I'm in a very similar situation - 7 years unfiled due to some major life upheavals. Reading through all these responses has been incredibly helpful! One thing I wanted to add that might help you is to check if your employers from previous years are still in business. I found that some of my older W-2s were easier to get directly from the company's HR department than going through the IRS transcript process, especially for the years where I had multiple jobs. Also, I discovered that some states have their own amnesty programs for unfiled state returns that run parallel to federal issues. Since you're dealing with 9 years, it might be worth checking if your state offers any penalty relief programs too. The emotional weight of this stuff is real - I put it off for so long because it felt too overwhelming. But honestly, once I started gathering documents for just one year, it became much less scary. You're taking the right step by addressing this proactively. The IRS is generally pretty reasonable when you come to them voluntarily rather than the other way around.

I want to echo what others have said about you making a smart choice by addressing this voluntarily. I went through a similar situation with 5 years of unfiled returns and the relief I felt once I started tackling it was incredible. One practical tip that helped me immensely: create a dedicated email folder and physical filing system for each tax year before you start. As you gather documents and communicate with the IRS or former employers, having everything organized by year from the beginning will save you so much time and stress later. Also, don't underestimate the power of calling your former employers' payroll departments directly. I was amazed at how helpful most HR departments were when I explained my situation. Many were able to email me copies of old W-2s within a day or two, which was much faster than waiting for IRS transcripts. The hardest part really is just starting. Once you tackle that first year and see it's not as scary as your brain made it out to be, the momentum builds. You mentioned battling depression - I totally get how that can make paperwork feel insurmountable. But you're taking control now, and that's huge. You've got this!

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.

Quick tax tip from a bookkeeper studying for the CPA too: track your study hours! If you can show you spent X hours studying specific topics directly related to your bookkeeping services vs Y hours studying audit/topics not related, you might be able to deduct a proportional amount of the expenses. Better than nothing if the IRS questions the full deduction!

Great advice from everyone here! I'm actually dealing with a similar situation with my tax prep business. One thing I'd add - make sure you're keeping detailed records of exactly what topics your CPA courses cover and how they relate to your current bookkeeping work. I created a simple spreadsheet tracking each course module and noting which ones directly applied to services I already offer clients (like tax prep, financial statement preparation, etc.) versus completely new areas. This documentation really helped when my CPA reviewed my deductions. Also, since you mentioned you're in startup phase - consider whether some of these expenses might qualify as startup costs under Section 195 rather than regular business expenses. Sometimes the startup cost treatment can be more favorable, especially if you're not generating much income yet to offset the deductions against. The international contractor payment is definitely deductible as others mentioned - just keep good records of the work performed and invoices received. No 1099 needed for foreign contractors working outside the US.

Great question! I went through this same confusion when I started my freelance marketing business. One thing that really helped me was creating a simple spreadsheet to track my business vs personal miles each month. I use my phone's GPS history to double-check my estimates - it's surprisingly accurate for reconstructing trips. For the 60% business use you mentioned, just make sure you can back that up with records. The IRS likes to see documentation like client appointment calendars, receipts from supply runs, and a mileage log. I learned this the hard way during a small audit last year - they wanted to see actual proof of my business driving patterns, not just my estimates. Also, don't forget that if you work from a home office, trips from your home to clients or suppliers typically qualify as business miles. But commuting from home to a regular workplace generally doesn't count as business use, even if you're self-employed.

Just to add another perspective on the documentation side - I've been self-employed for about 3 years now and learned that keeping a simple mileage log in your car is super helpful for staying consistent. I use a small notebook and just jot down the odometer reading, destination, and purpose for each business trip right when I get in the car. It becomes second nature after a few weeks. One thing I wish someone had told me earlier is that you can also deduct parking fees and tolls related to business travel, regardless of whether you use standard mileage or actual expenses method. Those add up more than you'd think, especially if you're driving to client meetings in downtown areas regularly. Just make sure to save those receipts too! For your 60% estimate, that sounds pretty reasonable for a graphic design business with regular client meetings and supply runs. The key is being able to justify that percentage if asked, so definitely start tracking your actual business miles now to see if your estimate is accurate.

Thank you so much for starting this thread! My husband and I have been wrestling with this exact question for weeks. After reading through everyone's responses, I feel like I finally have a roadmap to get the right answer. The most valuable insight from this discussion is that the specific TYPE of FSA matters more than just knowing it's "an FSA." I had no idea there were limited-purpose and post-deductible versions that don't disqualify HSA contributions. Our benefits materials just say "Health Care FSA" without any additional details. Based on everyone's advice, here's my action plan: 1. Request the actual Summary Plan Description from my husband's HR department 2. Look for the specific qualifying expense language mentioned by several commenters 3. If it's truly a general-purpose FSA, use the financial comparison framework that Lucas shared to see which option maximizes our household benefit I'm also intrigued by the tools mentioned - taxr.ai for document analysis and claimyr.com for getting through to the IRS if we need official confirmation. It's reassuring to know there are resources beyond just hoping HR gives accurate information. One question for the group: For those who discovered their FSA was actually HSA-compatible, did you find any other "gotchas" in the fine print that weren't obvious from the plan summaries? I want to make sure I'm not missing anything else important when I review our documents. This community has been incredibly helpful - thanks everyone for sharing your real experiences rather than just generic advice!

This thread has been incredibly illuminating! I work in employee benefits consulting and see this confusion constantly during open enrollment season. A few additional insights that might help: **Documentation Red Flags:** When reviewing your FSA plan documents, be especially wary if you see phrases like "qualified medical expenses as defined by IRS Publication 502" without further restrictions. This typically indicates a general-purpose FSA that would disqualify HSA contributions. Look instead for specific limitations like "dental and vision expenses only" or "expenses incurred after satisfaction of the high deductible health plan deductible." **Employer Communication Issues:** Many HR departments receive basic training on benefits but don't fully understand the tax implications of these account combinations. I've seen countless cases where HR confidently gives incorrect information about HSA/FSA compatibility. Always verify with the actual plan documents or insurance carrier directly. **Strategic Planning Tip:** If you discover you can't have both accounts this year, consider asking both employers about their options for next year. Some companies are adding limited-purpose FSAs or HSA-compatible health plans specifically because employees are requesting these combinations. Your inquiry might even prompt them to research better options for future plan years. The tax implications here can be significant - we're talking about thousands in potential savings or penalties - so it's absolutely worth the effort to get definitive answers rather than making assumptions. Great job everyone on emphasizing the importance of getting actual documentation!