One thing to be careful about - if you're claiming an exception to the 10% penalty, make sure you're using the right code! I messed this up last year and had to file an amended return. The IRS has specific codes for different exceptions (medical expenses is code 05, first-time home purchase is 09, etc). Also, some free software might let you fill out Form 5329, but won't guide you through figuring out if you qualify for exceptions. That's where I got tripped up - I ended up paying the 10% penalty when I actually qualified for an exception.

I went through this exact same headache last year! After trying multiple "free" services that all wanted to charge me for Form 5329, I ended up using the IRS Free File Fillable Forms directly from the IRS website. It's definitely not as polished as the commercial software, but it's completely free and includes all the forms you need. The interface is pretty basic - it's essentially just fillable PDFs - but it does the calculations for you and e-files directly to the IRS. You'll need to be a bit more careful about entering everything correctly since there's less hand-holding, but for Form 5329 it's pretty straightforward. Another tip: before you file, double-check if you qualify for any exceptions to the 10% penalty. I almost paid the penalty unnecessarily until I realized my medical expenses qualified for an exception. The Form 5329 instructions on the IRS website list all the exception codes - it's worth spending a few minutes reviewing them to see if any apply to your situation. Paper filing is always an option too if you're comfortable with that route. Sometimes the old-fashioned way is the most reliable!

Just a heads up about something many new partnerships miss - don't forget to include your guaranteed payments if you took any regular draws from the business! Those aren't the same as distributions and get reported differently on the K-1.

I went through a very similar situation with my consulting partnership last year when our CPA bailed on us right before the deadline. Here's what I learned that might help you: For your straightforward 50/50 partnership with $34k income and $8.5k expenses, you can absolutely handle this yourself. The key things to remember: 1. Your quarterly distributions of $3,125 each are NOT reported as income on the K-1 - they're just distributions of money you already earned. The actual income that goes on each K-1 would be your share of the net profit (roughly $12,750 each after expenses). 2. Make sure you track your "basis" correctly - this starts with what you each contributed to start the LLC, then increases with your share of income and decreases with distributions taken. 3. For a simple partnership like yours, the main boxes on the K-1 that will have amounts are Box 1 (ordinary business income) and possibly Box 19 (distributions). I used FreeTaxUSA's business version for about $80 and it walked me through everything step by step. The 1065 generates the K-1s automatically once you input all the partnership info. Took me about 3 hours total, and my regular accountant said they looked perfect. Don't stress too much - your situation is pretty straightforward compared to partnerships with multiple income streams or complex allocations!

Can someone explain the support test in more detail? My son made about $24k last year from his part-time job and internship, but he lives at home and I pay for housing, food, utilities, car insurance, health insurance, and his tuition. Even with his income, I think I still provide over half his total support, but how do you actually calculate this?

I went through this exact same situation two years ago with my daughter who turned 19 in October but was in high school until June. The key thing that helped me was getting a letter from her high school confirming she was enrolled as a full-time student for those months - some tax software asks for documentation if there are any questions. One thing to watch out for: make sure when you're entering info in TurboTax that you specify she was a FULL-TIME high school student for those 5+ months, not just enrolled. The software sometimes defaults to part-time if you don't explicitly select full-time status. That small detail completely changed my results. Also, since she made $22k, she'll definitely need to file her own return regardless of whether you claim her as a dependent. Just make sure she checks the box indicating that someone else can claim her as a dependent so there's no conflict when both returns are processed. Based on everything you've described, you should absolutely be able to claim her and keep your head of household status. Don't let the software scare you into filing incorrectly!

Has anyone dealt with Form 8833? My accountant is saying I need to file this to claim treaty benefits for the step-up basis on property I sold after immigration. Is this really necessary?

This is exactly the kind of situation where having proper documentation from day one of your US residency is crucial. I went through something similar when I moved from the UK with both property and investment accounts. One thing I'd add to the excellent advice already given - make sure you also document any improvements or renovations you made to the property during your ownership, even before becoming a US resident. While you get the step-up basis to fair market value on your residency date, any additional improvements after that date can be added to your basis as well. Also, keep in mind that different states might have different rules for how they treat this situation, so if you're in a state with income tax, you'll want to check their specific requirements too. Some states don't automatically follow the federal step-up basis rules. The $5,000 gain you're looking at is definitely manageable tax-wise, especially compared to what it could have been! Just make sure you have all your documentation organized - the appraisal, the sale documents, and any records showing the timeline of your residency status change.

Another option nobody mentioned - you could elect to treat your TFSA as a foreign grantor trust and file Form 3520-A instead of Form 3520. This might sound more complicated, but some cross-border accountants prefer this approach because it provides more clarity on how to report income. Also, check if you're required to file FBAR (FinCEN Form 114) for your TFSA. The threshold is lower than Form 8938 - just $10,000 across all foreign accounts combined at any point during the year.

I went through this exact situation two years ago when I moved from Vancouver to California. The TFSA reporting requirements are genuinely confusing because the IRS guidance has been inconsistent over the years. Here's what I learned after consulting with a cross-border tax specialist: You'll likely need to file Form 8938 since your TFSA value exceeds the threshold ($50k for single filers living abroad, but lower thresholds apply once you become a US resident). For Form 3520, while the IRS has indicated they won't aggressively pursue penalties for TFSAs, many professionals still recommend filing it for complete compliance. The most important thing people don't realize is that you need to report ALL income generated by your TFSA on your US tax return - interest, dividends, capital gains, everything. The "tax-free" benefit only applies in Canada, not for US tax purposes. Given the complexity and potential penalties, I'd strongly suggest finding a CPA who specializes in US-Canada cross-border tax issues, even if it's just for a consultation. The peace of mind is worth the cost, and they can help you decide whether to keep the TFSA or close it based on your long-term plans. Also don't forget about FBAR filing if your combined foreign accounts exceed $10k at any point during the year - that's separate from the other forms and has its own penalties for non-compliance.