn't considered FreeTaxUSA. What's the difference in features compared to TurboTax? Is it as user-friendly for first-timers?

FreeTaxUSA has all the same forms and capabilities for small business owners, but the interface is slightly less polished than TurboTax. Still very user-friendly though - it asks you all the same questions to find deductions and walks you through Schedule C step by step. The big difference is price - usually under $20 for state filing compared to TurboTax's $120+ for self-employed. The federal filing with FreeTaxUSA is completely free, even with business income. It doesn't have the fancy import features for certain banks, but if you're organized with your numbers, it works perfectly.

Do you pay for the Self-Employed version of TurboTax or can you get by with the cheaper options? I'm in a similar situation and trying to decide which version to buy.

Did you do it all yourself or use a tax service? I've been having taxes withheld from my paychecks so I'm hoping that helps my situation. How long did the whole process take from when you started catching up until you had everything resolved?

I started with a free consultation with a tax resolution firm, but their fees were outrageous ($3,000+), so I ended up doing it myself with regular tax software. I just went year by year. Since you've had withholding, that will definitely help - you might not owe as much as you fear. The whole process took about 3 months from when I started gathering documents until everything was filed and my payment plan was set up. The most time-consuming part was tracking down old W-2s and 1099s from previous employers. If you're missing any forms, you can request wage transcripts from the IRS that show what was reported under your SSN for each year. The actual filing part went pretty quickly once I had all the documents.

100% agree. Those companies often charge thousands for what amounts to filling out an installment agreement form (which you can do yourself online) and maybe making a few phone calls. They make it sound like they have special relationships with the IRS or can get "pennies on the dollar" deals, but that's rarely the case.