I've been through this exact situation with my consulting business in Germany. One thing that hasn't been mentioned yet is the timing of the check-the-box election - you need to file Form 8832 within 75 days of forming the entity OR by the due date of your return for the year you want the election to be effective. Also, regarding the self-employment tax concern that several people raised - if your foreign business involves providing services personally (like consulting), then yes, you'll pay SE tax on that income. However, if it's more passive investment income or rental income from the foreign entity, it might not be subject to self-employment tax even after the election. The key is understanding what type of business activities you're engaged in through the foreign entity. I'd strongly recommend getting a professional analysis of your specific situation before making the election, as it can't easily be undone once made.

Just wanted to add another consideration that I learned the hard way - if you make the check-the-box election, you'll also need to be very careful about the Foreign Earned Income Exclusion (FEIE) if you're living abroad. When your foreign entity becomes disregarded, that income is treated as directly earned by you, which can actually help you qualify for the FEIE if you meet the physical presence or bona fide residence tests. This could potentially exclude up to $120,000 (for 2023) of that foreign earned income from U.S. taxation, though you'd still owe self-employment tax on it. However, there's a catch - you can't claim both the FEIE and foreign tax credits on the same income. So you'll need to run the numbers to see which gives you a better result. In my case, the FEIE ended up being more beneficial than trying to claim foreign tax credits, especially since it doesn't eliminate the SE tax anyway. Also worth noting: if you're claiming the FEIE, you might want to consider making a Section 962 election if you have other foreign corporations that generate GILTI, as it can help with the overall tax optimization across all your international structures.

Something else to consider - if the stock price drops after your purchase and you sell at a loss, you might face the wash sale rule complications if you continue participating in the ESPP program. This has bitten me before when I sold some underwater ESPP shares but then acquired more through the next purchase period within 30 days.

Great point about the wash sale rule complications! This is something that caught me off guard when I first started with ESPPs. The automatic nature of ESPP purchases makes it really easy to accidentally trigger wash sale rules if you're trying to harvest losses from previous purchases. One strategy I've learned is to be very strategic about timing any ESPP share sales if you're planning to continue in the program. You either need to wait more than 30 days after selling before your next ESPP purchase, or suspend participation for a purchase period if you want to realize losses for tax purposes. The wash sale rule gets even more complex with ESPPs because you might have shares from multiple purchase dates with different cost bases. I keep a spreadsheet tracking all my ESPP purchases and any sales to avoid accidentally creating wash sale situations. It's tedious but has saved me from some nasty surprises at tax time. Also worth noting - if you have other employee stock options or restricted stock that vest around the same time, those can potentially trigger wash sale rules too if they're the same underlying stock.

I was hesitant to switch for the longest time, but finally updated our W-4s last year after getting yet another massive $3,200 refund. The new form definitely takes more thought upfront, but it's so much better for accuracy. What really sold me was realizing that the old allowances system was basically designed for single-income households from decades ago. It just couldn't handle modern situations like dual-income families, gig work, or investment income very well. The new W-4 walks you through each income source and deduction category step by step. For your situation with both spouses working, Step 2 is crucial - it has you choose between using the multiple jobs worksheet or the online calculator. I'd recommend the online calculator since it can factor in your actual pay amounts and tax brackets more precisely. One tip that helped us: when filling it out, have your most recent pay stubs and last year's tax return handy. The more accurate info you can input, the better your withholding will be. We went from that $3,200 refund to owing just $47 this past year - basically perfect!

I switched to the new W-4 form at the beginning of this year and it's been a huge improvement! My situation is similar to yours - married with both of us working. Under the old form, we were constantly surprised at tax time, either owing several thousand or getting massive refunds that varied wildly from year to year. The new form initially looked intimidating with all the worksheets, but it's actually much more logical once you dive in. Instead of trying to figure out mysterious "allowances," you're working with real dollar amounts that make sense. The biggest game-changer for us was Step 2 for multiple jobs. We used the online IRS calculator which walked us through our combined income and showed us exactly what to put on each line. This year we ended up owing just $150 instead of our usual $2,500+ surprise bill. My advice would be to bite the bullet and make the switch, especially if your withholding has been inconsistent. The peace of mind alone is worth the hour it takes to work through the calculations. Plus, you can update it mid-year without any issues - the payroll system just adjusts going forward.

I'm just wondering if anyone knows if there's a tax treaty between the US and Ecuador that might help with this situation? I know some countries have agreements to prevent double taxation.

Based on what you've described, I'd strongly recommend getting professional tax advice before your grandfather sends any money back. The IRS tends to look at the economic reality of transactions rather than just the labels you put on them. Since your grandfather "considers you a partial owner" and you're expecting returns based on business performance, this could easily be viewed as an investment arrangement rather than a simple loan, even without formal ownership papers. This means any payments beyond your original $15,000 might be taxable as business income or capital gains. A few key points to consider: 1. Keep detailed records of your original $15,000 transfer with documentation showing it as startup capital 2. Any "thank you" payments tied to business success will likely be taxable income 3. True gifts from your grandfather (unrelated to the business) have different reporting requirements but aren't taxable to you 4. You'll definitely need to file FBAR if these international transfers put you over the $10,000 threshold The informal nature of your current arrangement is actually working against you tax-wise. Consider formalizing this as either a proper loan with interest or an actual investment with documented ownership percentages. This will make your tax obligations much clearer and help you avoid potential issues with the IRS down the road. Don't wait until the money starts flowing to figure this out - the structure you set up now will determine your tax liability later.

Practical advice from someone who had a smaller lottery win ($230k): You absolutely need to pay your taxes correctly, but there are legal ways to maintain privacy. I formed an LLC to claim my prize (allowed in my state), had a proper tax attorney handle everything, and I live in the same neighborhood as before. I did buy a nicer car but nothing flashy like a Lambo. The key is not making sudden, dramatic lifestyle changes that attract attention. The IRS knows about your winnings, but they don't alert local police about lottery winners. As long as you're paying proper taxes, most people will never know unless you tell them or start spending extravagantly.

This is such a thoughtful question! I've been researching this topic myself (also daydreaming about winning lol). One thing I learned that might help is that many financial advisors recommend what they call a "staged reveal" approach to your lifestyle changes. Basically, instead of suddenly buying a Ferrari and mansion, you gradually upgrade your lifestyle over 6-12 months in ways that seem plausible. Maybe start with paying off existing debt, then a modest house upgrade, then a nice (but not exotic) car. This creates a more believable narrative if anyone asks - you could say you got a promotion, inheritance from a relative, or made some good investments. The privacy laws in anonymous states are really just about keeping your name out of the newspaper and preventing people from knowing you won. But you're right that the IRS will absolutely know, and so will anyone you work with to claim the prize (lawyers, financial advisors, etc.). I think the key is having a solid plan before you even claim the prize, which is why so many people recommend assembling a team of professionals first. They can help you structure everything legally while maintaining as much privacy as possible from the general public.