Couldn't you potentially save on taxes by using accrual method though? I've heard you can deduct expenses before you actually pay them. Would that be beneficial for someone who buys a lot of supplies in December but doesn't pay until January?

Cash method actually tends to be more beneficial for most small custom goods businesses. While accrual lets you deduct some expenses before paying, it also forces you to report income when you invoice clients - even if they haven't paid you yet. For most of us, that's a big disadvantage. The December/January scenario you mentioned is a real consideration, but for most custom makers, the simplicity of cash method far outweighs any potential timing benefits. Plus, with cash method, if you have a client who hasn't paid yet, you don't have to pay taxes on that income until you actually receive payment. This is huge for small businesses with cash flow challenges or clients who pay late.

I used TurboSelf-Employed last year and it handled my accounting method change pretty well. The software walked me through the Form 3115 with guided questions. It wasn't perfect - I still had to do some research on my own, but it was way cheaper than paying an accountant $600. They also have some decent articles about cash vs. accrual in their help section.

11 I tried H&R Block last year for my W2G as a non-resident from Germany. Big mistake! The preparer had no idea about the proper treaty rates and almost filed my return incorrectly. I ended up going to a specialist and had to pay twice. Definitely find someone who specifically knows international tax!

3 Thanks for the warning! I'll definitely avoid them and look for someone with specific international experience. Maybe I should check with my university's international student office for recommendations since they probably deal with this regularly.

20 Professional gambler status is EXTREMELY difficult to qualify for as a non-resident and can actually create bigger problems! The IRS scrutinizes these claims heavily, and it can trigger effectively connected income treatment which means filing Schedule C and potentially being subject to self-employment tax. It can also affect visa status since technically you'd be "working" in the US. I'd be very careful about pursuing this route without expert guidance.

Thanks for pointing that out - I should have mentioned it. From what I understand from the audit letter, she failed the support test. The IRS determined she didn't provide more than 50% of their support over the year. In reality, I was the one paying most of the housing costs and expenses, but we filed separately and she claimed them.

That's exactly what I was getting at! If the support test was the issue, and YOU were actually the one providing most of the support, then you have a legitimate case for amending and claiming them. Make sure you gather documentation showing YOUR financial support: rent/mortgage payments, utility bills, grocery receipts, clothing purchases, medical expenses, school supplies, etc. Calculate the total cost of support for each dependent and show that your contribution exceeded 50% of that total. Bank statements and canceled checks can help establish the timeline and amounts. When you file the 1040X, include a clear statement explaining that you were the actual support provider, not your wife, and that's why her claim was rightfully rejected while yours should be accepted. The more organized and detailed your documentation, the better your chances of avoiding another audit or having your amendment approved if you are audited.

I did this last year. Don't use the normal amend process in TurboTax. Start a brand new return for that tax year, enter everything correctly including the dependents, then select the option that this is an amended return. It'll generate a 1040X showing the differences automatically.

Thanks for this! Do you know how often the cash back percentages change? Should I wait until closer to the filing deadline to see if the rates go up?

The cash back percentages typically change every 2-4 weeks, sometimes more frequently during peak tax season. They usually increase as we get closer to April 15th, but there's no guarantee. Last year the highest rates were actually in mid-March, then they dropped slightly in April. If you don't need to file immediately, checking back every week or so might help you catch a better rate. Just don't cut it too close to the deadline in case of technical issues.

This worked for me! Found a coupon for 20% off and it stacked with the Rakuten cash back. Ended up paying like $79 for Premium instead of $119, then got about $12 back through Rakuten. Every bit helps when you're paying taxes!

That's a great point that I hadn't considered. We did have some capital gains last year from selling some stocks (about $35,000). Would that really affect the QBID calculation that much? I didn't realize capital gains would impact this.

Yes, capital gains definitely impact the calculation! The 199A deduction is limited to 20% of your taxable income MINUS net capital gains. So in your case, if you had $35,000 in capital gains, your effective taxable income for QBID purposes would be reduced by that amount. For example, if your taxable income was $200,000 including $35,000 capital gains, your QBID would be limited to 20% of $165,000 ($200,000 - $35,000), which is $33,000. Even if your QBI was higher, you couldn't take more than that $33,000 as your QBID. This is a commonly overlooked limitation that can significantly reduce the expected deduction.

TurboTax handles QBID calculations much better than FreeTaxUSA in my experience, especially with multiple K1s. It costs more but worth it for complex situations with partnerships and S-corps.