As someone who's dealt with similar Schedule C loss concerns, I want to emphasize that the IRS hobby loss rule is really about demonstrating genuine business intent rather than just hitting specific profit targets. The fact that you paused operations in 2023 due to your partner's illness actually works in your favor - it shows you made rational business decisions rather than blindly continuing to generate losses. A few key points for your Colorado restart: 1. **Documentation is everything** - Keep detailed records of your business activities, not just expenses. Time logs, client communications, market research, networking events all help prove business intent. 2. **The 5-year window is flexible** - Since you had legitimate business reasons for the pause, and you're essentially restarting with new equipment and location, you have a strong case that this demonstrates serious business commitment. 3. **Depreciation strategy matters** - While depreciation does count toward your loss calculation, bonus depreciation on legitimate business equipment actually supports your case for having a real business with substantial investment. 4. **Consider professional consultation** - Given that you're in year 3 with a restart, it might be worth having a tax professional review your specific situation to ensure you're positioning everything correctly for IRS scrutiny. The key is showing this is a legitimate business venture, not a tax-loss hobby. Your equipment investment and strategic restart suggest you're on the right track!

Clay, I've been following this thread and wanted to add some practical perspective from someone who went through an IRS audit specifically related to Schedule C losses and the hobby rule. First, yes - depreciation absolutely counts when determining profit/loss for the 2-of-5 year rule. However, the IRS isn't just mechanically applying this test. They're looking at the totality of circumstances to determine if you have a genuine profit motive. Your situation actually has several positive factors: 1) You made a rational business decision to pause operations in 2023 due to your partner's illness (this shows business judgment, not hobby behavior), 2) You're making a substantial equipment investment ($14k shows serious commitment), and 3) You're strategically relocating and restarting (again, shows business planning). Here's what I learned from my audit experience: Keep contemporaneous records of everything business-related. Don't just track expenses - document your business activities, decision-making process, market research, and efforts to improve profitability. The IRS agent specifically asked about my business plan and whether I had adjusted my approach based on prior losses. For your equipment depreciation, taking bonus depreciation can actually strengthen your case because it demonstrates significant business investment. Just make sure you can justify the business necessity of the equipment. Since you're essentially restarting in Colorado, this could be a good time to formalize your business structure (LLC, etc.) and create a detailed business plan showing how you'll achieve profitability within 2-3 years. The IRS gives more credibility to businesses that show they've learned from past losses and adjusted their approach accordingly. Bottom line: Document your business intent thoroughly, and you should be fine even with continued losses in the short term.

I went through this exact same situation last year with my Shareworks ESPP account! The key thing that helped me figure it out was looking at my actual account statements more carefully. In the fine print of my quarterly statements, I found language that specifically mentioned "Morgan Stanley Smith Barney LLC" as the custodian, which is clearly a US entity. Even though the mailing address and some correspondence showed Canadian addresses, the actual legal entity holding my shares was US-based. You can also check your account opening documents or look in the "Important Disclosures" section of your online account. There should be clear language about which Morgan Stanley entity is your account custodian. If it says something like "Morgan Stanley Smith Barney LLC" or another US LLC/Corp designation, you're dealing with a US account and no FBAR required. If you're still not 100% sure after checking these documents, definitely call their customer service line and ask them directly to confirm which legal entity is the custodian of your account. They should be able to give you a definitive answer. Better to spend 20 minutes on the phone than worry about potential FBAR penalties!

I've been dealing with this exact Shareworks/FBAR question for months and finally got clarity from my CPA. The bottom line is that most Shareworks ESPP accounts maintained through Morgan Stanley are actually US accounts, even with the Canadian address confusion. Here's what I learned: When Solium was acquired by Morgan Stanley, most existing US participant accounts were transferred to Morgan Stanley Smith Barney LLC, which is a US entity. However, some accounts might still be held by Morgan Stanley Canada depending on when your account was established and your company's specific arrangement. The easiest way to determine this is to log into your Shareworks account online and look for the "Account Details" or "Legal Information" section. It should clearly state which Morgan Stanley entity is the custodian. If it shows any US LLC or Corp designation, you're dealing with a domestic account and no FBAR is required. One thing to be careful about - even if you determine no FBAR is needed now, keep monitoring this if Morgan Stanley makes any changes to how they hold accounts in the future. Corporate restructuring can sometimes change the legal status of where accounts are maintained. Also worth noting: the $10,000 FBAR threshold is based on the highest balance at any point during the year, not just year-end balance. So if your account briefly hit $10,001 in March but was back down to $8,000 by December, you'd still need to file if it were indeed a foreign account.

Don't forget that your 1098-T might not show the correct amount for AOTC purposes! Many schools report tuition billed in Box 2 rather than tuition paid in Box 1. For AOTC, you need to claim based on amounts paid in 2022, not amounts billed. So if you paid spring 2022 tuition in December 2021, that technically wouldn't count for 2022's AOTC calculation. Similarly, if you prepaid some 2023 expenses in December 2022, those would count for 2022 taxes.

As someone who went through this exact situation, I can confirm you're eligible for the AOTC! Since you were enrolled as an undergraduate for the first part of 2022 and completed your degree within the traditional 4-year timeframe, you definitely qualify. The key thing to remember is that the AOTC is based on your status at the beginning of the tax year and during qualified enrollment periods. Your spring 2022 semester counts as undergraduate education, so those expenses are AOTC-eligible. Make sure you keep your records straight - only include expenses from your undergraduate program (tuition, required fees, and course materials from January-May 2022) when calculating the AOTC. Your graduate school expenses from August onward would only qualify for the Lifetime Learning Credit, but since you can only claim one education credit per student per year, you'll want to calculate which option gives you the better benefit. In most cases, the AOTC's higher credit amount ($2,500 vs $2,000) and partial refundability makes it the better choice. Good luck with your taxes!

Just wanted to add another perspective on this - if you're still unsure about the standard deduction eligibility, you might want to look into getting a Private Letter Ruling (PLR) from the IRS for your specific situation. I know it sounds like overkill, but given the potential tax savings you mentioned (thousands of dollars), it might be worth the cost and time investment. A PLR would give you definitive IRS guidance on whether you can take the standard deduction while your NRA spouse files separately. The process typically takes 6-9 months and costs around $10,000, but if you're looking at significant tax savings year after year (especially if your wife remains an NRA for several more years), it could provide valuable certainty. Plus, you'd have official IRS documentation to support your position if you're ever audited. Just another option to consider alongside the excellent advice already given in this thread!

I've been following this discussion and want to emphasize how crucial it is to get this right. I made a similar mistake a few years ago when my husband was on an H1B visa - I incorrectly itemized because I thought we both had to use the same deduction method. The key distinction that several people have mentioned is absolutely correct: the "matching deduction" rule only applies when BOTH spouses are filing U.S. tax returns. Since your wife is filing as an NRA, you're not bound by her deduction limitations. One thing I'd add is to keep excellent documentation of your decision-making process. Save screenshots of the relevant sections from Publication 519, and if you do speak with an IRS agent (whether through the services mentioned or on your own), document that conversation with dates and reference numbers. This will be invaluable if you're ever questioned about your filing decisions. Also, double-check that your wife's $8k in U.S. income doesn't push her into any unexpected filing requirements or make her subject to different rules than you're anticipating. Sometimes small details can have big implications in international tax situations.

This is probably a dumb question but does anyone know how long it typically takes for a mailed return to show up in the "Where's My Refund" tool? I mailed mine 3 weeks ago and it still says "Return Not Received" when I check.

Just wanted to add one more important point about the postmark rule - make sure you're using regular USPS mail or an approved private delivery service like FedEx or UPS. I learned the hard way that some local courier services don't count for the postmark rule because they're not IRS-approved delivery services. Also, if you're mailing multiple forms (like your return plus an extension), make sure they're all postmarked by the deadline. I once sent my extension on time but forgot to include a required payment voucher, and had to send that separately. Even though my extension was valid, I still got hit with penalties because the payment was late. One last tip: if you're really stressed about timing, you can actually hand-deliver your return to certain IRS offices, but they have very limited hours and locations for this. Most Taxpayer Assistance Centers stopped accepting returns during COVID and haven't resumed that service. But it's worth checking if you have one nearby and you're cutting it really close!