One important thing to consider is organizing your records NOW before tax season gets busy. Since you mentioned shutting down the business a few months ago, this is actually perfect timing to get everything sorted while it's still fresh in your memory. Create a simple spreadsheet with columns for: Date, Item Description, Purchase Cost, Sale Price, Platform Fees, Shipping Costs, and Net Profit/Loss per transaction. Even if you don't have perfect records, try to reconstruct what you can from your bank statements, PayPal records, and any Whatnot transaction history you can download. Also consider whether you want to treat this as a sole proprietorship (Schedule C) or if there are any advantages to filing as a partnership since you mentioned this was run with your partner. The tax implications can be different, and you might want to consult a tax professional for that specific question since it involves two people and substantial income. The key thing is that high gross sales with low/no profit is actually pretty common in reselling, especially when markets get saturated like you described with Lego. The IRS understands this, but you need solid documentation to support your expense claims.

Something to keep in mind - since you mentioned your partner ran the business but you're both concerned about taxes, make sure you're clear on whose SSN/EIN the Whatnot account was registered under. Whoever's tax ID is associated with the account will receive the 1099-K and be responsible for reporting all the income, even if you both contributed to the business. If the account was under your partner's SSN but you both invested money and time, you'll need to figure out how to handle the income split. The person who gets the 1099-K will need to report the full gross income on their Schedule C, but they can potentially "expense out" payments made to you as a business partner - though this gets complicated without formal partnership agreements. Also, don't stress too much about the high gross sales number. The IRS sees this all the time with resellers, especially on platforms like Whatnot, eBay, etc. What matters is your net profit after legitimate business expenses. Just make sure you have documentation for your major expense categories: inventory costs, shipping supplies, platform fees, storage costs if you rented space, mileage for sourcing inventory, and even a portion of utilities if you used part of your home for the business. The key is being organized and honest about your record-keeping. If you lost money or barely broke even, that's a legitimate business outcome that the IRS recognizes, especially in competitive reselling markets.

I had the exact same experience with ADP last year and it was so frustrating! The main problem is that ADP doesn't clearly explain how the different W4 options interact with each other, especially that "Multiple Jobs" checkbox. From what I learned through trial and error, here's what's happening: When you check "Married Filing Jointly with Multiple Jobs," ADP automatically applies an IRS withholding formula that increases your base withholding amount. Then it adds your $685 additional withholding on top of that calculated amount. So you're getting hit twice with extra withholding! Here's what I'd suggest to get to your target of $683 per paycheck: 1. Log back into ADP and go to your W4 settings 2. Change your filing status to "Married Filing Jointly" but UNCHECK the "Multiple Jobs" box completely 3. Calculate your needed additional withholding: $683 (target) - $245 (your base) = $438 4. Enter $438 in the "Additional withholding" field 5. Submit the changes and wait for your next paycheck to verify If it's still not quite right, you can adjust that additional amount up or down by $50-100 until you hit your target. The key is controlling it manually rather than letting ADP guess with those automated checkbox options. Don't feel bad about HR not being helpful - this is incredibly common with ADP and most HR departments don't understand the tax calculation details either. You'll get it figured out!

I'm new to this community but dealing with the exact same ADP withholding nightmare! Reading through everyone's responses has been incredibly helpful - I had no idea that the "Multiple Jobs" checkbox was so problematic. What really clicked for me is understanding that ADP stacks the automated "Multiple Jobs" calculation ON TOP OF your additional withholding amount, rather than incorporating it into a single calculation. No wonder the numbers never make sense! I'm in a similar boat where I owe a lot from last year and need to dramatically increase my withholding. Based on all the advice here, I'm going to: 1. Uncheck the "Multiple Jobs" box completely 2. Use just "Married Filing Jointly" as my base 3. Calculate exactly how much additional withholding I need using the simple math everyone's outlined 4. Start conservative and adjust after seeing the first paycheck It's frustrating that ADP makes this so confusing and that HR departments aren't equipped to help with these calculations. But this community thread has given me a clear path forward. Thanks everyone for sharing your experiences - it's really reassuring to know I'm not the only one who got completely lost in ADP's interface!

Careful with Mexican tax authorities! They've gotten much more strict in recent years. My friend is a permanent resident there and thought he only needed to report Mexican income, but got hit with a huge penalty for not declaring his US pension and rental properties. If your mom decides to use the "non-domiciled" approach mentioned above, make sure she has VERY clear documentation proving her stronger ties to the US. They look at factors like where family lives, where most valuable property is, main source of income, etc.

This is such a complex situation that affects so many Americans with ties to Mexico! I've been dealing with similar issues as a US citizen who recently got permanent residency in Mexico. One thing I learned the hard way is that timing matters a lot for when you become a Mexican tax resident. The rules changed in recent years - now if you have permanent residency status, you're generally considered a Mexican tax resident regardless of how many days you spend there, unlike the old 183-day rule. For your mom's situation, I'd strongly recommend getting clarity on her exact tax residency status in Mexico BEFORE she starts earning rental income there. It's much easier to plan the structure correctly from the beginning than to fix it later. Also, don't forget about FBAR reporting requirements in the US if she opens Mexican bank accounts for the rental property. Any foreign financial accounts over $10,000 need to be reported to FinCEN, and the penalties for missing this are severe. The Mexican tax system can be quite different from what we're used to in the US - things like how depreciation works, what expenses are deductible, and timing of when income is recognized. Having both a good Mexican accountant AND a US accountant who understands international issues is really worth the investment.

Has anyone dealt with rental income specifically across borders? I'm wondering about vacation rental platform payments (like Airbnb) - does it matter if the payments go to a US bank account vs Mexican account? Does that change where the income is considered sourced from?

This is such a helpful thread! I'm dealing with something similar for my sister who just got her Mexican permanent residency but still works remotely for a US company. One thing I learned from our tax attorney is that the timing of when your mom establishes her tax residency status in Mexico matters a lot. If she files the declaration for US primary tax residence early in the tax year, it can help avoid complications later. Also, since she's starting the vacation rental next year, now would be a perfect time to set up proper record-keeping systems for both countries. The Mexican tax authority is getting much more sophisticated about cross-referencing rental platform data (Airbnb, VRBO, etc.) with tax filings. Having clean books from day one will save headaches later. For the rental property specifically, make sure she understands the depreciation rules in both countries - they're calculated differently and this can affect her overall tax strategy significantly.

Don't forget about state taxes in all of this! Some states have their own additional self-employment taxes or different rules for retirement plan contributions. I made this mistake a few years ago and ended up with a surprise state tax bill because I only focused on federal tax planning.

This is exactly the kind of complex tax situation where having all the details straight is crucial. Based on what everyone has shared, it sounds like your brother is in a good position to significantly reduce his tax burden through the Solo 401k strategy. One additional consideration - since he's dealing with both severance income and new consulting income, make sure to factor in the timing of when the consulting payments were actually received versus earned for cash accounting purposes. If some of the $168,750 was invoiced but not yet received by year-end, that could affect both his self-employment tax calculations and his available contribution room for the Solo 401k. Also, with that level of income, he might want to consider whether a SEP-IRA could be more advantageous than a Solo 401k in his specific situation. While Solo 401k generally offers more flexibility, the administrative requirements can be more complex, especially if he's planning to continue growing his consulting business. The advice above about getting direct IRS clarification is spot on - with this much money involved and the complexity of mixed income sources, having official confirmation of the calculations could save him from costly mistakes down the road.