Don't forget to check if there's a totalization agreement between UAE and US for social security! It might not apply in your case, but it's worth checking. I got caught having to pay self-employment tax in the US even though I was working from Singapore because there was no totalization agreement. The W-8BEN doesn't cover social security taxes. Also, keep super detailed records of where you physically worked each day. If you ever visit the US for business, those days could potentially be considered US-sourced income and subject to different rules.

Great point about social security taxes! You're absolutely right that the UAE doesn't have a totalization agreement with the US, so this is definitely something to watch out for. As an independent contractor, you might still be subject to US self-employment tax (Social Security and Medicare taxes) even if your regular income isn't subject to withholding. The self-employment tax applies if you have net earnings from self-employment of $400 or more, and unfortunately, the foreign earned income exclusion doesn't apply to self-employment tax. However, since you're performing all services outside the US, you should generally not be subject to self-employment tax on that income. But here's the tricky part - if your US client treats you as a contractor and issues you a 1099, they might report payments to you to the IRS, which could trigger questions. Make sure your contract clearly establishes that you're providing services from outside the US and consider having the contract specify that you're operating under UAE jurisdiction. Document everything - flight records, lease agreements, utility bills - anything that proves your physical location during work periods. This becomes crucial if there's ever any dispute about where services were actually performed.

Does anyone know how the tax stuff works if you use bitcoin or other crypto for sports betting? I've been using this offshore site that only takes crypto deposits and I'm confused about how to handle the taxes.

One thing to keep in mind about sports betting taxes that I learned the hard way - the $600 W-2G threshold only applies to certain types of gambling like horse racing and casinos. For sports betting, the platforms are supposed to issue a 1099-MISC if your winnings exceed $600 AND are at least 300 times your wager. But even if you don't get any tax forms, you're still required to report ALL winnings as income. I'd also recommend setting aside a portion of any big wins throughout the year for taxes, especially if you're not having taxes withheld from other income. Getting hit with a big tax bill in April because you didn't plan for it can be brutal. I usually put about 25-30% of any significant winnings into a separate savings account just to be safe. The record-keeping really is crucial - not just for potential audits, but also to help you understand if you're actually profitable after taxes. A lot of casual bettors think they're doing better than they actually are when they don't account for the full tax impact.

I'm a little late to this convo but fyi - TurboTax has a known glitch with scholarships!! When you enter the 1098-T information, it doesn't automatically connect the scholarship amounts from Box 5 with the qualified expenses. You have to manually tell it that the scholarship was used for qualified expenses by entering those details in the scholarship/grant section. I had to call their support line to figure this out after it kept saying we owed taxes on my son's full scholarship amount. Super frustrating but fixable!

Great to hear you got it sorted out! For anyone else dealing with this, I'd also recommend keeping detailed records of what qualified expenses your scholarship covered. The IRS defines qualified education expenses pretty specifically - tuition, required fees, books, and required supplies/equipment for courses. Room and board, transportation, and personal expenses don't qualify, even if they're listed on your student bill. Also, if you're claiming education tax credits like the American Opportunity Credit, you can't "double dip" - the same tuition dollars can't be both tax-free (from scholarship) AND used to claim a tax credit. One more tip: if your child has multiple scholarships or grants, you might have some flexibility in how you allocate them between qualified and non-qualified expenses to optimize your tax situation. It can get complex, so definitely worth consulting with a tax professional if the amounts are significant!

Has anyone considered Series I Savings Bonds as a safe option? Current rate is decent, they're backed by the federal government, and the interest is exempt from state and local taxes. Only federal taxes apply, and you can even defer those taxes until you cash them out.

Isabella, your situation sounds very similar to mine a few years ago! At 43 with $187K in your 401k, you're in a good position to implement some strategic tax planning. Given that you expect to be in a higher tax bracket in 5-7 years, I'd actually recommend against Roth conversions right now. Instead, consider doing them during your early retirement years (60-65) when your income will likely be lower. This is called a "Roth conversion ladder" and can be much more tax-efficient. For the "safest" approach right now, I'd suggest: 1. Max out your current 401k contributions (especially if your employer matches) 2. If you have access to an HSA, max that out too - it's triple tax-advantaged 3. Consider tax-loss harvesting in any taxable accounts you have 4. Look into Series I Savings Bonds for a small portion of your safe money (currently paying decent rates) The key is diversifying your tax strategies across different account types. This gives you flexibility in retirement to manage your tax bracket by choosing which accounts to withdraw from each year. Municipal bonds aren't bad, but given your timeline and the current interest rate environment, you might get better long-term growth staying in diversified index funds within your tax-advantaged accounts.

Something important that nobody's mentioned yet - make sure you establish your Solo 401(k) before December 31st of the tax year! You can fund it later (usually by the tax filing deadline plus extensions), but the actual plan needs to be established in the calendar year you want to contribute for. I learned this the hard way last year. Had a great year in my business, went to make a big Solo 401(k) contribution in March when doing taxes, and found out I couldn't because I hadn't set up the actual plan by Dec 31st. Ended up paying way more in taxes than necessary.

One thing to consider - if you're a W-2 employee somewhere else AND participating in your spouse's Solo 401k, make sure you watch the annual contribution limits. The employee contribution limit ($22,500 in 2023) applies across ALL your 401k plans combined. But the cool part is the employer contribution from her S-Corp doesn't count toward that limit! So she can still make the employer contribution of up to 25% of her salary even if she's maxed out her personal contribution elsewhere.