I'm so deeply sorry for your friend's loss. This is an unimaginably difficult situation, and it's wonderful that you're trying to help them navigate these practical matters during such a heartbreaking time. Everyone here has provided excellent guidance about the tax implications. I wanted to add one more resource that might be helpful - many states have specific grief counseling services for parents who have lost newborns, and some of these programs also provide guidance on handling the administrative aspects (paperwork, benefits, etc.) that come up after such a loss. The National Stillbirth Society and similar organizations often have state-specific resources that can help with both the emotional support and practical guidance your friends might need. Sometimes having an advocate who understands both the grief process and the bureaucratic requirements can be invaluable. Please let your friends know that there's no rush on any of this tax-related paperwork - they have until the tax filing deadline to sort through everything, so they should take the time they need to grieve and process before tackling these administrative tasks. The most important thing right now is their emotional healing.

I'm so sorry for your friend's tremendous loss. Having gone through infant loss myself, I know how overwhelming it can be to handle practical matters while grieving. The advice here about claiming their baby as a dependent is absolutely correct - there's no minimum time requirement. One thing I wanted to add that hasn't been mentioned yet: they should also check if their employer offers any bereavement benefits or if their health insurance covers any additional services related to infant loss, like grief counseling or support groups. Also, if they had a baby shower and received gifts, they don't need to worry about any tax implications from returning those items or donating them - that won't affect their tax situation at all. I know it might seem like a small detail, but when you're grieving, sometimes these little questions can feel overwhelming. Please let them know that this community is here for them, and there's no pressure to handle any of this paperwork until they feel ready. Their healing is the most important thing right now.

I went through a very similar situation about 6 months ago as a freelance marketing consultant with 1099 income. The process was definitely more involved than a traditional W-2 mortgage, but absolutely doable with your financial profile. A few things that really helped me: **Documentation is everything** - Beyond just tax returns, I prepared a business income summary showing quarterly earnings for the past 2-3 years to demonstrate consistency. This helped offset any concerns about income variability. **Consider your debt-to-income calculation carefully** - Since you mentioned taking business deductions, run the numbers on what your net income looks like for qualification purposes. Sometimes it makes sense to be less aggressive with deductions in the year you're applying for a mortgage. **Bank statement loans might be worth exploring** - As someone else mentioned, these can be great for self-employed folks. I didn't go this route since my tax return income was sufficient, but it's good to know it exists as an option. **Your combined profile is strong** - Having your wife's stable W-2 income plus your consistent contractor earnings, excellent credit scores, and solid down payment puts you in a really good position. Many lenders will view this as lower risk than a solo 1099 applicant. I ended up going with a regional bank that had experience with self-employed borrowers. The process took about 45 days total, but we got a great rate and closed without any last-minute surprises. Don't let the extra paperwork discourage you - it's totally manageable!

As someone who went through this exact process last year as a 1099 contractor, I wanted to share what worked for me. I had been doing freelance accounting work for about 2.5 years when my husband and I decided to buy our first home. The biggest challenge was indeed the income documentation. Lenders wanted to see not just my tax returns, but also profit & loss statements, bank statements showing consistent deposits, and letters from my main clients confirming ongoing work relationships. I learned that organization is absolutely critical - having everything ready upfront made a huge difference. One thing that really helped was working with a loan officer who specialized in self-employed borrowers. They knew exactly what documentation to request and how to present my income in the most favorable light to underwriters. They also suggested I get a CPA letter summarizing my business income trends, which seemed to carry weight with the underwriting team. Your situation sounds quite strong actually - having your wife's W-2 income as a foundation plus your consistent 1099 earnings should work in your favor. The key is finding the right lender and being prepared with thorough documentation. Don't get discouraged if you get a "no" from the first lender - shop around until you find one that understands self-employed borrowers. Feel free to ask if you want more specific details about the documentation process!

This is why startup equity compensation is such a minefield. I messed up my 83(b) filing too but in a different way - I filed it but forgot to include a copy with my tax return, which apparently also invalidates it. Anyone know if there's any possible relief or exception? I've heard rumors about a "reasonable cause" exception for late filings?

I feel your pain on this one! Missing the 83(b) election is unfortunately more common than you'd think, especially at startups where HR doesn't always explain the importance clearly. Since your initial FMV was $0.00, you're actually in a relatively good position compared to others who miss this deadline. The main thing to understand is that now you'll be taxed on ordinary income as your shares vest based on their fair market value at each vesting date. My advice: start preparing financially now. Set up a separate savings account and begin putting money aside for the tax bills that will come with each vesting event. If your company has had any funding rounds or valuation increases since you received your equity, those taxes could be substantial even though you won't have cash from selling shares to pay them. Also, make sure you understand exactly when your vesting dates are and try to get the company's most recent 409A valuation reports so you can estimate what you'll owe. Being proactive about this will save you from scrambling when tax time comes around.

Just to add some practical info on donation values - I volunteer at a nonprofit thrift store and here are some ballpark clothing values we use that the IRS generally accepts: - Men's shirts: $5-10 - Women's tops: $4-12 - Jeans/pants: $5-12 - Coats/jackets: $10-40 - Shoes: $3-9 These are general ranges and condition matters a lot! A worn-out shirt is worth less than a like-new one with tags still on.

Don't forget that it's not just about the amount of donations - it's whether you have enough TOTAL itemized deductions to exceed the standard deduction. My wife and I donate about $1,200 a year but we still take the standard deduction because our mortgage interest and state taxes aren't enough to push us over the threshold.

Has anyone actually checked if not claiming legit business expenses could trigger an audit? I've always been told that the IRS algorithms flag returns that don't match expected patterns for your industry. Like if most bookkeepers claim around 20-30% expenses but you claim zero, wouldn't that look weird?

I think you're overcomplicating this. The math is pretty straightforward - you should always claim your legitimate business expenses because of the self-employment tax implications that others have mentioned. Here's why: In your Option 1, you'd have $16,000 in net earnings subject to SE tax (15.3%), which is about $2,448 in SE taxes. In your Option 2, you'd have $20,000 in net earnings subject to SE tax, which is about $3,060 in SE taxes. That's an extra $612 you'd be paying unnecessarily. Plus, your Solo 401k contribution limits are based on your net self-employment earnings anyway, so claiming legitimate expenses doesn't actually hurt your contribution capacity - it just makes your tax situation more accurate and saves you money on SE taxes. The IRS doesn't care if you don't claim every possible deduction, but why would you voluntarily pay more taxes than you legally owe? Take the deductions you're entitled to, pay the correct amount of SE tax, and then contribute what makes sense to your Solo 401k based on your actual net earnings.