Wait seriously? I had no idea about the Roth IRA limitation! I thought the income limits were just reduced, not basically eliminated. That's a huge factor to consider...

Yes, it's one of the most restrictive aspects of filing separately that catches people by surprise. The income limit for Roth IRA contributions when filing separately is just $10,000 - after that, you can't contribute at all. It's not a gradual phase-out like with other filing statuses. For comparison, with married filing jointly in 2024, the Roth contribution starts phasing out at $230,000 and completely phases out at $240,000 of modified AGI.

This is the approach we took. My wife is a public school teacher going for PSLF, so we file separately to keep her payments low. Yes, we pay more in taxes each year, but after running the numbers, we'll come out ahead by about $42,000 over the 10-year forgiveness period.

Do you need to verify those certificates somehow? Or just keep them on file? I've had a few business customers claim they're exempt but I wasn't sure if I should just take their word for it.

You need to collect the actual certificate from them - don't just take their word for it. Most states have specific forms customers need to fill out. You should verify the certificate has all required information (their tax ID number, signature, etc.) and keep it on file. Some states also let you verify tax ID numbers on their websites. You don't need to send these certificates to the state, but you absolutely must have them available if you get audited. I now keep digital copies of all certificates in a dedicated folder so I can find them easily.

I've used both. TaxJar is more affordable for small businesses but Avalara has more features if you're growing fast. With your sales level ($2,500/month), TaxJar's basic plan would probably be sufficient. The time savings is definitely worth it - it automatically files your returns in multiple states and keeps track of all the weird local tax rates.

So when they say "voluntary tax system" that's basically BS right? Like they WILL come after you eventually? I always thought it was more like "we hope you'll pay but if you don't we might not notice" lol.

Voluntary tax" system means'you re expected to calculate and report your own taxes correctly without the government doing it for you first. It'doesn t mean taxes are optional! The IRS receives information from banks, employers, payment processors, etc., and their systems automatically match that information against filed returns. If you'haven t filed but they have records of your (income like 1099s from clients or bank)deposits , their automated systems will eventually flag your account for non-filing. Sometimes it takes years if'you re not on their radar, but digital records have made it much easier for them to catch non-filers. And once they do notice, they can go back indefinitely for unfiledyears.

I used FreeTaxUSA for 3 years of back taxes last year. Way cheaper than TurboTax and they keep prior year versions available. You just have to print and mail them in since you can't e-file prior years. Make sure you send them certified mail so you have proof of when you filed. Took about 9 weeks to process each return.

Thanks for this info! That's really helpful. Would it be better to wait until March then? Or is mid-February generally safe enough? I'm trying to balance getting it done early vs avoiding problems.

Mid-February is typically safe enough in my experience. By then, the IRS has usually worked out most of the early filing season kinks. March is completely fine too if you're not in a rush. Anytime between mid-February and the April deadline should give you smooth processing. Just make sure if you're filing a protective return that your statement is very clear about your intentions and the legal basis for your position. That clarity is more important than the exact filing date.

Yes, attaching a PDF statement works fine! I did this last year. Just make sure you title it clearly like "Form 1120-F Protective Filing Statement" and reference it somewhere in the return itself if possible. The IRS does look at properly labeled attachments.

If I file an amended return just for the stimulus credit, will that affect any other parts of my tax situation from that year? I'm worried about opening a can of worms or triggering an audit.

Filing an amended return for just the Recovery Rebate Credit shouldn't affect other aspects of your tax situation if that's the only change you're making. You'll need to complete the entire 1040-X form, but you'll only be changing the specific line related to the credit. The amendment itself doesn't increase your audit risk if the claim is legitimate. Just make sure you have documentation showing you were eligible and didn't receive the payment. The IRS should have records of which payments were issued to you, but having your own bank statements as backup is always smart.

You can check your IRS online account instead. Go to irs.gov and look for "View Your Account." You'll need to create an ID.me account if you don't have one, but once you're in, you can see all the payments that were issued to you including all stimulus payments. It's actually more reliable than the old GetMyPayment tool was.