This is a great discussion that really highlights how complex trust taxation can be! As someone who's dealt with similar confusion, I want to add one more important consideration that might help others reading this thread. Even if you could somehow modify your trust to qualify as a simple trust, you need to think carefully about whether that's actually beneficial in the long run. While the tax rate compression issue is real (trusts hitting 37% at just $14,500 vs $578,000+ for individuals), there are other factors to consider. Simple trust status means ALL income must be distributed and taxed to beneficiaries every year, regardless of whether they need the money or whether it's the optimal time tax-wise. With a complex trust, the trustee has flexibility to distribute income in years when beneficiaries are in lower tax brackets, or retain income in years when beneficiaries have unusually high income from other sources. Also, once income is distributed from a simple trust, it's gone from the trust permanently. Complex trusts allow for more sophisticated tax planning strategies, like timing distributions to offset capital losses or spreading income across multiple beneficiaries. The "election" you were hoping for doesn't exist precisely because Congress wanted to prevent tax gaming - but the flexibility of complex trusts often provides better overall tax outcomes when managed properly.

This thread has been incredibly educational! I'm also a trust beneficiary and had similar misconceptions about being able to "elect" simple trust status. One thing I'd add from my experience: even though complex trusts face those compressed tax brackets, there's another consideration that hasn't been mentioned - the Net Investment Income Tax (NIIT). Trusts are subject to the 3.8% NIIT on undistributed net investment income when their adjusted gross income exceeds just $14,450 (for 2025). This threshold is much lower than the $200,000/$250,000 thresholds that apply to individuals. This creates yet another incentive for trustees to distribute investment income to beneficiaries who might not be subject to NIIT at all, or who have higher thresholds before it kicks in. So even beyond the regular income tax rate compression, there's this additional layer of tax that makes retaining income in trusts expensive. It's really fascinating how all these rules work together to encourage income distributions while still preserving the flexibility that complex trusts offer for strategic tax planning. The system seems designed to prevent the exact kind of "tax arbitrage" that the original poster was hoping to achieve!

For what it's worth, I had to deal with this exact situation with the 2022 tax year (filed in 2023). Sold some Taylor Swift tickets for way more than I paid (didn't realize they'd be so valuable when I bought them!!) and got a 1099-K from StubHub. The way it worked in TurboTax was: 1. Entered the 1099-K amount as reported 2. In the "related expenses" section, I put what I originally paid for the tickets 3. When asked if this was a "business," I selected "no" since it was a one-time thing I didn't have to mess with Schedule C at all, it was just reported as miscellaneous income on Schedule 1. The difference between what I got and what I paid was taxed as ordinary income.

I went through this exact same situation last year with StubHub and multiple other platforms! The confusion around 1099-K reporting for ticket sales is really common because different platforms handle it differently. Here's what I learned from my research and experience: First, verify what StubHub actually reported by checking if the $12,000 matches what was deposited to your bank account or if it's higher. If it matches your deposit, they've already deducted their fees and you shouldn't deduct them again. For entering this in tax software, both TurboTax and H&R Block will walk you through it under "Other Income" or "Less Common Income" sections. You'll enter the 1099-K amount exactly as shown, then add your related expenses (original ticket cost) to offset the income. The key is keeping good records - save your original purchase confirmations, the 1099-K, and any StubHub transaction summaries. This will help you determine exactly what was deducted and what you can claim as expenses. Since this was a one-time sale, you're correct that this should be treated as miscellaneous/hobby income rather than business income, which keeps things simpler and avoids self-employment tax complications.

Friendly reminder that even if some tax debts are beyond the collection statute of limitations, unfiled tax returns still need to be addressed if the IRS requests them. The 10-year limit is for collecting assessed taxes, not for requiring returns to be filed. Also, if you ever filed for bankruptcy, applied for a mortgage, or had other major financial events, those can sometimes extend or "toll" the collection statute.

I really feel for you - 20 years is a long time to carry this burden, and it takes real courage to finally tackle it. The mental health struggles you mentioned are more common than you think in these situations. Here's what I'd suggest as your immediate next steps: 1. **Get your tax transcripts first** - File Form 4506-T or request them online at irs.gov. This will show you exactly what the IRS has on file for each year, including any substitute returns they filed. 2. **Start with the most recent 6 years** - This aligns with IRS voluntary disclosure practices and gets you current faster. Since you had regular withholding during this period, some years might actually result in refunds. 3. **Don't panic about perfect records** - For those early self-employment years with missing documentation, you can make reasonable estimates based on what you remember. Bank deposits, credit card statements, even old calendars can help reconstruct income and expenses. 4. **Consider the Volunteer Income Tax Assistance (VITA) program** - They offer free tax help for people with limited resources. Given your situation and savings constraints, you might qualify for their services. The fact that you're reaching out shows you're ready to handle this. Take it one year at a time, and remember that the IRS generally wants to work with people who are making a good faith effort to get compliant.

Something nobody has mentioned yet - make sure you're actually subject to US taxation in the first place. If you're truly just selling e-books through Amazon KDP (or similar platform), you might be receiving royalty income, not freelance/contractor income. Different types of income are treated differently under US tax law. For royalty income from intellectual property, you might have different options than for services income. This distinction could affect both your ITIN application purpose and your ultimate tax liability.

I went through this exact process about 6 months ago as a freelance web developer from the Philippines (also no tax treaty). A few practical tips that really helped me: First, when gathering your identity documents for the ITIN application, make sure your passport is valid for at least 6 months beyond your application date. The IRS rejected my first application because my passport was expiring in 4 months. Second, consider timing your application carefully. I applied in August (non-tax season) and got my ITIN in about 6 weeks. Friends who applied during tax season waited 12+ weeks. Third, once you get your ITIN, you'll need to be proactive with your US clients about updating their records. Send them the completed W-8BEN form via certified mail or email with read receipts. Some companies have slow accounting departments and it took 2-3 months for the withholding changes to take effect. One thing that surprised me - even after getting my ITIN and filing my first US tax return, I only got back about 15% of what was withheld (not the full 30%). The actual tax rate on my income bracket was still around 15%, but I was able to claim some business deductions for my home office and equipment. Still a significant improvement from losing the full 30% though!

Quick tip: If you're using TurboTax or H&R Block software, when you enter your 1098 information, they'll specifically ask about property taxes paid. Enter what's in Box 10 BUT ALSO have your actual property tax statements handy. The software will help reconcile any differences. I found out that my mortgage company only paid a portion of my property taxes from escrow, and I paid the rest directly to the county. If I had only claimed what was on my 1098, I would have missed out on about $2,300 in additional deductions for the portion I paid directly.

This is such a helpful thread! I had the exact same confusion with my 1098 form last year. One thing I'd add is that if you have multiple properties or a complex escrow situation, it's worth requesting a detailed breakdown from your mortgage servicer. I called my lender and asked for an escrow analysis statement that showed exactly when each property tax payment was made and for which tax period. This helped me figure out that some of my 2023 tax year payments were actually made in early 2024, so they wouldn't appear on my 2023 1098 form. The bottom line is: always use your official county property tax statements as the source of truth, and treat the 1098 as helpful supplementary information. The asterisk is just their way of saying "we're giving you this info to help, but don't hold us responsible if there are discrepancies.